What does Encumbrance mean? Read on to discover the definition & meaning of the term Encumbrance - to help you better understand the language used in insurance policies.
An encumbrance refers to anything that affects, limits, interrupts, or obstructs an insurance policy and its provisions. For instance, encumbrances could include previous or outstanding claims for which the insurance company has already set aside funds. However, the insurance company might issue restrictions to the policyholder, restricting the use of these funds for other purposes.
We hope the you have a better understanding of the meaning of Encumbrance.