Filing Claims
How to file a claim and how payouts, partial payouts, and claim debt work
TL;DR: File a valid claim and the protocol pays as much as available in the same transaction. If liquidity is exhausted, the unpaid remainder becomes claim debt that you can collect later.
LayerCover uses smart-contract-driven settlement. Launch pools validate claims through on-chain rules and execute payouts against the same liquidity waterfall.
For the exact live funding order and the difference between reinsured and non-reinsured policies, see Payout Waterfall.
Claim Flow
After a claim is approved, the protocol tries to fund it in this order:
- Underwriter adapter liquidity
- Private reinsurance hook, if the policy actually has reinsurance
- Underwriter idle liquidity
- Protocol backstop
- Protocol treasury
- Any unpaid remainder becomes outstanding claim debt
Incident-Based Claims
Used by most pools. Claims are fully permissionless — you can file at any time by swapping your covered asset for the underwriter's asset, even before any committee has formally recognised the incident. In practice, claiming only makes economic sense once the covered event has actually occurred, since it requires surrendering your tokens as salvage and paying a claim fee.
Step-by-step:
- Incident occurs - You notice the covered event has happened (e.g., a depeg or vault exploit)
- Go to Dashboard - Navigate to your active policy and click File Claim
- Transfer your asset - Send the distressed tokens (e.g., depegged USDC) to the protocol
- Receive payout - USDC is sent to your wallet in the same transaction up to available liquidity
How much do I get? Your gross claim amount is determined by the policy rules. The protocol then applies any claim fee and pays as much of the net amount as current liquidity allows. Any unpaid remainder is recorded as claim debt.
Vault Cover Claims
For ERC-4626 vault share coverage, the claim flow has a specific custody model:
- You transfer your vault shares to the PolicyManager
- The protocol verifies the shares against the snapshot taken at purchase
- You receive USDC at the snapshotted value - not the current (distressed) value
- The protocol retains the shares as salvage (potential future recovery value)
Eligibility Rules
Your claim will be validated if:
| Rule | Requirement |
|---|---|
| Active policy | Policy must not be cancelled. After expiry, you have a grace period (set by the protocol's cooldown period) to file claims for incidents that occurred during your coverage period |
| 7-day cooldown | At least 7 days since purchase |
| Incident timing | Incident must have occurred during your coverage period |
| Pre-purchase check | Incident must not have been reported before your purchase |
| Correct pool | Your policy must cover the affected pool |
After a Claim
- Your Policy NFT is either burned (full claim) or reduced (partial claim)
- The payout arrives in the same transaction up to available liquidity
- If the claim cannot be fully funded, the unpaid remainder becomes outstanding claim debt
- The underwriter's pledged capital is reduced by the underwriter-funded share
- Distressed assets are held as salvage, and routed according to who actually funded the payout
Partial Payouts And Claim Debt
If the protocol cannot fully fund your claim at execution time, the unpaid remainder is stored as claim debt under your policy and wallet.
- Claim debt is tied to the claimant address that received the original claim execution.
- Later debt collection is best-effort: the protocol will try to pay from available liquidity at that time.
- For reinsured policies, the system also tracks whether backstop or treasury substituted for an unpaid private reinsurance hook.