Fire insurance method under which the insured pays a deposit in a lump sum or in instalments based on a percentage of the value of the property at risk. The insurer invests the sum paid in order to accrue interest from which claims will be paid. The insured can end the arrangement by withdrawing his deposit.
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Property Insurance (usually covering Fire and extended coverage perils) under which the insured, rather than paying periodic premiums, deposits a sum large enough that the investment earnings on this deposit can pay insured losses plus the insurer’s operating expenses. This deposit and its investment earnings, minus loss payments and Underwriting expenses, is held in the insured’s name. The insured is entitled to the balance of this account upon withdrawing from the perpetual Insurance arrangement.