Insurance Glossary  (E to J)

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E

Earned Premium: The amount of premium that has been used for certain periods of time

Earth Movement or Earthquake Exclusion: An exclusion found in most property insurance policies eliminating coverage for earth movement or earthquake, except ensuing fire

Effective Date: The date on which an insurance binder or policy goes into effect

Electrical Damage or Injury Exclusion: An exclusion usually contained in property insurance policies eliminating coverage for damage to electrical appliances caused by artificially generated currents, except for ensuing fire or explosion

Employee Dishonesty Coverage: Coverage for theft of money, securities or property by an employee

Employee Leasing: A staffing method which an employee leasing company provides all or most of its client's employees

Employers Excess Indemnity Insurance: Insurance coverage purchased by employers that do not subscribe to the Texas Workers' Compensation law

Employers Liability Coverage: Part 2 of the Workers' Compensation policy which pays on behalf of the employer all sums that the employer becomes legally obligated to pay because of bodily injury by accident or disease sustained by any employee of the insured arising out of and in the course of his employment by the insured

Employment Practices Liability Insurance: A form of liability insurance covering wrongful acts arising from employment practices such as wrongful termination, discrimination and sexual harassment

Endorsement: A document attached to an insurance policy that changes the original policy provisions

Equipment Floater: A property insurance coverage for equipment that is often moved from place to place

Estimated Premium: A preliminary premium amount that could be adjusted based on a variance in exposures

Evidence of Insurability: Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

Excess and Surplus Lines Insurance: Coverage that is provided by insurers not licensed in the states where the risk is located

Excess Liability Policy: A policy that provides additional limits in excess of an underlying liability policy

Exclusions: Specified hazards listed in a policy for which benefits will not be paid.

Expected or Intended: An exclusion for injury or damage that is expected or intended

Expediting Expense Coverage: Coverage providing reimbursement of expenses for temporary repairs and costs incurred to speed up the permanent repair or replacement of covered property or equipment

Expense Constant: A small flat expense charged to Workers' Compensation policies

Experience Modifier: A debit or credit factor developed by measuring the difference between the insured's actual past experience and the expected or actual experience of the class of business

Expiration: The ending date of an insurance policy

Exposure Base: The basis of rates that are applied to determine premium. Some exposures may be measured by payroll, receipts, sales, square footage, area, man-hours or per unit

Extra Expense Coverage: Coverage for reimbursement of expenses in excess of normal operating expenses that are incurred to continue operations after a direct damage loss

Extraterritorial Coverage: The coverage for extending workers' compensation law to provide benefits for workers hired in one state but injured while working in another state

F

Face Amount: The amount covered by the terms of an insurance contract, usually found on the first page of the policy.

Fiduciary Liability: The liability placed on trustees, employers, fiduciaries and professional administrators with respect to errors and omissions in the administration of employee benefit programs

Final Expenses: Expenses incurred at the time of a person's death. These include but are not limited to:funeral costs, court expenses, current bills or debt, mortgages, loans and taxes.

Fine Arts Coverage: Property insurance for works of art

Fire Department Service Charge Coverage: Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire

Fire Legal Liability Coverage: Liability coverage for the insured's legal liability for fire damage to premises rented by the insured

Fire Wall: A wall designed to prevent the spread of fire from one part of a building to another

Firewall: A computer that protects a company's private network from outside internet users

Fixed Benefit: A death benefit, the dollar amount of which does not vary.

Flat Cancellation: The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full

Flood Coverage: Coverage for damage to property caused by flood

Flood Exclusion: A provision in most all property insurance policies eliminating coverage for damage by flood and possibly other types of water damage, such as seepage and sewer backup

Follow Form: An umbrella policy provision that follows the underlying policy for coverages and policy provisions

Forgery or Alteration Coverage: Covers loss due to the dishonesty of writing, signing or altering of checks and bank drafts

Fortuitous Event: An event that is subject to chance without the implication of suddenness

Free Look: Trial period required in most states where policy owners have up to 20 days to examine their new policies with no obligation.

Frequency: The number of times that a loss will occur within any given period of time

Full Coverage: Any form of insurance that provides payment in full of all losses caused by the perils insured against without applying a deductible or depreciation

Funeral Expenses: Expenses including casket, vault, grave plot, headstone and funeral director.

G

Garage Liability Insurance: Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations

Garagekeepers Coverage: Provides coverage to owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair

General Aggregate Limit: The maximum amount of insurance payable during the policy period for losses (other than those arising from the products - completed operations hazards as covered under the standard commercial general liability policy)

General Liability Insurance: Insurance protecting businesses from most liability exposures other than automobile and professional liability

Glass Insurance: A property insurance policy covering breakage of building glass regardless of cause

Governing Classification: In Workers' Compensation Insurance, the classification that best describes the workers' compensation exposure of an employer's business

Grace Period: Period of time after the due date of a premium during which the policy remains in force without penalty.

Graded Premium Policy: A type of whole life policy designed for people who want more life coverage than they can currently afford. They pay a lower premium rate that increases gradually over the first three to five years and then remains constant over the life of the policy.

Gross Negligence: Willful and wanton misconduct

Gross Vehicle Weight (GVW): The weight specified by a manufacturer for the maximum total loaded weight of a single vehicle

Guaranteed Term: A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.

H

Hired Automobile: An automobile whose exclusive use has been temporarily given to another for a monetary sum or other consideration. The business auto definition of 'hired autos,' however, includes autos borrowed except those borrowed from employees or partners

Hold Harmless Agreement: A contractual agreement that requires one contracting party to assume certain legal liabilities of the other party

Host Liquor Liability: Liability coverage for hosts of business or social functions arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise

I

Improvements and Betterments: Additions or changes made by a lessee at his own expense to property that may not legally be removed. Usually covered under the tenants property coverage

Incontestable Clause: A clause in a policy providing that a policy has been in effect for a given length of time (two or three years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.

Incurred Losses: The amount of paid claims and loss reserves within a particular period of time, usually a policy year. Customarily computed as losses incurred during the period, plus outstanding losses at the end of the period, less outstanding losses at the beginning of the period

Independent Adjuster: A claims adjuster who provides adjustment services to insurance companies but is not employed by them

Independent Contractor: An individual or company who has agreed, in writing, with another party to perform a job or function on behalf of that party

Inflation Guard Provision: A provision that increases the limit of insurance by a specified percentage over a specified period of time to offset inflation costs

Insurability: The condition of the individual wishing to be insured, including their health, susceptibility to injury and life expectancy.

Insurance: A formal social device for reducing risk by transferring the risks of several
individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.

Insurance Policy: The printed form which serves as the contract between an insurer and an insured.

Insurance to Value: Insurance written in an amount equal to the value of the property or which meets coinsurance requirements

Insured: The party who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.

Insurer: The insurance company; Party that provides insurance coverage, typically through a contract of insurance.

Irrevocable Beneficiary: A beneficiary that cannot be changed without that beneficiary's consent.

Increasing Term Insurance: Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.

J

Joint Venture: A business relationship when two or more persons join their labor or property for a business undertaking and share profits