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Insurance Covenant

Definition

A promise made by the insurer to meet certain obligations under the policy. It builds trust and sets clear expectations for both parties.

What to consider

  • Determine the appropriate fund size.
  • Keep the fund easily accessible.
  • Regularly replenish the fund as needed.

Real world scenarios

  • A small business set up a contingency fund to cover unexpected operational costs.
  • An individual created a contingency fund for emergency medical expenses.
  • A nonprofit organization maintained a contingency fund to handle unforeseen events.

Related terms

Supplemental Retirement Protection
Claims Settlement
Property Liability
Mandatory Insurance
Insurance Underwriting

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