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Multiple Trigger Insurance Contracts

Multiple Trigger Insurance Contracts

Definition

Traditional insurance contracts have one trigger: a physical event or occurrence that activates coverage. Multiple trigger contracts are designed to respond to both physical hazard-type events and resultant financial movements. These financial movements can be any benchmark against which the firm measures its financial viabilities, such as its stock price, quarterly earnings, internal rate of return, etc. For example, a multiple trigger (also known as a dual trigger) program could cover property loss due to fire, windstorm, etc., and a reduction in quarterly earnings that results from the physical event.

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