Balance Sheet Reserves

What are 'Balance Sheet Reserves'

Balance sheet reserves refer to the amount expressed as a liability on the insurance company's balance sheet for benefits owed to policy owners. Balance sheet reserves represent the amount of money insurance companies set aside for future insurance claims or claims that have been filed but not yet reported to the insurance company or settled. The amount of balance sheet reserves to be maintained is regulated by law.

Also known as "claim reserves."

BREAKING DOWN 'Balance Sheet Reserves'

Balance sheet reserves are required of insurance companies by law to guarantee that an insurance company is able to pay any claims, losses or benefits promised to customers and claimants.

RELATED TERMS
  1. Adjuster

    An insurance claims agent. A claims adjuster is charged with ...
  2. Insurance Claim

    A formal request to an insurance company asking for a payment ...
  3. Insurance Premium

    The amount of money that an individual or business must pay for ...
  4. Cooperation Clause

    An insurance contract clause that requires the policyholder to ...
  5. Cumis Counsel

    Legal counsel chosen by the insured when the insurer has a conflict ...
  6. Losses and Loss-Adjustment Expense

    The portion of an insurance company’s reserves set aside for ...
Related Articles
  1. Investing Basics

    The Industry Handbook: The Insurance Industry

    As a result of globalization, deregulation and terrorist attacks, the insurance industry has gone through a tremendous transformation over the past decade. In the simplest terms, insurance of ...
  2. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  3. Markets

    Fundamental Analysis: The Balance Sheet

    By Ben McClureInvestors often overlook the balance sheet. Assets and liabilities aren't nearly as sexy as revenue and earnings. While earnings are important, they don't tell the whole story. ...
  4. Investing

    Outstanding Shares

    Learn more about this important number found on a company's balance sheet.
  5. Home & Auto

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  6. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  7. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  8. Home & Auto

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  9. Home & Auto

    6 Huge Insurance Claims

    Next time you think that insurance is a waste of your money, think about these expensive claims.
  10. Entrepreneurship

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
RELATED FAQS
  1. Does the balance sheet always balance?

    Yes, a balance sheet should always balance. The name "balance sheet" is based on the fact that assets will equal liabilities ... Read Answer >>
  2. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  3. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  4. How are open market operations and monetary policy related?

    Understand the meaning of an aggregate limit in an insurance policy as well as which types of insurance companies are most ... Read Answer >>
  5. What are the main components of the Federal Reserve's balance sheet?

    Find out which items are listed as assets and liabilities on the balance sheet of the Federal Reserve, and how to read the ... Read Answer >>
  6. How do I choose which insurance company to use?

    Picking an insurance company to use is not an easy task, considering the financial crisis of 2008 and 2009. Several financial ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center