Definition of "Strike-through clause (cut-through clause)"
Deborah Terrero, Real Estate Agent
Berkshire Hathaway HomeServices
Provision that holds a re-insurer liable for its share of losses even if the ceding company becomes insolvent before paying these losses. For example, XYZ Insurance Co. writes a fire policy for Acme Manufacturing and then re-insures 80% of the risk with ABC Reinsurance. XYZ is declared insolvent. Then Acme Manufacturing burns to the ground. ABC Reinsurance would be responsible for the 80% of the risk it re-insured and would pay the claim directly to Acme.
Have a question or comment?
We're here to help.