[E086]
Early retirement age
If a person retires before the target retirement date in a pension plan, that person is taking early retirement. Plans usually have a minimum early retirement date which may be a specific age or a combination of age and years of service. Benefits are lower than if the person would have retired at the target retirement date because there is less time to accrue benefit (in a target retirement plan) or the years of service are not as great (in a defined benefit plan).
[E001]
Early Warning System
Now known as the NAIC Insurance Regulatory Information System (IRIS), it is a financial ratio and performance criterion designed by the National Association of Insurance Commissioners to identify insurance companies which may need close surveillance by state insurance departments.
[E002]
Earned premium
The portion of the policy premium allocated to the expired or used portion of the policy term. This also includes any short-rate charge made on policy cancellation.
[E003]
Earned reinsurance premium
The earned portion of the policy premium paid to a reinsurer by the primary or ceding company.
Earnings test
Regarding disability insurance, refers to the amount an injured worker may earn via part-time work and still remain eligible for disability benefits.
[E004]
Earth movement exclusion
A provision to exclude coverage for loss caused by settlement of earth, creep or slide of soil, or other instability of the earth.
[E005]
Earthquake
Vibrations of the earth's crust caused by pressures from within the earth.
[E006]
Earthquake insurance
Insurance against damage by earthquakes and earth movement. Written most frequently on the Pacific coast.
Earthquake sprinkler leakage coverage
Optional coverage against direct damage to insured property that is due to water that escapes from a sprinkler system after earth movement activity.
[E007]
Easement
A legal term used to express the privilege, convenience or right of an owner of a piece of property to use nonowned property, usually adjoining the owned property, without which the property owner might not have full access to or enjoyment of his/her owned property.
[E105]
ECO (extra contractual obligations)
Where an insurer is judged to owe a responsibility for coverage that falls outside of the actual policy provisions.
[E009]
Economic perils
One of the three common categories of perils used in the insurance industry to classify causes of loss. Economic perils are those caused by loss of market, loss of income, local, national, or worldwide economic conditions, inflation, or obsolescence of an industry. The other two common categories of perils are human perils and natural perils.
(See human perils, natural perils and peril.)
[E010]
EDP insurance
An "all-risk" policy that provides protection on equipment, software and extra expenses incurred as a result of failure of such equipment caused by an insured loss and loss of earnings. Also know as an EDP policy. Coverage may be extended to include liability claims alleging errors and omissions by data processing companies.
(See data processors errors and omissions insurance and data processing equipment insurance.)
Edr
(See event data recorder.)
[E010a]
Edits or underwriting edits
Account or risk elements selected by an insurer as evaluation points. Most often associated with automated underwriting systems (AUS).
[E011]
Educators professional liability insurance
Professional liability coverage specifically designed to offer protection for the hazards and exposures faced by educators, teachers, and school boards from claims or suits that may result from the acts, negligence, errors, omissions, rendering or failing to render of the professional services of school board members, faculty, staff, aides, or volunteers. Coverage for bodily injury resulting from corporal punishment is also available.
[E011a]
EEOC--Equal Employment Opportunity Commission
Federal commission designed to provide employees with employment opportunities and environments that are free of discrimination based upon such items as race, nationality, religion, gender, physical handicap or enviornments that involve improper working conditions such as sexual harassment. This commission provides protection against such abuses in accordance with federal law. The EEOC provides a method of recourse for employees who feel that they have been unfairly treated in the course of employment or possible employment.
[E012]
Effective date
The day upon which a policy first becomes eligible to pay covered losses.
[E013]
Effects
Personal property, goods, chattels, clothes and documents.
Efficient proximate cause
While proximate cause generally refers to a chain of events that lead to injury or damage, efficient proximate cause refers to identifying a particular event as the chief or primary contributor to such loss or damage, even when other events occur in between.
E-filing
(See System for Electronic Rate and Form Filing.)
EFT
(See Electronic Forms Transmittal.)
[E115]
EHS
(See environmental health and safety.)
[E095]
EIFS
Refers to exterior wall systems typically consisting of insulation board attached to a home’s exterior, covered by a base coat, a mesh reinforcement and a rigid finish coat. The system’s installation is promoted as being more energy efficient, reducing infiltration by elements.
[E096]
EIFS Problem
In recent years, a widespread problem has developed with certain installations of EIFS. When not properly installed, gaps exist that allow water and moisture to seep in and then gets trapped. The trapped moisture results in large scale rotting of the home's framing and walls. This damage is considered ineligible for coverage under a homeowners policy.
(See exterior insulation and finish systems (EIFS).)
[E097]
E-insurance
An evolving term that typically refers (theoretically) to any form of insurance coverage that is sold, delivered and serviced electronically, specifically via the Internet. Another term is virtual insurance.
[E087]
Election period (COBRA)
When a participant leaves a group health plan, the person has up to 60 days to elect to accept the COBRA continuation coverage. This period is called the election period.
(See also COBRA.)
[E014]
Election to avoid a policy
When important information related to seeking insurance coverage has been concealed, misrepresented or is fraudulent, the insurer may have the right to dissolve a policy's coverage as though the policy never existed.
[E088]
Elective contributions 401(k)
The amount of money the employee elects to contribute towards his/her 401(k) plan. As qualified elective contributions are tax deferred, the employer actually reduces the participant's income by the amount of the elective contribution. The accumulations and earnings in a 401(k) plan build on a tax deferred basis as well.
(See also 401(k) plan.)
[E015]
Electrical exemption clause
A clause in a policy that provides that damage to electrical machinery by electrical current is limited to such damage as is followed by fire damage. Several different clauses of this nature are used in different circumstances.
[E015a]
Electronic data processing coverage (EDP)
(See EDP insurance)
(See data processors errors and omissions insurance, and data processing equipment insurance.)
Electronic Forms Transmittal
Software that enables an insurance carrier to send rate, rule and/or form filings to state regulators electronically. This is a format being required by an increasing number of jurisdictions.
[E099]
Elements of negligence
Negligence is established by considering whether a duty exists to act in a certain manner, that a person has failed to act as required and whether actual damage or injury is a direct result of failing to act properly.
[E016]
Elevator liability insurance
Liability coverage for elevators, escalators and other hoisting devices. This coverage is no longer written as a policy by itself but is now included in the standard commercial general liability coverage form.
[E017]
Eligibility period
Once an employee has become eligible for company benefits such as life and health insurance, the employee is usually given a limited period of time to decide which benefits to subscribe to without having to go through physical examinations and prove insurability. This is called the eligibility period. Once the eligibility period has expired, should the employee decide to purchase or subscribe to the insurance benefit programs, proof of insurability is normally required and the insurer may reject the employee's request.
[E018]
Elimination period
In health insurance, an amount of time after the occurrence of a disability during which no indemnities are payable, as provided in the policy. An elimination period can apply to accident, sickness, or to both. Commonly referred to as the waiting period. Also used in boiler and machinery business interruption insurance.
[E117]
Emergency road service
Refers to coverage agreements that respond to risks of the road such as dealing with dead batteries, flat tires, towing charges, locksmith services, etc.
[E019]
Embezzlement
Fraud in using money for yourself that has been entrusted by another. A similar term, conversion, applies to property instead of money.
[E100]
E-mediation
Any on-line process that allows disputing parties to resolve an argument over the amount of damage suffered in a loss. One popular method allows the parties to submit separate, blind offers electronically; agreement is then reached if the submissions fall within a predetermined value range.
[E020]
Emergency fund
Life insurance policies often have a benefit provision that extends a set amount of money to the beneficiary or insured's family in the event of the insured's death, to handle emergency and funeral expenses until the final disposition of the policy has been determined.
[E020a]
Emotional distress
A type of injury where the victim suffers anguish and other disorders as a result of the infliction of duress such as threat of physical abuse, sexual harassment or racial/gender/religious discrimination. Emotional distress is not considered to be bodily injury in many jurisdictions; however, physical manifestations may result which may be considered bodily injury.
[E000]
Employed lawyers coverage
A variation of professional liability coverage. It is designed to address the liability exposures faced by lawyers who are employed as general or in-house counsel (corporate legal departments), as opposed to law firms or private practice. It is meant to fill the gap that exists in standard general liability policies that exclude professional liability.
[E021]
Employee benefit plan
The benefit package offered by employers to their employees which may include such items as health, dental, accident, disability, and life insurance, as well as other non-insurance items such as vacation and retirement plans. The cost of the package or plan may be paid in its entirety by the employer but is most often subsidized by the employer so that the employee pays only a portion of the cost.
[E021a]
Employee benefit plans liability
Protects the insured employer against any claims made against him or her by employees or former employees caused by a negligent act, error or omission in the administration of the insured's employee benefit programs. Exposures such as providing incorrect advice concerning an employee's pension plan or failure to enroll employees under a benefit program are covered under this insurance. The coverage is provided either under a separate policy or as an endorsement to the employer's general liability policy.
[E022]
Employee Retirement Income Security Act of 1974 (ERISA)
This act is sometimes called the "pension reform act." One of the purposes of this act is to force employers to protect the assets of the business that have been designated as employee pension benefits.
(See fiduciary liability insurance.)
[E089]
Employee Stock Ownership Plan (ESOP)
Any qualified employee benefit plan that invests in the stock of the employer. ESOP plans can be designed as qualified stock bonus plans, pension plans that invest entirely in the stock of the company and where the employees are the owners of the company, or a hybrid plan that combines some employer stock funding with other funding methods.
[E023]
Employers liability insurance
Coverage against the common law liability of an employer for injuries sustained by employees, as distinguished from liability imposed by a workers compensation law.
[E023a]
Employment-related practices liability (ERPL) or
Employment practices liability insurance (EPLI)
Impetus for this coverage started with public interest in the allegations made by Anita Hill during the confirmation hearings of Supreme Court Justice Clarence Thomas. Changes in federal and state laws, such as the Americans with Disabilities Act and the Civil Rights Act of 1991, resulted in increased consumer awareness of sexual harassment and discrimination in the workplace. Coverage is available for legal costs to defend claims involving sexual harassment, wrongful termination and discrimination including legal liability for such acts. The coverage is known by various titles. Employment-related practices liability, management risk protection, employers E&O and Americans with Disabilities Act insurance are basically the same coverage. Most policies provide limits ranging from as low as $25,000 per claim up to $1 million. Policies may cover employees as additional insureds.
[E023b]
Employment-related practices liability (ERPL) or (EPL) or (EPLI)
Impetus for this coverage started with public interest in the allegations made by Anita Hill during the confirmation hearings of Supreme Court Justice Clarence Thomas. Changes in federal and state laws, such as the Americans with Disabilities Act and the Civil Rights Act of 1991, resulted in increased consumer awareness of sexual harassment and discrimination in the workplace. Coverage is available for legal costs to defend claims involving sexual harassment, wrongful termination and discrimination including legal liability for such acts. The coverage is known by various titles. Employment-related practices liability, management risk protection, employers E&O and Americans with Disabilities Act insurance are basically the same coverage. Most policies provide limits ranging from as low as $25,000 per claim up to $1 million. Policies may cover employees as additional insureds.
[E024]
Endorsement
A document with language attached to and becoming part of a basic policy for the purpose of modifying the policy, either at inception or mid-term. The term endorsement is usually associated with property and casualty policies while the term rider is normally used with life, accident and health contracts.
(See attachment and rider.)
[E025]
Endorsement in blank
An assignment method used in both ocean and inland marine insurance in order to be able to allow the insurance coverage on cargo to transfer with the cargo and to protect the various interests involved. To handle this approach, a special type of cargo insurance on a bill of lading may be issued, allowing the insured to sign off on the certificate of insurance, thus assigning the policy to the other interests as needed.
(See bill of lading and open cargo policy.)
[E026]
Endowment policy
A type of life insurance policy in which the stated benefit or face amount is paid to the insured on the maturity date. Often, this type of policy is used as a retirement account. Should the insured die before the maturity date has been reached, a beneficiary will receive the benefit amount.
[E027]
Engineer
An individual in the insurance business who specializes in loss or accident prevention work and also develops rating and underwriting information.
[E028]
Engineers professional liability policy
Protects engineers against claims arising out of their professional services caused by error, omission or negligent acts. Most often written as architects and engineers professional liability policy or engineers and architects professional liability policy.
[E090]
Enrolled actuary
Defined benefit pension plans generally require the services of an enrolled actuary to calculate the amount of contribution required and to perform other services required by the plan. Other plans may require the services of an enrolled actuary from time to time. An enrolled actuary is one who meets the standards set by and is enrolled by the federal agency called the Joint Board for the Enrollment of Actuaries.
[E028a]
Ensuing losses
In commercial property insurance contracts, ensuing losses are further or additional direct damage losses that have been initiated by the original direct damage cause of loss. Different from consequential losses which are indirect property losses such as time element (loss of business income or extra expense) losses.
[E102]
Enterprise risk management
Described in a variety of ways, the term refers to implementing an integrated process for continually assessing risks that are obstacles to an organization's financial and operational goals. Under this concept, risks are viewed in two ways: as threats and as opportunities.
[E029]
Entertainment insurance
A category of insurance developed to address the exposures of a wide range of entertainment activities (theatrical events, contests, competitions, special events, etc.). This type of insurance may include liability, property and crime protection. It meets the insurable interests of promoters, entertainment venue property owners, show producers, and so forth. Coverage is also available for loss of income caused by the interruption, cancellation or postponement of a given event.
[E091]
Entire contract provision
In life insurance, the entire contract is the policy itself and the application for insurance (if attached). No change is valid unless an endorsement (signed by an executive officer of the company) is attached to the policy. No agent can change any of the policy provisions.
[E030]
Entitlement, psychology of
A concept or societal phenomenon expressing the expectation of people that their desires and wants are their legitimate needs which society can and must fulfill. The concept affects insurance when the law expands to permit increasing numbers of plaintiffs to recover from insurers in cases where questionable coverage exists (e.g., when courts appear eager to find that insurance coverage exists if there is any indication that the insured expected such coverage to exist, or when jury awards increase beyond economic justification).
[E116]
Environmental health and safety
Refers broadly to industrial or commercial resources dedicated to addressing various environmental and safety concerns such as workplace ergonomics, brownfield development, waste management, wastewater handling, and compliance with related workplace or industry regulations.
[E107]
Environmental impairment liability insurance
Insurance designed to provide protection for the liability exposures that may result from damage, injury and, in some cases, clean-up costs caused by pollution. This coverage is excluded in the standard CGL, and the attempt has been to make the CGL exclusion as broad or absolute as possible.
[E031]
Environmental Protection Agency (EPA)
A United States government agency charged with the responsibility of protecting and defending the environment for the peoples of the nation. This agency has the responsibility to test, monitor and evaluate possible damage to the environment for all varieties of pollution to ground, water and air. The EPA may set standards of controls, determine responsible parties, assess costs for cleanup and corrective actions, and impose fines and penalties for noncompliance.
[E098]
E&O
1) A form of professional liability insurance which provides coverage for mistakes made by a person or persons in a profession not involved with the human body, such as lawyers, architects, engineers, or for mistakes made in a service business, such as insurance, real estate, and others.
(See nonrecording chattel mortgage policy.)
2) A form of coverage for financial institutions protecting against loss to lending institutions which fail to effect insurance coverage.
(See malpractice and medical malpractice.)
[E032]
EPA--Environmental Protection Agency
A United States government agency charged with the responsibility of protecting and defending the environment for the peoples of the nation. This agency has the responsibility to test, monitor and evaluate possible damage to the environment for all varieties of pollution to ground, water and air. The EPA may set standards of controls, determine responsible parties, assess costs for cleanup and corrective actions, and impose fines and penalties for noncompliance.
[E032a]
EPL--employment-related practices liability (also known as ERPL or EPLI)
Impetus for this coverage started with public interest in the allegations made by Anita Hill during the confirmation hearings of Supreme Court Justice Clarence Thomas. Changes in federal and state laws, such as the Americans with Disabilities Act and the Civil Rights Act of 1991, resulted in increased consumer awareness of sexual harassment and discrimination in the workplace. Coverage is available for legal costs to defend claims involving sexual harassment, wrongful termination and discrimination including legal liability for such acts. The coverage is known by various titles. Employment-related practices liability, management risk protection, employers E&O and Americans with Disabilities Act insurance are basically the same coverage. Most policies provide limits ranging from as low as $25,000 per claim up to $1 million. Policies may cover employees as additional insureds.
[E032b]
EPLI--employment-related practices liability (also known as ERPL or EPL)
Impetus for this coverage started with public interest in the allegations made by Anita Hill during the confirmation hearings of Supreme Court Justice Clarence Thomas, Changes in federal and state laws, such as the Americans with Disabilities Act and the Civil Rights Act of 1991, and increased consumer awareness of sexual harassment and discrimination in the workplace. Coverage is available for legal costs to defend claims involving sexual harassment, wrongful termination and discrimination including legal liability for such acts. The coverage is known by various titles. Employment-related practices liability, management risk protection, employers E&O and Americans with Disabilities Act insurance are basically the same coverage. Most policies provide limits ranging from as low as $25,000 per claim up to $1 million. Policies may cover employees as additional insureds.
[E032c]
Equal Employment Opportunity Commission (EEOC)
Federal commission designed to provide employees with employment opportunities and environments that are free of discrimination based upon such items as race, nationality, religion, gender, physical handicap or enviornments that involve improper working conditions such as sexual harassment. This commission provides protection against such abuses in accordance with federal law. The EEOC provides a method of recourse for employees who feel that they have been unfairly treated in the course of employment or possible employment.
[E032d]
Equifax
The insurance end of Equifax is now known as ChoicePoint, Inc. It is an organization widely used by insurance professionals to obtain information on applicants for underwriting purposes such as motor vehicle reports, prior loss or claims history (C.L.U.E.) reports, retail credit reports and even inspection reports. Equifax was formerly known as the Retail Credit Company.
(See ChoicePoint, Inc.)
[E033]
Equipment
Personal property of a business which is not inventory or supplies; machinery and vehicles may be considered to be "equipment" for insurance purposes.
[E108]
Equipment breakdown coverage
Protection against loss from disruption of boilers and machinery by an insured peril: loss to the boiler and machinery itself, damage to other property, business interruption losses, or all three. Also known as machinery breakdown insurance.
[E034]
Equipment floater insurance
A form of inland marine insurance, often on an "all-risk" basis, covering various kinds of equipment.
(See contractors' equipment floater.)
[E035]
Equity
1) When referring to property, it is the owner's actual interest or worth in a property. Computed by subtracting the amount owed on the property from the value of the property. The amount remaining is the equity in the property.
2) When referring to owner's equity in a business, it is the total amount of liabilities for that business, subtracted from total assets. The amount remaining is the owner's equity in the business.
[E036]
Equity in unearned premium reserve
An overstatement in the amount shown for this liability in the annual statement of an insurer. The overstatement is approximately 20-40% of an insurer's unearned premium reserve and is caused by statutory accounting requirements:
1) that initial expenses must be recorded immediately and cannot be deferred to track with premiums as they are earned and taken into revenue (as is done for expenses and income for other businesses).
2) that the sum of all premiums representing the unexpired portions of policies on the books must be kept in the reserve. The overstatement is the amount of initial expenses recognized, which will eventually flow to the surplus account with the passage of time.
(See unearned premium reserve.)
Erection all risks
A form of comprehensive coverage that focuses on loss to plants and machinery under construction (rather than buildings).
[E037]
Ergonomics
The applied science involving the factors and interaction of the workplace environment on its workers. Although it is most often associated with automation in the workplace, this science covers the cause and effect of any workplace environment.
(See human factors engineering.)
[E109]
Ergonomists
An expert, usually a consultant, in the study (some argue science) of ergonomics.
[E038]
ERISA--Employee Retirement Income Security Act of 1974
This act is sometimes called the "pension reform act." One of the purposes of this act is to force employers to protect the assets of the business that have been designated as employee pension benefits.
(See fiduciary liability insurance.)
[E102]
Enterprise risk management
Described in a variety of ways, the term refers to implementing an integrated process for continually assessing risks that are obstacles to an organization's financial and operational goals. Under this concept, risks are viewed in two ways: as threats and as opportunities.
[E039]
ERP--extended reporting period
In "claims-made" liability policies, only those claims that occur after the retroactive date and are reported or filed against the insured during the policy period, are covered by the policy. The ERP, or tail, is an endorsement available to extend the reporting period for the filing of a claim to give additional time in order to be considered covered.
[E039a]
ERPL--employment-related practices liability (also known as EPL or EPLI)
Impetus for this coverage started with public interest in the confirmation hearings of Supreme Court Justice Clarence Thomas and his alleged relationship with a woman coworker, other changes in federal and state laws, such as the Americans with Disabilities Act and the Civil Rights Act of 1991, and new consumer awareness of the practice of sexual harassment and discrimination in business. Coverage previously has been available for legal costs to defend claims against sexual harassment, wrongful termination and discrimination, but only recently has any policy covered actual legal liability for such acts. The coverage is known by various titles through a few insurers. Employment-related practices liability, management risk protection, employers E&O and Americans with Disabilities Act insurance are basically one and the same coverage. Most policies provide varying limits ranging from as low as $25,000 per claim up to $1 million. Policies may cover employees as additional insureds.
[E040]
Errors and omissions clause
Obligatory reinsurance treaties contain a provision to clarify that because of the nature of the treaty, should an error or omission occur in the process of recording or describing of the ceded risk, and if the risk is otherwise covered by the treaty, the reinsurer will still respond despite the error or omission.
[E041]
Errors and omissions insurance
1) A form of professional liability insurance which provides coverage for mistakes made by a person or persons in a profession not involved with the human body, such as lawyers, architects, engineers, or for mistakes made in a service business, such as insurance, real estate, and others.
(See nonrecording chattel mortgage policy.)
2) A form of coverage for financial institutions protecting against loss to lending institutions which fail to effect insurance coverage.
(See malpractice and medical malpractice.)
[E101]
E-signature
Electronic signature that is a valid, legally binding signature which facilitates transactions, such as insurance applications and purchases, via the Internet.
[E118]
Escape clause
A provision in an agreement that, under certain conditions, releases a party from its obligation to perform.
[E092]
ESOP employee stock ownership plan
Any qualified employee benefit plan that invests in the stock of the employer. ESOP plans can be designed as qualified stock bonus plans, pension plans that invest entirely in the stock of the company and where the employees are the owners of the company, or a hybrid plan that combines some employer stock funding with other funding methods.
[E041a]
Estate plan
The plan for the disposition of a person's assets, including property, at the time of death. Estate plans include contingencies for the handling of property in the event of the incompetence or some type of disability of the estate owner. A will is one part of an estate plan.
[E042]
Estoppel
The prevention of one party from asserting rights that might otherwise have existed, by reason of that party's inequitable conduct. Waiver is a term sometimes used interchangeably.
Event data recorder
A type of "black box" for personal and commercial vehicles. Depending upon the type of device, it can record and store various information regarding vehicle operation, particularly key information that happened during a collision. Data typically gathered is braking information, time, vehicle speed, operation of vehicle’s safety equipment, etc.
[E110]
Event loss trigger
Where a given event's date is deemed to be the loss date for all losses or claims that are related to that event, ignoring whether an applicable policy was written on a claims-made or an occurrence basis.
[E044]
Evidence and duties provision
A condition in most insurance policies requiring the insured to cooperate with the insurer in any (and all) investigation, settlement or defense of a claim or suit.
[E045]
Evidence of insurability
In life and health policies, a statement on the application that provides proof of an individual's occupation and/or physical condition. Used to help determine that individual's acceptability for insurance.
[E061]
Ex gratia payment
A payment made even though the company is not technically liable under the terms of its policy, usually made in order to avoid incurring greater legal expenses in defending a claim.
[E046]
Examination
An inspection of an insurance company or organization by a representative of a state insurance department to determine whether the laws of that state have been obeyed.
Examination of records clause
A policy provision that gives an insurance company the right to examine (audit) a policy against relevant policyholder records to insure that the proper premium has been paid (under premiums that are subject to audit).
[E047]
Examination under oath
Securing testimony after being duly sworn that such information supplied is true to the best knowledge of the testifier, under penalty of perjury or voided insurance for false statements.
[E048]
Examiner
A representative or employee of a state insurance department to whom is delegated the task of verifying a company's records and procedures to determine that the law has been observed.
[E048a]
Exceptions
Circumstances, causes of loss or property types that are excepted from either the coverage provided or from the exclusion listed. Example: There is no coverage for pollution losses except those exposures that result from a hostile fire.
[E111]
Excess and surplus insurance
An amount of protection which bears all or a portion of a loss after the loss exceeds an agreed amount. This amount may or may not be insured elsewhere by the company issuing the policy. Excess policies are not subject to the basic principle of contribution with non-excess policies, although they may contribute or share the loss with other excess policies.
[E119]
Excess clause
An insurance policy provision that requires an insurer to respond to a loss only after any other source of coverage has been exhausted.
(Also see pro rata clause and escape clause.)
[E049]
Excess insurance
An amount of protection which bears all or a portion of a loss after the loss exceeds an agreed amount. This amount may or may not be insured elsewhere by the company issuing the policy. Excess policies are not subject to the basic principle of contribution with non-excess policies, although they may contribute or share the loss with other excess policies.
[E112]
Excess judgment loss
A judgment levied against an insurer due to a court determining that it acted in bad faith. Such judgments exceed any written limit of liability that ordinarily would apply to the loss.
[E050]
Excess liability insurance
Liability insurance designed to provide an extra layer of coverage above the primary layer. The excess insurance does not respond, however, until the limits of liability in the primary layer have been exhausted. Because of the method of response, it is often much less costly than the primary layer, per $1,000,000 of coverage. The excess layer provides not only higher limits, but catastrophic protection for very large losses.
[E051]
Excess line
A line of insurance provided by insurers not licensed in the states where the risks are located and placed under the surplus lines laws of the various states. Before such placements can be made through specially licensed surplus lines agents and brokers, state laws generally require evidence that placements could not readily be made in licensed insurers-- or broadly referred to as being all lines of insurance placed with nonadmitted insurers.
(See surplus line.)
[E052]
Excess of loss ratio insurance or reinsurance
A company wishing to protect itself in the event its net loss ratio for a given year rises above a certain percentage may buy reinsurance which pays in excess of that figure up to a higher agreed percentage, beyond which the company is once more liable. In short, a plan which takes the sting out of an above-average net loss ratio.
(See stop loss reinsurance.)
[E053]
Excess of loss reinsurance
A company wishing to protect itself in the event its net loss ratio for a given year rises above a certain percentage may buy reinsurance which pays in excess of that figure up to a higher agreed percentage, beyond which the company is once more liable. In short, a plan which takes the sting out of an above-average net loss ratio.
(See stop loss reinsurance.)
[E054]
Excess property insurance
Insurance protection for large property risks that provides a layer of coverage above the primary layer. The primary policy will cover most property losses while the excess layer of coverage does not respond until the primary layer has exhausted all applicable limits. The primary layer acts much the same as a very large deductible.
[E055]
Exchange
A place where goods or services are traded. Also known as insurance exchanges.
[E056]
Exclusion
The peril, hazard, condition or circumstance that is not covered by the insurance and is so stated in the policy. A clause in an insurance policy which specifies what is excluded from the policy's coverage.
[E057]
Exclusive agent
An agent who, by contract, represents only one company and its affiliates. Sometimes called a captive agent.
(See agent, independent agent and insurance agent.)
Exculpatory clause
Any provision within a contract or agreement that is designed to relieve a party from their liability for any responsibility, obligation or duty. Generally, wording meant to shield parties against their negligence, particularly fiduciaries or trustees is voided as being against public policy.
[E093]
Exculpatory statute
In a community property state, both spouses jointly own all property acquired during the marriage. However, a life insurance policy (property) may be established by one spouse without the other knowing, with a beneficiary who may not be the spouse. An exculpatory statute allows the insurer to pay the proceeds from the policy as the policy directs without being obligated to also pay the surviving spouse what should have been his/hers as it relates to their community property.
[E058]
Executor
A person or a corporation named in a will to administer the decedent's estate.
(See administrator.)
[E059]
Executrix
A female executor--the person named in a will to administer the decedent's estate.
(See administrator.)
[E060]
Exemplary damages
Damages awarded separately and in addition to compensatory damages, usually because of malicious or wanton misconduct, to make an example of the wrongdoer and, possibly, as a deterrent to others. Sometimes referred to as punitive damages when intended to punish the actions of the wrongdoer.
(See punitive damages.)
[E061a]
Exhausted limits
Refers to a situation where the total amount of payments made for a given loss or provided during a policy period relieves the insurance company from its obligation to provide further coverage. The payment amounts are defined by the insurance policy's stated per-loss and aggregate coverage limits.
[E062]
Expediting charges
Money spent to speed up the repair or replacement of destroyed or damaged property. Important in the adjustment of time element losses, such as those under business interruption forms.
[E113]
Expediting expenses
This coverage applies to the extra cost the insured incurs to make temporary repairs and expedite (speed up) the permanent repairs or replacement of the damaged property.
[E063]
Expense constant
A flat premium charge made on small workers compensation policies based upon the fact that the expense factor on such risks is inadequate to cover the cost of issuing and handling the policy.
[E064]
Expense loading
When determining the rate per exposure unit of a risk, the expense loading is the amount that is added to the base rate to handle the cost of administrative expenses experienced by insurers.
[E065]
Expense ratio
Expenses incurred, expressed as a percentage of net written premiums.
[E066]
Experience
Classified statistics of claims and losses related to insurance, of outgo or of income, actual or estimated.
(See actuarial gains and losses.)
[E067]
Experience rating
A form of individual risk rating which takes into consideration the loss experience of the particular risk as a credit or a debit to the manual rate for the insured's classification. As the size and number of exposure units increase (e.g., a multiple location risk), more credibility is given to the insured's own experience.
(See merit rating.)
[E068]
Expiration
1) The cessation of insurance when the time period for which it was written has ended.
2) The date on which insurance expires.
3) The detailed policy records of customers served which are owned by independent insurance agents.
(See ownership of expirations and American agency system.)
[E069]
Expiration card
A record of an expiration containing all important data relating to a particular insurance policy.
[E070]
Expiration notice
A notice sent (by an insurer to an agent or broker, by an agent to a client, or by an insurer to a policyholder) to the effect that a policy is about to expire on a given date.
[E071]
Explosion
1) A bursting of forces, usually from pressure within.
2) In general, a rupture of a pressure vessel of some kind due to too much internal pressure, accompanied by a loud noise. Courts, however, have interpreted it in many ways.
[E072]
Exposure
1) Synonymous with risk: chance of loss by fire, radiation, accident, etc.
2) The danger of loss (particularly by fire) arising from what happens to another risk close by.
3) The sum total of values which, if damaged or destroyed, would cause loss under a policy, i.e., the value of everything a policy insures.
4) A measure of the rating units or premium basis of a risk, e.g., payroll or number of automobiles.
5) A unit of loss potential (e.g., a life, a house, an automobile, a ship, a package in shipment, an acre of growing crops, a plate glass window, a fur coat) in which case the term "exposure unit" is used.
[E073]
Exposure rating
A method of rating a per-risk excess reinsurance cover where the rate is determined by the number of policies and limits of those policies which actually expose the cover being rated to loss. Generally requires a detailed profile of the policies in force for the reinsured company. This method is often used for rating upper layers that have not shown sufficient credible past experience to justify using a rate based on burning cost.
[E103]
Exposure theory
An event is recognized as an insurable loss (or occurrence) when the covered entity or property was first exposed to the source of loss that creates damage or injury.
(See continuous trigger theory, injury-in-fact theory and manifestation theory.)
[E074]
Exposure unit
1) During the premium computation phase of insurance issuance, the exposure unit is the unit of measure that is used to associate the premium charged with some credible factor that relates directly to the exposure covered by the insurance policy. Examples are: per $100 of property value, per square foot area of a building, per $100 or $1,000 of payroll, admissions or gross receipts.
2) The property or location covered by the insurance policy.
[E094]
Express authority
Is derived from the specific authorizations given by the company to the agent in their agreement, e.g. the agent manual says that an agent can bind a homeowners policy if the value on the dwelling is not more than $250,000.
(See also implied authority.)
[E075]
Extended coverage insurance
Protection against loss or damage caused by windstorm, hail, smoke, explosion, riot, civil commotion, vehicles, and aircraft. Written in conjunction with a fire policy either as part of the basic contract or by endorsement.
[E077]
Extended health insurance
Health insurance coverages available for retired persons to cover the surplus after retirement health insurance and Medicare benefits are exhausted.
[E078]
Extended period of indemnity
This endorsement option is available only for business income insurance coverage and may be purchased to provide additional income protection while a risk gets back on its feet and re-establishes a customer base, after that risk had been closed by a covered loss and after it had resumed operations, but was still not making the income it had prior to the direct physical loss.
[E079]
Extended reporting period (ERP)
In "claims-made" liability policies, only those claims that occur after the retroactive date and are reported or filed against the insured during the policy period, are covered by the policy. The ERP, or tail, is an endorsement available to extend the reporting period for the filing of a claim to give additional time in order to be considered covered.
[E080]
Extended term life insurance
An option available in some whole life insurance policies, allowing the insured to use the cash value of the policy to purchase additional term life insurance. The insured uses the whole life cash value to pay the premiums of the term coverage until the whole life cash value is exhausted.
[E104]
Exterior Insulation and Finish Systems (EIFS)
Refers to exterior wall systems typically consisting of insulation board attached to a home’s exterior, covered by a base coat, a mesh reinforcement and a rigid finish coat. The system’s installation is promoted as being more energy efficient, reducing infiltration by elements.
[E081]
Exterminators liability insurance
Liability insurance designed specifically to cover the exposures and hazards faced by exterminators of all types of insects, pests, and rodents, and any chemical applications those operations may use.
[E082]
Extortion insurance
A type of crime coverage designed to protect any type of operation from loss of money, property, stock, or other tangible assets that are extorted during a threat of harm to persons or property.
[E114]
Extra contractual obligations (ECO)
Where an insurer is judged to owe a responsibility for coverage that falls outside of the actual policy provisions.
[E084]
Extra expense insurance
Reimbursement for additional expenses incurred because of an insured loss. Written either as a separate policy or as an endorsement.
[E085]
Extra percentage tables
Life and health insurance tables that have been developed to assist in the computation of premium charges. These tables apply to the additional charges that need to be factored into the premiums based on the standard mortality or morbidity tables for certain health conditions, the most common being cancer or AIDS. The term "extra percentage table" is used because the calculation is normally expressed in terms of an additional percent to be added onto the base.
