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Simple English definitions for legal terms
deferred claim
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A quick definition of deferred claim:
A deferred claim is when someone waits to get something they are owed until a later time. This means that the person will not receive what they are owed until a future time, usually in the next accounting period.
A more thorough explanation:
A deferred claim is a claim that is postponed to a future accounting period. This means that the claim will not be recognized or paid until a later date.
- Insurance claims: If an insurance company receives a claim for damages that occurred in the current year, but the payment for the claim will not be made until the following year, the claim is considered a deferred claim.
- Warranty claims: If a company receives a warranty claim for a product that was sold in the current year, but the repair or replacement will not be made until the following year, the claim is considered a deferred claim.
These examples illustrate how a claim can be recognized in one accounting period, but the payment or resolution of the claim is postponed to a future period. This can affect a company's financial statements and must be properly accounted for in order to accurately reflect the company's financial position.