Insurance Glossary

C-SHARE VARIABLE ANNUITIES

A form of variable annuity contract with no upfront sales charges or surrender fees. Contract owners have full liquidity and can withdraw funds at any time without penalty.

CAPACITY

The amount of insurance risk an insurer or the industry as a whole can assume based on available capital and financial strength. Capacity fluctuates with losses, investment returns, reinsurance availability, and capital levels.

CAPITAL

The financial resources available to an insurer, including shareholder equity or retained earnings, used to absorb losses and support underwriting risk.

CAPITAL MARKETS

Financial markets where equity and debt instruments such as stocks and bonds are traded.

CAPTIVE AGENT

An insurance agent who represents only one insurance company and is contractually restricted from placing business with other insurers.

CAPTIVES

Insurance companies formed and owned by non-insurance businesses to insure their own risks, serving as a form of self-insurance.

CAR YEAR

A standard measurement in auto insurance equal to 365 days of coverage for a single vehicle.

CASE MANAGEMENT

A coordinated approach to managing medical care designed to improve patient outcomes while controlling healthcare costs.

CATASTROPHE

A single event or series of related events causing insured property losses exceeding a defined threshold, currently $25 million.

CATASTROPHE BONDS

Risk-linked securities that transfer catastrophe risk to investors and provide insurers with an alternative form of reinsurance.

CATASTROPHE DEDUCTIBLE

A large deductible, usually a percentage of property value, that applies when a major natural disaster occurs.

CATASTROPHE FACTOR

A statistical measure estimating the probability of catastrophic loss based on historical disaster data.

CATASTROPHE MODEL

Computer-based systems that combine historical disaster data with current property and demographic information to estimate potential catastrophe losses.

CATASTROPHE REINSURANCE

Reinsurance that protects insurers against extreme losses caused by major natural or man-made disasters.

CELL PHONE INSURANCE

Optional insurance coverage that protects mobile devices against loss, theft, or accidental damage.

CHARTERED FINANCIAL CONSULTANT (ChFC)

A professional designation awarded by The American College to individuals who complete advanced financial planning education.

CHARTERED LIFE UNDERWRITER (CLU)

A designation earned through advanced study in life insurance, taxation, investments, and estate planning.

CHARTERED PROPERTY AND CASUALTY UNDERWRITER (CPCU)

A professional designation requiring examinations and experience in property and liability insurance.

CLAIMS-MADE POLICY

An insurance policy that covers claims reported during the policy period or within a specified timeframe after expiration.

COBRA

A federal law allowing employees and their dependents to continue group health insurance coverage after job loss, provided the full premium is paid.

COINSURANCE

A provision requiring the insured to share in a portion of covered losses, either by maintaining adequate property coverage or paying a percentage of healthcare costs.

COLLATERAL

Property pledged as security for a loan or financial obligation and subject to seizure in the event of default.

COLLATERAL SOURCE RULE

A legal rule preventing evidence of compensation from other sources from being introduced in liability lawsuits.

COLLISION COVERAGE

Auto insurance coverage that pays for damage to the insured vehicle resulting from a collision.

COMBINED RATIO

A financial metric showing the percentage of premium income spent on claims and expenses. A ratio under 100% indicates underwriting profitability.

COMMERCIAL GENERAL LIABILITY INSURANCE (CGL)

A comprehensive liability policy covering bodily injury, property damage, and related risks for businesses.

COMMERCIAL LINES

Insurance products designed for businesses, including liability, property, professional, and workers compensation coverage.

COMMERCIAL MULTIPLE PERIL POLICY

A package policy combining property, crime, boiler and machinery, and liability coverages.

COMMERCIAL PAPER

Short-term unsecured debt issued by corporations to finance operating expenses.

COMMISSION

Compensation paid to insurance agents or brokers as a percentage of the policy premium.

COMMUNITY RATING LAWS

State health insurance regulations requiring insurers to charge the same premium to all insureds regardless of age or health status.

COMPETITIVE STATE FUND

A state-operated insurer that competes with private companies to provide workers compensation coverage.

COMPLETED OPERATIONS COVERAGE

Liability coverage protecting businesses against claims arising from completed work or services.

COMPREHENSIVE COVERAGE

Auto insurance coverage for damage caused by non-collision events such as theft, fire, vandalism, or natural disasters.

COMPULSORY AUTO INSURANCE

State-required minimum auto liability insurance necessary to legally operate a vehicle.

CONTINGENT LIABILITY

Liability for damages caused by individuals who are not employees but whose actions create legal responsibility.

COVERAGE

Another term for insurance protection.

CRASH PARTS

Vehicle body parts commonly damaged during automobile accidents.

CREDIT

The ability to borrow money or defer payment with the promise to repay in the future.

CREDIT DERIVATIVES

Financial instruments used to transfer credit risk from one party to another.

CREDIT ENHANCEMENT

Methods used to improve a bond’s credit rating and reduce borrowing costs, often through insurance guarantees.

CREDIT INSURANCE

Coverage protecting businesses against losses due to customer insolvency or failure to pay debts.

CREDIT LIFE INSURANCE

Life insurance designed to pay off a borrower’s outstanding loan balance if the borrower dies.

CREDIT SCORE

A numerical measure of creditworthiness based on an individual’s credit history and financial behavior.

CRIME INSURANCE

Coverage protecting against losses from burglary, robbery, theft, and related criminal acts.

CROP-HAIL INSURANCE

Insurance coverage protecting farmers against crop damage caused by hail, fire, or lightning.