In a mutual insurance company, who is usually required to buy a policy?

In a mutual insurance company, the policy owner is typically required to buy a policy. This is because mutual insurance companies are owned by their policyholders, who share in the company's profits and losses. When individuals purchase a policy from a mutual insurer, they become policyholders and, in essence, the owners of the company. Their purchasing of a policy is critical for the mutual model, as it establishes the risk pool from which claims will be paid and ensures the company has the necessary funds to operate.

Additionally, policyholders in a mutual insurance company may also have voting rights in corporate matters, allowing them to influence decisions regarding the direction of the company. This structure emphasizes the communal aspect of mutual companies, as all policyholders have a vested interest in the success and financial health of the insurer. Thus, the requirement for policy ownership aligns with the fundamental principles of mutuality, fostering a sense of cooperation and shared benefit among its members.