State RegulationsFL specificDifficulty 1/5
What distinguishes a mutual insurance company from a stock insurance company under Florida law?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under the Florida Insurance Code, a mutual insurance company has no capital stock and is owned by its policyholders, who may participate in the company's favorable experience through policyholder dividends. A stock company, by contrast, is owned by shareholders who receive dividends on their shares.
Why the other options are wrong
- B) Mutual insurers sell insurance, not mutual funds; the name describes ownership, not products.
- C) Employee ownership is not the mutual structure; the policyholders are the owners.
- D) Mutual companies, like stock companies, can be domestic, foreign, or alien; place of organization is unrelated.
Memory hook
Mutual = members own it; stock = shareholders own it.