A small portion of the total budget that is set aside for expenditures on unexpected needs or emergencies, not appropriated in other budget lines.

A reserve account in which funds are held until certain specified conditions are satisfied.

A reserve for losses in excess of those that are expected. An insurer generally contributes up to 50% of premiums earned in any year to this reserve, and amounts contributed are to remain there for 10 years, subject to transfer to the surplus account either at the end of that period or before to the extent that the loss ratio exceeds 35% in any given year. Federal income taxes on amounts in the contingency reserve are deferred as long as the funds remain allocated there and are paid when they are transferred to surplus (see tax and loss bonds).

Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account. This contingency reserve is only used when unforeseen repairs or deficiencies are found during renovation.

A voluntary, noncontractual reserve established by an insurer to supply added reserve protection against various special categories of risk, usually related to the C-1 through C-4 risks. See also special surplus.

amount of funds held in a reserve account to cover the cost of any unforeseen repairs or deficiencies are found during renovation. Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account.