Special Acceptance

Definition of "Special acceptance"

Krista Leighton real estate agent
Krista Leighton, Real Estate Agent Keller Williams

The definition of special acceptance explains how two insurance institutions work together for the benefit of the masses. In order to define what special acceptance means, we must understand some facts about insurance companies and how they work. People usually hear about insurance companies regarding their properties, homes or vehicles, and their health or life coverages. The individual goes to the insurance company in order to get insurance to cover their cars, houses, health, or lives in case of damage inflicted.

How do insurance companies work?

Simply put, there is already an insurance policy signed between the insurance company and the insured individual, but the individual later decides that they want additional risks covered. These additional risks increase the policy’s coverage, the premium, and the insurance’s pay-back when the insurance company has to finance the insured individual.

In those situations, the insurance company may face insurance coverage that is too demanding for them to cover because of the additional risks added to the policy. At that point, insurance companies can submit an offer to a reinsurance company to help cover the liabilities and losses through a reinsurance broker. Because the offer splits the costs of the coverage between the two companies, the premium is also divided between the two companies. The percentage of premiums and liabilities are discussed between the two companies. 

So what is a special acceptance?

When an insurance company makes an offer to the reinsurance company, the reinsurance company responds through a special acceptance. Once the reinsurer agrees to the terms and conditions of the contract, a special acceptance is formed through the reinsurance contract to cover the risk.

Simply put, a special acceptance is the acceptance of the reinsurer. This special acceptance is given regarding objects, risks, claims, and businesses that are not mentioned in the original policy between the insurance company and the insured individual but added later on. The reinsurance company forwards the agreement to the insurance company through special acceptance. Once the reinsurer gives their special acceptance, the reinsurer is subject to the terms and conditions of the agreement except for any modifications brought by the agreement between the two companies.

A critical aspect of this collaboration between the insurance company and the reinsurance company is that the insured individual is unaware of it. When the policy is paid, the insured party gets the check from the insurance company, and the insurance company then splits the liabilities with the reinsurance company as per the agreement between the two.

Also, the individual insured can not go directly to the reinsurance company in order to get a fully covered policy. The individual insured does not have access to the reinsurance company directly as the reinsurance company only insures insurance companies. The individual getting insured only deals with the insurance company, only signs contracts with the insurance company, and only gives and receives money to and from the insurance company.


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