Define: Stipulated Insurance

Stipulated insurance refers to an insurance policy with specific terms and conditions that are agreed upon between the insured party and the insurer. These terms are typically negotiated and outlined in the insurance contract, with both parties consenting to the coverage, premiums, deductibles, and other provisions. Stipulated insurance allows for customised coverage tailored to the insured’s needs and preferences, providing clarity and certainty regarding the scope and limitations of the insurance policy.

An insurance policy that allows the insurance company to assess an amount on the insured, above the standard premium payments, if the company experiences losses worse than had been calculated into the standard premium. This is a way for both the insurance company and the policy-holder to gamble on the risk, mutually betting on low losses. Also called an assessment, mutual assessment or mutual life insurance. Example: A shipping company buys an insurance policy to protect against loss or damage to its cargo. During the first few years, the company never pays more than the low fixed premiums because it suffers no losses. Later, however, the company’s luck turns and one of its shipping liners sinks in the Bermuda Triangle. In response to the huge losses, the insurance company assess penalty payments and higher premiums.

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This glossary post was last updated: 29th March 2024.