Balance Sheet Reserves

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DEFINITION of 'Balance Sheet Reserves'

An 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."

INVESTOPEDIA EXPLAINS '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.

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