Municipal Bond Insurance

Definition - What does Municipal Bond Insurance mean?

Municipal bond insurance provides financial reimbursement to a party if a default occurs on a municipal bond. This type of insurance is designed to provide the policyholders with enough confidence to get involved in municipal projects such as the construction of bridges, roads, or schools.

Insuranceopedia explains Municipal Bond Insurance

Municipal projects can cost exorbitant amounts of money. The construction of a single high school, for example, can costs tens of millions of dollars. Because such large amounts of money are involved in municipal projects, municipal bond insurance is crucial for hedging against the risk of default and it associated losses.

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