Accounting Dictionary

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Insurance Contract

Definition: An insurance contract is a contract in which one party, the insurer, accepts significant insurance risk from another party, the policyholder, to compensate the policyholder if a specific uncertain future event impacts the policyholder. Examples of insurance contracts are insurance against property theft, insurance against professional liability, life insurance, disability insurance, fidelity bonds, product warranties, and credit insurance. Self-insurance is not an insurance contract.