Auto Insurance company reserve?

[Sahbou]

What is the name of your state? MD

What do the insurance companies (IC) do with the money I pay them? Can they run out of money in their reserve? If so, what will happen? What is a reserve, anyway? Do they reinvest my premiums like a bank does when I deposit my money. You know how banks reinvest and make loans in order to make more money. So how does an IC work?

Thanks!

[Lynx 36]

Quote: "What do the insurance companies (IC) do with the money I pay them?"

Provide you insurance.

Quote: "What is a reserve, anyway?"

It is money the insurance co. sets aside to pay claims. They evaluate a claim from the beginning and set aside the monetary value they think it will take to pay it. This can be increased or decreased by the adjustor as they see fit while they are working a claim.

Quote: "Do they reinvest my premiums like a bank does when I deposit my money."

Yes.

Quote: "So how does an IC work?"

Have no clue what an IC is.