Contingency

What Does Contingency Mean?

A contingency refers to a chance occurrence or uncertain outcome. In the context of insurance, contingency insurance serves to supplement a primary policy or cover remote risks that the primary policy may be slow to address.

Insuranceopedia Explains Contingency

To mitigate risks, individuals and businesses often assume slightly worse-than-expected outcomes to manage potential issues with minimal stress. When purchasing primary insurance policies, it’s important to recognize that these policies may not cover all claim expenses. Contingency insurance is designed to serve as secondary coverage to fill in any gaps. It addresses unprecedented risks typically not covered by primary policies, such as business interruptions, delayed deliveries, or canceled events.

For example, contingency insurance in event planning aims to minimize the impact of unknown variables and unforeseeable incidents that could lead to losses for the event organizer, such as inclement weather, the death of a key participant, or the non-appearance of high-profile guests.