RESERVE
reserve,n.1. Something retained or stored for future use; esp., a fund of money set aside by a
bank or an insurance company to cover future liabilities.
amortization reserve.An account created for bookkeeping purposes to extinguish an
obligation gradually over time.
bad-debt reserve.A reserve to cover losses on uncollectible accounts receivable.
legal reserve.The minimum amount of liquid assets that a bank or an insurance company
must maintain by law to meet depositors’ or claimants’ demands. [Cases: Banks and Banking 14,
503; Insurance 1139. C.J.S. Banks and Banking §§ 23, 674–676, 679; Insurance §§ 106–107,
loss reserve. 1. An insurance company’s reserve that represents the estimated value of future
payments, as for losses incurred but not yet reported. [Cases: Insurance 1139. C.J.S. Insurance
- § 106–107, 116–118.] 2. A bank’s reserve set aside to cover possible losses, as from defaulting
loans.
mean reserve.In insurance, the average of the beginning reserve (after the premium has been
paid for the policy year) and the ending reserve of the policy year.
policy reserve.An insurance company’s reserve that represents the difference between net
premiums and expected claims for a given year. • This type of reserve is kept esp. by
life-insurance companies. [Cases: Insurance 1139. C.J.S. Insurance §§ 106–107, 116–118.]
required reserve.The minimum amount of money, as required by the Federal Reserve Board,
that a bank must hold in the form of vault cash and deposits with regional Federal Reserve Banks.
[Cases: Banks and Banking 351–359. C.J.S. Banks and Banking §§ 650–662, 676–678, 682–687,
746.]
sinking-fund reserve.A reserve used to pay long-term debt. See sinking fund under FUND(1).
unearned-premium reserve.An insurance company’s reserve that represents premiums that
have been received in advance but not yet applied to policy coverage. • If a policyholder cancels
coverage before the policy expires but has already paid a premium for the full policy period, the
insurance company refunds the policyholder out of this reserve. [Cases: Insurance 1139. C.J.S.
Insurance §§ 106–107, 116–118.]
2.RESERVATION(3).3. See net value under VALUE(2). — reserve,vb. [Blacks Law 8th]