excess of loss treaty

  • This is a coverage of the whole or a specified proportion of loss over a deductible, which may be a specified figure or a computation. Excess of loss is the normal form of reinsurance of liability risks, but is also has special applications in all branches. It should never be confused with surplus, which in reinsurance always refers to a pro rata form of coverage.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).