Mutual insurance is a type of insurance where policyholders are also the owners of the company. This means that any profits made by the insurance company are returned to the policyholders in the form of dividends or reduced premiums. The primary goal is to provide coverage for its members rather than to generate profit for shareholders. In a mutual insurance model, members pool their resources to share risks. If a member experiences a loss, the mutual insurance company uses the pooled funds to cover the claim. This system fosters a sense of community and shared responsibility among policyholders, aligning their interests with the company's success.