# ASC 720-20-15: Other Expenses — Insurance Costs — 15 Scope and Scope Exceptions

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/20/#15-scope-and-scope-exceptions)

Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.

Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure.

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:bc61da2cecd989664a5fbaf3d83083ae57d319e6a4fa012cd2f6687f5cb52849

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-20-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/720/20/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [720-20-15-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:b09d24d4d06f40716d2087b5f785c5d65e449098dc0087daf9656de1b7f56720

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The General Subsection of this Section establishes the pervasive scope for this Subtopic, with specific exceptions noted in the other Subsections of this Section.

#### Entities

##### [720-20-15-2](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:f2d09d8c7c9c82f2244abf222b643204d2ffbbe01f75a983ede73aba974ba908

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in this Subtopic applies to all entities.

### Retroactive Contracts

#### Overall Guidance

##### [720-20-15-3](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-3)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:aa42395ae7f26b9988df19c7594e049a7723e44a6a59d37e198d01e48346faa2

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The Retroactive Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see paragraph [720-20-15-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-1), with specific entity and transaction qualifications noted below.

#### Entities

##### [720-20-15-4](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-4)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:a4ab70952e208333930bc6079794a8df9c6d608ba526188019ec52541637a26e

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in the Retroactive Contracts Subsections applies to all entities that enter into retroactive insurance contracts.

#### Transactions

##### [720-20-15-5](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-5)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:16f0cb07f67b1dd70a069e301a834f93382140e0d4973587ad84ba9c7baf9de6

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in the Retroactive Contracts Subsections applies to the following transactions and activities:

1.  a
    
    Those that meet the indemnification against loss or liability conditions of Section [720-20-25-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-1)
    
2.  b
    
    Those that provide indemnification against loss or liability relating to liabilities that have been incurred as a result of a past event, for example, environmental remediation liabilities (see Subtopic 410-30).

##### [720-20-15-6](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-6)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:17e71650a96739e5c6922aed4b6423941826b1ca49d35f4c3216ae1dcd8987f7

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in the Retroactive Contracts Subsections does not apply to the following transactions and activities:

1.  a
    
    Those that legally extinguish the entity's liability
    
2.  b
    
    [Reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") transactions (see Subtopic 944-20 for guidance on the accounting by insurance entities for reinsurance contracts).

### Claims-Made Contracts

#### Overall Guidance

##### [720-20-15-7](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-7)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:8789686d28516e1c940f21a4c08fcbf75bfdf4141466c10efd77e24a48e54000

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The Claims-Made Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see paragraph [720-20-15-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-1), with specific transaction exceptions noted below.

#### Transactions

##### [720-20-15-8](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-8)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:66a9581ac02a381ccba6b484408dc843ed10a8bd5352efaf0f4f66bd2aeaeb3b

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in the Claims-Made Contracts Subsections does not apply to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") transactions (see the Reinsurance Subsections of Topic 944 for guidance on the accounting by insurance entities for reinsurance contracts).

### Multiple-Year Retrospectively Rated Contracts

#### Overall Guidance

##### [720-20-15-9](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-9)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:ea53a2375880cd06556ec2e139a409ed9c96493d06abaef7f465add03b085b51

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The Multiple-Year Retrospectively Rated Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, see paragraph [720-20-15-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-1), with specific transaction exceptions noted below.

#### Transactions

##### [720-20-15-10](https://asc.understandingaccounting.org/asc/720/20/#720-20-15-10)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:07:22.977Z to 2026-09-10T01:07:22.977Z

Record version: sha256:07b75bdd1d182a0f2c0422d726205626ff6399b59969904dd14f53e86960bda8

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in the Multiple-Year Retrospectively Rated Contracts Subsections does not apply to the following transactions and activities:

1.  a
    
    A retrospectively rated insurance contract that is not a multiple-year contract or that could be cancelled by either party without further obligation.