-C-

CAC

See Combined Additional Coverage.

CALENDAR-ACCIDENT YEAR BASIS

A compilation of losses incurred arising out of accidents occurring during a 12 month period with premiums earned during the same 12 month period.

CALENDAR YEAR BASIS

A compilation of experience based on transactions recorded during a given calendar (12 months) year.

CALL PRICE

An announced value for redeeming securities prior to maturity.

CANCELLATION (CANC.)

The termination of a policy prior to the expiration date stated in the policy. A policy may be canceled at the request of the insured or by the carrier.

CANCELLATION, FLAT

Cancellation of an insurance policy as of its date of inception, without premium charge.

CANCELLATION, PRO-RATA

See Pro Rata Cancellation.

CANCELLATION REWRITE

The process of terminating a policy prior to the expiration date stated in the policy, and issuing a new policy to supersede the one terminated. Most changes in the insuring agreement between the carrier and insured are made by an endorsement (see Endorsement) attached to the policy, but the cancellation rewrite method may be used for this purpose and also to extend the time of the insuring agreement.

CANCELLATION, SHORT RATE

See Short Rate Cancellation.

CAPITAL SUM

The amount paid to an insured under an accident or disability policy if the insured suffers the loss of limb, sight or hearing.

CASH REFUND ANNUITY

An annuity which provides that upon the death of the annuitant before payments totaling the purchase price have been made, the excess of the amount paid by the purchaser over the total annuity payment received will be paid in one sum to designated beneficiaries.

CASH SURRENDER VALUE

The amount available to the owner when a policy is surrendered equals the reserve less a "surrender charge." In the later policy years, the cash surrender value usually equals or closely approximates the reserve value at time of surrender.

CASH VALUE [LIFE] (Universal Life and Uniflex)

Equals the Accumulation Account balance minus any policy loans and interest outstanding.

CASUALTY INSURANCE (CAS. INS.)

This is a broad term which includes nearly every form of insurance except life, fire and its allied lines and marine and inland marine.

CATASTROPHE COVER

An excess of loss form of treaty against multiple losses arising from a catastrophic event such as a conflagration, earthquake or windstorm. Catastrophe loss generally refers to the whole loss an insurance company experiences out of a single catastrophic event.

CATASTROPHE LOSS

A large number of claims resulting from the same cause.

Frequent or common causes of catastrophes are hail, flood, fire, earthquake and volcanic activity.

CAUSES OF LOSS

A new term in the Commercial Property forms that replaces the old term "perils."

C.C.D.

Comprehensive Car Damage.

CERTIFICATE OF INSURANCE

A memorandum stating that a policy has been issued. The certificate states the coverage afforded in general terms. A mortgagee usually insists upon holding the fire insurance policy on the mortgaged property, so a certificate of insurance is sent to the mortgagor.

CERTIFICATE OF INSURANCE [LIFE]

The written contract between a fraternal society and the member purchasing the insurance, stating the terms and full details of the agreement. Also a certificate, issued to the group policy owner for delivery to the persons insured under the group insurance policy, setting forth in summary form a statement of the essential features of the insurance protection to which they are entitled.

CESSION

The unit of insurance passed on to the reinsurers by the primary company, as distinct from the policy units of an insurance company. This may be the whole or a portion of a) single risks, or b) defined policies, or c) defined divisions of business as agreed.

CHARTERED LIFE UNDERWRITER (CLU)

A designation conferred by the American College, Bryn Mawr, PA, in recognition of the attainment of certain standards of education and proficiency in the art and science of life underwriting. The right to the designation is open to the agent, or company employee who meets the preliminary requirements and can pass the series of examinations.

CHARTERED PROPERTY CASUALTY UNDERWRITER (CPCU)

A designation awarded to qualified persons who successfully pass a series of ten written examinations involving, in addition to insurance knowledge, the broad range of related business subjects such as accounting, economics, law, management and finance. Offered by the Insurance Institute of America.

CIVIL AUTHORITY CLAUSE

A clause in a fire policy which protects the insured in case any civil authority, such as a fireman, policeman, etc., has to damage property in order to check the spread of a fire.

CIVIL COMMOTION

A riot.

CLAIM

A demand or notice of a right or alleged right, of any party to recover from an insurance company on account of an alleged loss resulting from a contingency or cause covered by the policy; or a demand by a third party against an insured on account of loss, damage, or injury caused, or alleged to have been caused by the insured and alleged to be covered by the insured's policy.

CLAIMANT

Strictly speaking, anyone who makes a claim. However, the term is usually applied to a third party making a claim against our policyholder.

CLAIMS MADE

Policies on a "claims made" basis cover claims reported during the policy terms, regardless of the date of occurrence. In contrast, "occurrence" policies cover claims which occur during the policy term, regardless of when reported.

CLAIMS REPRESENTATIVE

A person whose duty is to determine whether or not a loss is covered under the terms of a policy; and if so, how much the company should pay. Can be a Field or Branch Claims Office Representative.

CLASS RATES

Rates developed for a line of property/casualty business based on the concept of what is average for that particular class. Rates are then deviated for other factors such as the public protection class and, when applicable, individual risk characteristics.

CLASSIC CAR

A car under 25 years old, but whose resale value is much greater than Actual Market Value, upon which a Stated Value or Actual Value policy is written.

CLASSIFICATION

The underwriting or rating group into which a particular risk must be placed for proper pricing of insurance underwritten.

CLAUSE

Any specific part or provision of a policy or endorsement.

CLEAN-UP-FUND

One of the basic uses for life insurance. Also called "final expenses fund." A reserve to cover costs of last illness, burial, legal and administrative expenses, miscellaneous outstanding bills, etc.

CLERICAL OFFICE EMPLOYEES

Those employees whose duties are confined to keeping the books or records of the insured, conducting correspondence, or who are engaged wholly in office work where such books or records are kept or where such correspondence is conducted, having no other duty of any nature in or about the employer's premises.

CLIENT

A person who secures insurance through an agent or broker and depends on the agent or broker for help and advice.

CLOSE CORPORATION

An incorporated company whose entire stock is owned by a small group of persons with none available to the general public.

CODING

The process of inputting numerical and/or alphabetic data to represent policy information.

COINSURANCE CLAUSE

A clause which requires the policyholder to maintain at all times a certain percentage of insurance to the actual value of the property insured. If they fail to maintain the required percentage, they have to pay part of every loss themselves.

COINSURER

A carrier that shares the risk sustained under a policy of insurance. In some cases, an insured.

COLLATERAL

Anything of value pledged with the surety to secure it against loss through default of the principal who supplies the collateral.

COLLATERAL ASSIGNMENT

The assignment of a policy to a creditor as security for a debt. Under a collateral assignment, the creditor is entitled to be reimbursed out of policy proceeds for the amount owed. The beneficiary is entitled to any excess of policy proceeds over the amount due the creditor in the event of the insured's death.

COLLISION

A violent meeting of two or more objects (or persons.)

COLLUSION

A secret agreement between two or more persons to defraud a third party. Collusion with intent to defraud an insurance company voids the coverage.

COMBINATION COMPANY

A life insurance company whose agents sell both Weekly Premium and Ordinary Life insurance.

COMBINATION FORM

An insurance policy which covers against several hazards or types of exposure under the terms, conditions and insuring agreements of one insurance policy.

COMBINED ADDITIONAL COVERAGES (CAC)

Means theft, earthquake, hail, explosion, riot, falling objects, malicious mischief, or vandalism, etc.

COMMERCIAL AUTOMOBILE

Any automobile other than one rated and classified as a private passenger automobile, or farm truck up to 4 tons load capacity (not GVW).

COMMERCIAL BLOCK

See Special Personal Property Coverage.

COMMERCIAL INSPECTION REPORT

The investigation report made by an organization which specializes in obtaining information regarding persons who desire insurance, employment, credit, etc.

COMMERCIAL PACKAGE POLICY (CPP)

A policy containing two or more of the following coverage parts: Commercial Property, Commercial General Liability, Commercial Crime, Commercial Inland Marine, Boiler and Machinery or Commercial Auto.

COMMERCIAL PROPERTY COVERAGE (C.P.C.)

See Special Personal Property Coverage.

COMMISSION

That portion of the premium paid to the agent as compensation for his/her services.

COMMISSION, CONTINGENT

A commission, the amount of which is dependent on the profitability of the business written by an agent.

COMMISSIONERS' STANDARD ORDINARY TABLE (CSO)

A table of mortality based on intercompany experience over a period of time which is legally recognized as the mortality basis for computing maximum reserves on policies issued within past years. Since 1966, use of the 1958 CSO Table has been mandatory for the valuation of all policies issued.

COMMON CARRIER

An individual or corporation who offers its services to the public for the carrying of persons or property from one place to another for payment.

COMMON CARRIER'S LIABILITY

A common carrier is liable for goods at all times unless the injury results from an act of God, the shipper's negligence or a public enemy.

COMMON DISASTER CLAUSE

A clause sometimes added to a policy which is designed to provide an alternate beneficiary in the event that the insured and the original beneficiary meet death as the result of a common accident.

COMMON LAW

Law based upon custom and usage of the courts during the past several hundred years, as distinguished from Statute Law which is passed by the State Legislatures or Congress.

COMMON LAW DEFENSES

Pleas, which may defeat an injured employee against his/her employer in cases where Workers' Compensation or Employers' Liability Statutes do not apply. They are:

1. Contributory negligence on the part of the employee

2. Assumption of risk by the employee

3. Injury caused by a fellow employee

In most states, if an employer is permitted to reject the Compensation Law, and does reject it, they lose their common law defenses.

COMMUTED VALUE

The single sum which-represents the present worth, or equivalent value, of a stipulated number of installments payable at fixed future dates. The commuted value is computed on the basis of a given rate of interest. Often called "discounted value."

COMPARATIVE NEGLIGENCE

Liability based on the degree of fault an individual is responsible for in the loss. Each person is liable for their portion of damage. Recovery is based on the other party's degree of comparative fault.

COMPENSATION

Shortened expression for workers' compensation insurance.

COMPREHENSIVE COVERAGE (COMP. COV.)

This means having a wide scope, including many things. It does not mean including everything. Thus, a comprehensive liability policy is not an all-risk liability policy; there are a number of exclusions. However, it does provide far more protection than a scheduled policy.

Comprehensive Fire and Theft does not cover all damage to the car; there are a few exceptions and exclusions. But it does cover any extraordinary occurrences which the average person would never think of until they take place.

COMPREHENSIVE PERSONAL LIABILITY (CPL)

This coverage protects individuals and families from liability for nearly all types of accidents occurring in their personal lives.

COMPULSORY ISSUANCE

Any form of insurance required by law.

COMPUTER

A programmable electronic device that can store, retrieve, and process data.

CONCEALMENT

Withholding material facts concerning a risk or a loss. Concealment usually voids coverage.

CONCURRENT INSURANCE

Two or more policies covering the same interest in exactly the same manner are said to be concurrent. It is extremely important that all fire policies covering the same risk should be concurrent as to forms and clauses.

CONDITION

A clause in an insurance contract that defines an event and its legal consequence under the contract.

CONDITIONAL RECEIPT

A receipt given to an applicant in exchange for an initial premium, sufficient to bind the company under certain circumstances.

CONDITIONAL SALE

A sale in which transfer of title to the buyer is made dependent upon the performance of some condition, usually the payment of weekly or monthly installments until the full purchase price has been paid.

CONDITIONS

These are provisions of an insurance policy which state either the rights and duties of the insured or the rights and duties of the insurer.

CONDOMINIUM UNIT

A condominium building is a multi-unit structure with each unit owner holding the title to their own unit, plus an interest in the common elements of the building. Common elements include exterior walls, roof, floor, plumbing, electrical heating and air-conditioning. Ownership of the property and the specifications for insurance are usually outlined in the Condominium Association Agreement.

CONDOMINIUMS

A system of separate ownership of individual units in a multiple unit building or buildings. Basically, in a condominium, each purchaser of a unit becomes the owner of that unit and acquires an individual interest with all other unit-owners in the common elements or areas of the building.

CONSEQUENTIAL LOSS

A loss which results indirectly from a hazard insured against. For example, loss of rent or rental value if a building burns.

CONSERVATION

Efforts extended by agents and companies to keep insurance in force. Conservation consists not only in the prevention of lapses, but also in the reinstatement of business that already has lapsed.

CONSIDERATION

An exchange of something of value between two parties. This is one of the requirements of a valid contract. Payment of the premium is an applicant's consideration. The company's promise to pay proceeds is its consideration.

CONSTRUCTIVE TOTAL LOSS

A partial loss of such severity that the cost of repairing the damaged property plus salvage value is more than the property is worth in a repaired state.

CONTENTS RATE

The fire insurance rate applicable to the contents of a building as differentiated from the rate on the building itself.

CONTESTABLE PERIOD

The period of time during which the company may contest a claim on a policy as a result of misleading or incomplete information furnished with the application. (See Incontestable Clause.)

CONTINGENCY RESERVES

In order to insure a sound margin of safety, most companies reserve a portion of their surplus to cover possible investment or mortality losses and operating contingencies that may arise. Such funds are listed in the financial statement as "contingency reserves."

CONTINGENT BENEFICIARY

See Beneficiaries.

CONTINGENT LIABILITY

Protects corporations and partnerships against accidents to persons other than employees; for those whose acts the corporation or partnership may become liable through the operation of applicable law. Also applies to Contingent Liability from enforcement of building codes in property insurance.

CONTINUITY OF COVERAGE CLAUSE

A clause contained in a new fidelity bond, which takes the place of another bond, and agrees to pay losses that would be recoverable under the first bond except that the discovery period has expired.

CONTRA

Opposite, complement.

CONTRACT

An agreement entered into by two or more persons under which one or more of them agree, for a consideration, to do or refrain from doing acts in accordance with the wishes of the other party(s).

CONTRACT [LIFE]

The chief requirements for the formation of a valid contract are: (1) parties having legal capacity to contract; (2) mutual assent of the parties to a promise, or set of promises, generally consisting of an offer made by one party and an acceptance thereof by the other; (3) a valuable consideration; (4) the absence of any statute or other rule making the contract void; and (5) the absence of fraud or misrepresentation by either party. A life insurance policy meeting these requirements qualifies as a contract.

CONTRACT CARRIER

A transportation company which carries the goods of only certain customers and not the public in general as in the case of a common carrier.

CONTRACTUAL LIABILITY

Liability assumed under any contract or agreement. This kind of liability is excluded by the automobile liability policy and most other liability policies.

CONTRIBUTION CLAUSE

See Coinsurance Clause.

CONTRIBUTORY NEGLIGENCE

Lack of care by the injured person when such lack of care helps to cause the accident. Under common law, contributory negligence bars the right to recover damages.

CONVERSION

The wrongful use or disposition of another person's property by someone who is in lawful possession of it.

CONVERSION PRIVILEGE

A provision which allows the policy owner, before expiration of an original policy, to elect to have a new policy issued. Conversion may be effected at attained age (premiums based on the age attained at time of the conversion) or at the original age (premium based on age at time of original issue). If original age is selected, the policy owner must pay the difference in premiums between the old and the new policies and any interest due for the time the old policy has been in force. The conversion privilege also generally is included in group insurance. It permits employees who are terminated for any reason to convert their certificates to permanent insurance at their attained ages.

CONVERTIBLE TERM

Some term contracts provide that they may be converted to more permanent forms of insurance without medical examination if the conversions are made within a limited period as specified in the contracts. The conversion may be made as of the original age or as of the attained age of the insured at the time of conversion.

COOPERATIVE

A form of real estate ownership in which a non profit corporation owns a multiple family project with each stockholder having a right to occupy a designated portion of the housing.

CORPORATE FORM

Corresponding to corporation, e.g., any group of persons treated by law as an individual or unity having rights or liabilities, or both, distinct from those of the persons composing it.

CORPORATION INSURANCE

See Business Insurance.

CORRIDOR [LIFE]

The minimum amount of pure insurance protection that must be maintained in the policy at all times. This enables the policy to keep its "life insurance" status to qualify for favorable tax treatment.

CO-SURETYSHIP

Two or more surety companies jointly become sureties on a bond, or legally liable for the debt or default of each other.

COUNTERSIGNATURE

Signature of a representative validating an insurance contract.

COUNTRYWIDE RATES

The section of each division of the Commercial Lines Manual that contains the rates and minimum premiums to be used with the Countrywide Rules. It does not apply in certain states because of the nature of the rating law.

COUNTRYWIDE RULES

The section of each division of the Commercial Lines Manual that provides the rules and rating factors needed to write coverage. It does not contain rates or minimum premiums.

COUPON POLICY

See Guaranteed Dividend Policy.

COURSE OF CONSTRUCTION

See Builder's Risk.

COVERAGE

The specific protection provided by the policy against the results of the hazards insured against.

COVERAGE PART

Comprises the declarations, forms and endorsements used for each commercial lines.

COVERED EXPENSES

Health care expense incurred by an insured that entities the insured to the payment of benefits under a health insurance policy.

COVERED PERSON

The individual named on the face sheet, the spouse, and any family member.

C.P.C.

See Special Personal Property Coverage.

CREDIBILITY

A volume of experience sufficient to justify belief in a given set of statistics.

CREDITOR LIFE INSURANCE

Sometimes called Credit Life Insurance. Usually written as Decreasing Term on a relatively small decreasing balance installment loan. The loan may reflect direct borrowing, or a balance due for merchandise purchased on the installment plan. In event of the borrower's death, the balance due is canceled. Similar to Mortgage insurance, except that, generally (1) amounts are smaller, (2) periods covered are shorter, (3) creditor is named beneficiary instead of member of borrower's family, and (4) written non-medically for certain ages. Sometimes written on a group basis; sometimes on an individual basis.

CROSSBAR

A bar of solid dimensioned wood or iron placed horizontally across the inside of a door, the ends of the bar being held in sockets or supports securely bolted in place. The bar should preferably be permanently fastened at one end and padlocked at the other.

CRT

The Cathode Ray tube in a television set or video display monitor.

C.S.L.

Combined Single Limits of liability coverage. The same limit applies to Bodily Injury (per person and per occurrence) and Property Damage coverage combined.

C.S.L.A.

Combined Single Limit Aggregate. A combined single limit for all coverages on a policy (e.g., BI/PD, F&T, Collision and Cargo). Most commonly used on Gross Receipts and Retrospective type policies.

CUSTODIAN

Means (1) the insured if an individual; (2) a member of the firm of a co-partnership; (3) any executive officer of a corporation; (4) any person in the regular employ of the insured who is authorized to act as paymaster, messenger, collector, cashier, clerk or salesperson, and who, while so acting, may have the care and custody of the insured property, and who is not a watchman, porter or janitor.