CAPACITY - The supply of insurance available to meet demand. Capacity depends on the industry's financial ability to accept risk. Reduced capacity leads to higher premiums, but higher premiums eventually attract more capacity to the market.

CAPITAL MARKETS -The markets in which equities and debt are traded.

CAPTIVE AGENT - A person who represents only one insurance company and is restricted by agreement from submitting business to any other company, unless it is first rejected by the agent's captive company.

CAPTIVES - Insurers that are created and wholly-owned by one or more non-insurers, to provide owners with coverage. A form of self-insurance.

CATASTROPHE - Term used for statistical recording purposes to refer to a single incident or a series of closely related incidents causing severe insured property losses totaling more than a given amount.

CATASTROPHE DEDUCTIBLE - A percentage or dollar amount that a homeowner must pay before the insurance policy kicks in when a major natural disaster occurs. These large deductibles limit an insurer's potential losses in such cases, allowing it to insure more property. A property insurer may not be able to buy reinsurance to protect its own bottom line unless it keeps its potential maximum losses under a certain level.

CHARTERED PROPERTY/CASUALTY UNDERWRITER / CPCU - A professional designation given by the American Institute for Property and Liability Underwriters. National examinations and three years of work experience are required.

COLLISION COVERAGE - Portion of an auto insurance policy that covers the damage to the policyholder's car from a collision.

COMBINED RATIO - Percentage of each premium dollar a property/casualty insurer spends on claims and expenses. When the ratio is over 100, the insurer has an underwriting loss.

COMMERCIAL LINES -Products designed for and bought by businesses. Among the major coverages are boiler and machinery, business interruption, commercial auto, comprehensive general liability, directors and officers liability, fire and allied lines, inland marine, medical malpractice liability, product liability, professional liability, surety and fidelity, and workers compensation. Most of these commercial coverages can be purchased separately except business interruption which must be added to a fire insurance (property) policy. (See Commercial multiple peril)

COMMISSION - Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer, and the marketing methods.

COMPLAINT RATIO - A measure used by some state insurance departments to track consumer complaints against insurance companies. Generally, it is written as the number of complaints upheld against an insurance company, as a percentage of premiums written. In some states, complaints from medical providers over the promptness of payments may also be included.

COMPREHENSIVE COVERAGE - Portion of an auto insurance policy that covers damage to the policyholder's car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft.

CONTINGENT LIABILITY - Liability of individuals, corporations, or partnerships for accidents caused by people other than employees for whose acts or omissions the corporations or partnerships are responsible.

COVERAGE - Synonym for insurance.

CREDIT SCORE - 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 insurance scores as an insurance underwriting and rating tool.