Legal Definitions - mutual company

Definition: A mutual company is a type of company that is owned by its customers rather than by a separate group of stockholders. Many insurance companies and federal savings-and-loan associations are mutual companies.

Example: XYZ Insurance Company is a mutual company. This means that the policyholders of XYZ Insurance Company are also the owners of the company. They have a say in how the company is run and can receive dividends if the company is profitable.

Explanation: The example illustrates the definition of a mutual company by showing that the customers of the company are also the owners. This means that the company is run for the benefit of its policyholders rather than for the benefit of a separate group of stockholders. As a result, mutual companies may be more focused on providing good service and competitive prices to their customers.