As used in this chapter, the term: (1) “Mortgage guaranty insurance” means a form of casualty insurance insuring lenders against: (a) Financial loss by reason of nonpayment of principal, interest, and other sums agreed to be paid under the terms of any note, bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate which contains a residential building or a building designed to be occupied for industrial or commercial purposes. (b) Financial loss by reason of nonpayment of rent and other sums agreed to be paid under the terms of a written lease for the possession, use, or occupancy of real estate, provided such real estate is designed to be occupied for industrial or commercial purposes. (2) “Contingency reserve” means a special premium reserve which is in addition to other premium reserves required by law and which is established for the protection of policyholders against the effect of adverse economic cycles.
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