Cancellation; flat, pro rata, or short rate
In a flat cancellation the full premium is returned to the insured. A pro rata cancellation means the insurer has charged for the time the coverage was in force. Short rate cancellation entails a penalty in excess of pro rata for early termination.
Care, custody, or control
An expression common to liability insurance contracts. It refers to an exclusion in the policy eliminating coverage for damage to property of others that is in the insured's care, custody, or control. The insured has a bailee relationship to the property, in other words, making the insured liable for the care of the property beyond damage caused by negligence. A bailees floater is often used to cover the insured's obligation for the care of such property.
Name given to an insurer's practice of nonselectively writing business in order to generate greater amounts of cash for investment purposes.
The type of insurance concerned with legal liability for losses caused by bodily injury to others or physical damage to property of others.
Causes of loss forms
1he reference is commonly to property insurance contracts and the form in question details those perils to which the coverage will respond. Though any property insurance contract must name the perils it intends to cover, for example, crop hail, earthquake, or perils of transit, the most commonly used general forms are the basic and broad named perils forms and the special form. In contrast to the named perils forms that list specific perils for coverage, the special form contract covers, simply, risk of direct physical loss and relies on exclusions to delimit and define the coverage.
Certificate of insurance
A written description of insurance in effect as of the date and time of the certificate. The certificate does not ordinarily confer any rights on the holder, that is, the issuing insurer does not promise to inform the holder of change in or cancellation of coverage.
A type of public liability insurance that responds only to claims for injury or damage that are brought (to the insurer) during the policy period (or during a designated extended reporting period beyond expiration). This development was in response to long tail claims, such as those related to asbestosis injury, carrying over many years and multiple layers of coverage limits. However, most public liability policies are written on an occurrence basis, covering injury or damage occurring during the policy period even if a claim is brought months or even years later.
A provision or condition affecting the terms of a contract. Coinsurance, cancellation, and subrogation clauses are typical insurance contract clauses.
Clear space clause
A clause requiring that insured property, such as stacks of lumber, be stored at some particular distance from each other or from other property.
Generally, those costs associated with the clean-up of pollution.
Coinsurance refers to the bargain between commercial property owners and the insurance industry. This clause in property policies encourages the property owner to gauge coverage needs by possible, not probable, maximum loss. With $1 million at risk but a probable maximum loss of S100,000, for example, the property owner would probably buy S100,000 insurance and bank on avoiding the larger disaster. The bargain offered by the insurance industry is a reduced rate per $100 of coverage if the owner agrees to buy coverage at a specified relation (80% commonly) to value (to possible maximum loss in other words). If the insured accepts the bargain but events prove the amount of insurance is inadequate to the stated coinsurance percentage, the insured becomes coinsurer in the same ratio as the amount of insurance bears to the amount that should have been carried.
A property insurance peril, subject to its own specific agreement in property policies, that otherwise insure on an open perils basis.
Collision damage waiver
When paired with an auto rental agreement, the rental car company agrees to waive the renter's responsibility for any physical damage to the rental car in exchange for an additional payment. Sometimes called a loss damage waiver.
A type of physical damage insurance available for automobiles. Coverage is triggered when damage is caused by striking against another object.
A secret agreement between persons to defraud another, e.g., an insured driver of an automobile and his passenger may misrepresent the facts of an accident in order to have monies paid to the passenger under the insured's automobile insurance policy.
The sum of an insurance company's loss ratio and expense ratio; used as an indicator of profitability for insurance companies.
Combined single limit (CSL)
Liability policies commonly offer separate limits that apply to bodily injury claims and to claims for property damage. 50/100/25 is shorthand under such a policy for $50,000 per person/$100,000 per accident for bodily injury claims and S25,000 for property damage. A combined single limits
policy might cover for $100,000 per covered occurrence whether bodily injury or property damage, one person or many.
Commercial blanket bond
A bond that covers the named insured against employee dishonesty. A single coverage amount applies to any one loss, regardless of the number of employees involved.
Commercial general liability (CGL)
The CCL policy is an ISO form widely used to provide commercial enterprises with premises and operations liability coverage, products and completed operations insurance, and personal injury coverage. Premises medical payments coverage is often included as well.
A distinction marking property and liability coverage written for business or entrepreneurial interests as opposed to personal lines.
Commercial property policy
An alternative title for the commercial building and personal property coverage form.
The part of a building or premises either owned by or used by all tenants or tenant-owners of the building (e.g., the swimming pool at a condominium).
Comprehensive Loss Underwriting Exchange
Commonly referred to as a CLUE report, this provides accident or loss history of individuals including claim payments and coverages. Used by agents and carriers to determine eligibility and premiums for coverage.
Comprehensive personal liability insurance
Provides individuals and family members with protection from legal liability for most accidents caused by them in their personal lives. Note that any legal liability claims submitted while in the course of business activities are not covered.
Comprehensive physical damage (automobile)
Traditional name for physical damage coverage for losses by fire, theft, vandalism, falling objects, and various other perils. On personal auto policies, this is now called other than collision coverage. On commercial forms, it continues to be called comprehensive coverage.
Computer fraud coverage
Covers loss if money, securities, or other property is stolen or transferred through computer fraud.
Covers computer equipment and peripherals beyond the normal coverage provided in homeowner's insurance policies, typically between $1,000 and $3,000. Some policies are also designed to cover damage and/or theft of portable equipment, such as laptop computers, and even the costs of data recovery.
When two perils contribute concurrently to a property loss, one excluded and the other not, the effect of the exclusion tends to be voided in a policy covering on an open perils basis. A concurrent causation exclusion is found in current forms.
One of the obligations of either the insured or the insurer imposed in the insurance contract.
Type of dwelling where the structure is owned jointly, while spaces within the structure are owned individually. Special property and liability forms cover the interests of the condominium association and of unit owners.
Condominium association coverage
A policy that provides coverage for the building, elements of the building, and liability needs for those who collectively own a piece of property.
Condominium unit owner's form
A policy that provides coverage for the personal property, owned elements of a unit, and liability for the individual unit owner.
An indirect consequence of direct loss to property. Business income may be lost when a store burns down, or frozen goods may spoil when a windstorm causes an interruption of power. Consequential or indirect loss is not generally insured by policies covering direct damage (i.e., by fire or wind as in these examples), but insurance is readily obtainable separately for most such consequential exposures - business income coverage being among the most common coverage.
Liability imposed on a business entity (individual, partnership, or corporation) for acts of a third party for which the business entity is responsible.
A type of bond designed to guarantee the performance of obligations under a contract. These bonds guarantee the obligee that the principal will perform according to the terms of a written contract. Construction contracts constitute most of these bonds. Contract bonds protect a project owner by guaranteeing a contractor's performance and payment for labor and materials. Because the contractor must meet the surety company's pre-qualification standards, construction lenders are also indirectly assured that the project will proceed in accordance with the terms of the contract.
Contractors equipment floater
Coverage designed for the special needs of contractors to insure their machinery and other equipment.
Liability that does not arise by way of negligence but by assumption under contract. For example, in certain leases, a tenant may assume a landlord's liability to others for unsafe conditions on the premises. Some such assumptions are covered automatically under the Commercial General Liability form.
An accident, including accidental damage by forces of nature, that brings a contract of insurance into play.
The number produced by an analysis of an individual's credit history. Studies have shown that credit history provides an indicator of the likelihood of an auto insurance loss. Some companies use credit scores as an insurance underwriting and rating tool.
A broad category covering loss of property through criminal activity – from employee dishonesty to burglary and robbery, computer fraud, and forgery.