Risk & Insurance Glossary - C


CANCELLATION – The termination of an insurance policy or bond, before its expiration, by either the insured or insurer. Almost invariably the contract states the type of notice necessary before such cancellation becomes effective and how the return premium, if any, is to be calculated, short rate or pro rata.
CAPACITY – The amount of insurance available for anyone type of exposure.
CAPTIVE INSURANCE COMPANY – An insurance company set up to insure the risks of its owner, whether it be an individual entity or an association.
CARGO INSURANCE – Insurance covering goods being transported, as on ships, motor trucks, railroads, or airplanes.
CARRIER – (1) An insurance company. (2) In transportation insurance, the entity that "carries" goods, such as truckers or the railroad.
CASUALTY INSURANCE – A class of insurance made up of a variety of sub–classes principally concerned with insurance against loss due to legal liability to third persons, but comprising also several unrelated lines.
CATASTROPHE – An event that causes a loss of extraordinary large amount.
CEDE – An insurer reinsuring some of an insurance line it has underwritten with a reinsurer. The primary insurer "cedes" a part of its business to the reinsurer.
CERTIFICATE OF INSURANCE – It is evidence that an insurance policy has been issued, and shows the amount and type of insurance provided.
CIVIL COMMOTION – An uprising of people creating a prolonged disturbance.
CIVIL LAW – The branch of law that provides a means to settle disputes between parties. 
CHATTEL – Personal or movable property.
CLAIM – (1) A demand by a party suffering loss to recover such loss from the party causing the loss, his insurance carrier, or the insurance carrier of the party suffering the loss. (2) The estimated or actual amount of loss.
CLAIMANT – One who makes a claim.
CLAIMS-MADE POLICY – A policy providing liability coverage only if a written claim is made during the policy period or any applicable extended reporting period.
CLASS RATE – The premium rate applicable to a specified class of risk.
CLASSIFICATION – The underwriting or rating group into which a particular risk must be placed. Pertains to type of business, location and other factors.
CLAUSE – A provision of an insurance contract or an endorsement to the contract.
CLEAR SPACE CLAUSE – A provision in a fire insurance policy requiring that a certain area be clear of buildings or inflammable material surrounding the property insured.
COINSURANCE CLAUSE – A policy provision under which the insured shares in losses in the proportion that his insurance is less than a specified percentage of the value of the property insured.
COINSURER – One who shares the loss sustained under an insurance policy or policies.
COLLISION INSURANCE – Insurance against loss to insured property caused by striking or being struck by an object; includes loss caused by upset.
COLLUSION – A conspiracy between two or more parties to defraud another.
COMBINATION POLICY – An insurance policy, or more often, two policies printed on one conjoined form, providing coverage against several hazards under one document.
COMBINED SINGLE LIMIT (CSL) – The maximum amount payable under the policy whether for loss to one party or more than one party.
COMMISSION – A method of compensating agents and brokers based on a percentage of premiums they produce.
COMMON CARRIER – An entity that offers its services, for a fee, to the public for carrying persons or property from one place to another.
COMMON LAW – Law based upon custom and usage as established through court cases. (See also STATUTORY LAW)
COMPANY – In insurance, the insurance company.
COMPARATIVE NEGLIGENCE – A method of reimbursing parties who suffer loss based upon the ratio of each party's negligence. (See also CONTRIBUTORY NEGLIGENCE)
COMPLETED OPERATIONS INSURANCE – A form of liability insurance which covers accidents arising out of operations which have been completed or abandoned provided the accident occurs away from premises owned, rented, or controlled by the insured. This coverage is commonly endorsed to General Liability Policies.
COMPLETION BOND – A bond guaranteeing the construction of an improvement in connection with which, and prior to completion of which, a mortgagee or other lender lends money to the owner.
COMPOSITE RATE – A special, "single" rate based upon a measure of exposure which will reasonably reflect the variations in the insurable hazards covered for a particular insured. Bases of exposure to which the composite rate is applied include payroll, sales, receipts and contract cost. This is often called an "average rate" in property Insurance.
COMPREHENSIVE DAMAGE – In automobile insurance, damage to an automobile other than collision or upset. Examples are automobile damaged by a falling tree, automobile window breakage, theft, etc.
COMPREHENSIVE DISHONESTY, DISAPPEARANCE, AND DESTRUCTION INSURANCE – A broad form of insurance available to business risks covering optionally one or more of eight separate types of loss: loss caused by dishonesty of employees; loss of money or securities from within the premises; loss of money or securities while being conveyed by a messenger outside the premises; loss of securities from a safe deposit box; loss caused by forgery of outgoing instruments; loss caused by forgery of incoming instruments; loss of merchandise caused by burglary; and loss of merchandise or equipment caused by theft.
COMPREHENSIVE GENERAL LIABILITY INSURANCE – Insurance against loss due to all claims against the insured for damages arising from his business premises or operations, except those arising from motor vehicles away from the premises, and other stated exclusions.
COMPREHENSIVE INSURANCE – Insurance that covers, under one insuring agreement, all hazards within the general scope of the contract, except those specifically excluded. Sometimes, insurance, under one policy, against a variety of named perils.
COMPREHENSIVE PERSONAL LIABILITY INSURANCE – Insurance against loss due to all claims for damages arising from personal, non–business premises or conduct, except those arising from automobiles away from the premises, and other stated exclusions.
COMPULSORY INSURANCE – Any form of insurance that is required by law.
CONCEALMENT – Withholding of material facts from the insurer in negotiating or making application for insurance or in making a claim. Concealment may void an insurance contract.
CONCURRENT INSURANCE – Two or more insurance policies covering the same property under the same terms and conditions.
CONDITIONS – A part of an insurance policy that contains provisions similar to most policies, such as Notice of Loss, Cancellation, Audit, etc.
CONFLAGRATION – A fire extending beyond a single risk and over a wide area. Sometimes defined in terms of amount of loss.
CONFLAGRATION AREA – An area where a large fire is likely to consume all the buildings located within it.
CONSEQUENTIAL LOSS – A loss not directly caused by a peril, but caused indirectly as a consequence of that peril. For example, spoilage of frozen foods would be a consequential loss of a power failure.
CONSIDERATION – In insurance, consideration is usually the payment of premium. It is an essential element of a contract. Without it, parties to the contract are not bound. Agreement or implied agreement to pay a premium also constitutes consideration.
CONSTRUCTIVE TOTAL LOSS – A loss of sufficient amount to make the cost of salvaging or repairing the property equal to or greater than the value of the property when repaired; under United States marine law, to make the cost exceed 50 percent of the repaired or salvaged value.
CONTINGENT BENEFICIARY – One named in a policy to receive the proceeds in event the primary beneficiary does not survive.
CONTINGENT BUSINESS INTERRUPTION INSURANCE – Business interruption insurance against loss to the insured caused by an accident to property of one other than the insured; e.g., a supplier of raw material.
CONTINGENT LIABILITY – The liability imposed upon an individual, corporation or partnership because of the negligence of persons, other than employees, for whose acts the first party may be held responsible under the law.
CONTRACT – An insurance policy legally qualifies as a contract if it has a mutual agreement, is between competent parties, there is a valid consideration, and has a legal subject matter.
CONTRACT CARRIER – An entity that offers transport services, for a fee, those shippers and travelers with whom they have contracts.
CONTRACT BOND – A guarantee of the faithful performance of a construction contract and the payment of all labor and material bills related to it. In those situations where two bonds are required, one to cover performance and the other to cover payment of labor and material, the former is known as a "performance bond," and the latter as a "payment bond."
CONTRACTUAL LIABILITY – Liability assumed by contract or agreement, and which would not otherwise exist. Coverage for this exposure may be endorsed to liability policies.
CONTRACTUAL LIABILITY INSURANCE – Insurance against loss under a contractual liability agreement. May be added by endorsement to a liability policy.
CONTRIBUTION – The equitable distribution of a loss among insurers if more than one policy is involved.
CONTRIBUTORY NEGLIGENCE – Under the law of contributory negligence, no recovery is possible if the injured person has in any degree contributed to the accident. (See also COMPARATIVE NEGLIGENCE)
CONVERSION – Wrongful taking of property entrusted to a person's care.
CONVERTIBLE TERM – A provision whereby a more permanent form of insurance may be elected without a medical examination if the request is made within the specified time and an additional premium is paid.
COSURETY – One of a group of surety companies that participate in underwriting a surety bond. The obligation is joint and several, but common practice provides a stated limit of liability for each surety.
COUNTERSIGNATURE – The signature of a licensed agent or representative on a policy in order to validate the contract.
COURT BOND – A bond required of a litigant as a condition of pursuing his rights in court.
COVER NOTE – A document similar to a binder, issued usually by a reinsurer as evidence of coverage.
COVERAGE – The extent of the insurance afforded under an insurance contract. Often used to mean insurance or insurance contract.
CREDIBILITY – The degree of reliability that can be placed on a statistically forecasted event.
CREDIT INSURANCE – Insurance that protects against losses arising from bad debts, etc.
CREDIT REPORT – A report made by an independent individual or organization who has investigated the financial standing, reputation, and record of the party being investigated.
CRIMINAL LAW – The branch of the law that imposes penalties for wrongs against society.CROP INSURANCE – Insurance against loss due to failure of or damage to crops.
CROSS LIABILITY – Liability between two different insureds of a single liability insurance policy. A "cross liability" clause says that each insured will be treated as though the policy applied separately to him.