|
CANCELLATION
- Termination of an insurance coverage during the policy
period by the voluntary act of the insurance company or
insured, effected in accordance with provisions in the
contract or by mutual agreement.
CATASTROPHE - A sudden, great disaster.
CERTIFICATE OF INSURANCE - Written document stating that
insurance is in effect. Includes particulars of the
policy’s coverage.
CERTIFICATE OF SUBSTANTIAL COMPLETION - Document stating
that, in the engineer’s opinion, work is sufficiently
complete, in accordance with contract documents, for
work to be utilized for intended purposes.
CERTIFIED COPY - Reproduction of a document, that the
authority having custody of the original signs and
attests as a true, genuine and authentic copy.
CLAIMS MADE BASIS - Provision in some insurance and
reinsurance contracts covering only claims made during
term of the contract.
CLAUSE - A term used to identify a particular part of a
policy or endorsement.
COINSURANCE
- In property insurance, a clause under which the
insured shares in losses to the extent that he is
underinsured at the time of loss.
A condition in a policy where the insured is required to
maintain insurance to a set percentage (80%, 90% or
100%) of the value of the building. The sum insured for
the building can be established using either replacement
cost or actual cash value (defined as today’s
replacement cost minus depreciation). Remember that for
insurance purposes, the replacement value always refers
to cost to repair, replace or rebuild the destroyed
property to the same construction & occupancy it was
prior to the loss. By-laws insurance is required to
cover any costs associated with demolition, debris
removal or increased cost to comply with the building or
municipal codes.
When an insured accepts a co-insurance clause, he has
already accepted a portion of the risk in a total loss
situation, because the insurance company will never pay
more than the policy limit. The insured is depending on
the fact that most losses are only partial losses and in
these cases, as long as the co-insurance clause is
satisfied, the loss will be completely paid by the
insurer. If the co-insurance clause is not satisfied, it
becomes a penalty clause.
When a loss occurs, the insured must first prove that he
satisfied the requirements of the co-insurance clause or
he will bear a proportionate part of the loss. For
example, if a building is worth $100,000 and the policy
includes an 80% co-insurance clause, the policy limit
must be at least $80,000 or the insured will have to
bear some of the loss. If the insured chose to insure
only $50,000, the insurance company will only pay 5/8 of
the loss and the insured will pay 3/8. This is the
formula the insurance company will use:
| Amount
of insurance |
x |
Amount of the loss |
| Amount of insurance required |
|
|
When a policy includes stated amount co-insurance, the
normal co-insurance clause has been suspended for the
term of the policy. The insurer will only suspend the
co-insurance clause when the insured (i.e. the Borrower)
completes a statement of values, which is a signed
declaration as to the value of the building. The normal
co-insurance clause remains in the policy because the
stated amount co-insurance clause will expire with the
term of the policy and a revised statement of values
must be completed before the stated amount co-insurance
clause will be effective for another term.
On some policies, a blanket limit is used, or a limit of
loss/liability. If a blanket limit is used you should
still ask the values declared for the location. A policy
can also be issued with no co-insurance requirement.
Regardless of what co-insurance
clause is included, it is always dependent on proper
evaluation of replacement cost at inception of the
policy.
COMMERCIAL GENERAL LIABILITY - The standard liability
form of coverage protecting commercial entities for the
liabilities for bodily injury and property damages
losses arising from their operations.
CONSEQUENTIAL DAMAGE - A loss, which is an indirect
result of an accident or fire, e.g. food spoiled through
breakdown of a refrigerator.
CONSTRUCTIVE TOTAL LOSS - A partial loss but where the
damage is so extensive that repairs would cost as much
or more than the repaired property would be worth, or
the limit of insurance.
CONTINGENT BUSINESS INTERRUPTION INSURANCE - The
insurance against loss due to interruption of business
by fire or other insured peril occurring at another’s
premises, such as those of a supplier or a large
customer.
CONTINGENT LIABILITY - A liability which may be incurred
by an insured as a result of negligence on the part of
independent persons engaged by him to perform work. The
most common example is the contingent liability of a
principal contractor, which may result from construction
operations undertaken by his subcontractors.
CONTRACT BOND - In general terms, a surety bond
guaranteeing the performance of a contract. Usually
associated with construction work, but these bonds can
cover any kind of contract. Performance, labour and
material payment, supply and maintenance bonds are
contract bonds.
CONTRACTOR’S PROTECTIVE LIABILITY - A liability
insurance form protecting the contractor in the event of
claims resulting from operations conducted on his behalf
by independent contractors or subcontractors. This
insurance is included in the coverage provided by the
Commercial General Liability form.
CONTRACTUAL LIABILITY - Liability assumed by contract
either written or implied. Legal liability policies are
based upon liability in tort or negligence and have a
ore limited coverage normally for contractual liability.
The Commercial General Liability policy includes
coverage for claims for bodily injury and property
damage assumed under specified types of contracts.
COUNTER-SIGNATURE - Policies usually have a facsimile
printed signature of a company officer at the bottom.
They must also be individually signed by hand, usually
by the agent. This signature is the “counter” signature.
COVER - To insure.
COVERAGE - Insurance.
COVER NOTE - A document which tells the insured that the
insurance described therein is in effect. Since there
are often delays in issuing formal policies, a cover
note gives the insured a description of what insurance
is in effect. |
|
