Definition - What does Contingency mean?
A contingency refers to a chance occurrence or uncertain outcome. In the context of insurance, contingency insurance supplements a primary policy or covers remote risks the primary one would be slow to cover.
Insuranceopedia explains Contingency
To mitigate risks, individuals and businesses usually assume slightly worse than expected outcomes to deal with these problems in the least stressful way possible. When purchasing primary insurance policies, be aware that these policies may not be able to cover all claims expenses. Contingency insurance is designed to function as a secondary insurance to fill in coverage gaps. It covers unprecedented risks usually not covered, such as business interruption, postponed or delayed deliveries, or even cancelled events. For example, contingency insurance for event planning aims to reduce the possibility of unknown variable and unforeseeable incidents that cause a loss to the company holding the event, such as inclement weather, death, and non-appearance of high-profile guests.