underwritten

Insurance/Contract LawLegal glossary term

Legal Definition

Underwritten refers to a formal agreement where one party (the underwriter) formally agrees to guarantee the financial obligations of another party, typically in an insurance context, ensuring that the policyholder's claims are covered according to the terms agreed upon.

Plain-English Translation

Imagine you have a big promise to pay for something, and someone else agrees to be the official guarantor that this promise is real. It means the person who wrote the policy officially agrees to back up the financial promises made in the contract.

Context in Contracts

It matters because it establishes the formal legal relationship between the insurer and the policyholder regarding coverage. It defines who is responsible for the financial backing when a contract dictates that responsibility must be met.

Visual model

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ELI10 illustration for underwritten
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Example 1: A formal insurance agreement where the insurer explicitly agrees to cover the financial liability of the insured party.

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Example 2: A legal document detailing the terms under which a specific claim or obligation is guaranteed by an underwriting entity.

Document context

How underwritten shows up in legal documents

What is it?

Underwritten is a term used primarily in insurance or finance where an entity formally accepts responsibility for the financial obligations of another party, often the policyholder or the insured, ensuring that the underlying risk or claim is covered under the agreed-upon terms.

Why does it matter?

It matters because it establishes the formal legal relationship between the insurer and the policyholder regarding coverage. It defines who is responsible for the financial backing when a contract dictates that responsibility must be met.

When does it matter?

It usually appears in insurance policies, financial agreements, or legal settlements where one party formally guarantees the underlying obligation or risk assumed by another party.

Where is it usually seen?

It is typically found within policy documents, insurance contracts, underwriting agreements, and formal legal resolutions.

Who is affected?

The insurer (the entity that underwrites) and the policyholder (the party whose obligations are being guaranteed) are affected. The underwriter assumes a specific role in guaranteeing the financial outcome.

How does it work?

In practice, it works by establishing a formal written agreement where the underwriter provides the necessary assurance or guarantee for the claims or obligations outlined in the contract, ensuring that the policyholder's rights are secured.

Related terms

Terms to compare with underwritten

Surety

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Disclaimer: We do not provide legal advice. We translate legal language into plain English and help you prepare for a conversation with a lawyer.