Other Free Encyclopedias » Law Library - American Law and Legal Information » Free Legal Encyclopedia: Ministerial to National Education Association

Mutual Company

insurance companies profits

A corporation in which members are the exclusive shareholders and the recipients of profits distributed as dividends in proportion to the business that such members did with the company.

The most common kind of mutual company is a mutual insurance company. In this type of organization, which is a cooperative association, the members are both the insurers and the insured. Such companies exist for the purpose of satisfying the insurance needs of their members at a minimal cost. The members contribute through a system of premiums or assessments, forming a fund from which all losses and liabilities are paid. Any profits are divided among the members of the company in amounts proportionate to their individual interests.

The members of a mutual company choose the management. Professional associations that offer their members insurance coverage often form mutual insurance companies.

Mutual Fund - Further Readings [next]

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or