| EARLY
WARNING SYSTEM |
A system of
measuring insurers’ financial stability set up by insurance industry
regulators. An example is the Insurance Regulatory Information System
(IRIS), which uses financial ratios to identify insurers in need of
regulatory attention.
|
| EARNED
PREMIUM |
The portion of
premium that applies to the expired part of the policy period. Insurance
premiums are payable in advance but the insurance company does not fully
earn them until the policy period expires.
|
| EARTHQUAKE
INSURANCE |
Covers a
building and its contents, but includes a large percentage deductible on
each. A special policy or endorsement exists because earthquakes are not
covered by standard homeowners or most business policies.
|
| ECONOMIC
LOSS |
Total financial
loss resulting from the death or disability of a wage earner, or from the
destruction of property. Includes the loss of earnings, medical expenses,
funeral expenses, the cost of restoring or replacing property, and legal
expenses. It does not include non-economic losses, such as pain caused by an
injury.
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| ELECTRONIC
COMMERCE / E-COMMERCE |
The sale of
products such as insurance over the Internet.
|
| ELIMINATION
PERIOD |
A kind of
deductible or waiting period usually found in disability policies. It is
counted in days from the beginning of the illness or injury.
|
| EMPLOYEE
DISHONESTY COVERAGE |
Covers direct
losses and damage to businesses resulting from the dishonest acts of
employees. (See
FIDELITY BOND)
|
| EMPLOYEE
RETIREMENT INCOME SECURITY ACT / ERISA |
Federal
legislation that protects employees by establishing minimum standards for
private pension and welfare plans.
|
| EMPLOYER’S
LIABILITY |
Part B of the
workers compensation policy that provides coverage for lawsuits filed by
injured employees who, under certain circumstances, can sue under common
law. (See
EXCLUSIVE REMEDY)
|
| EMPLOYMENT
PRACTICES LIABILITY COVERAGE |
Liability
insurance for employers that covers wrongful termination, discrimination, or
sexual harassment toward the insured’s employees or former employees.
|
| ENDORSEMENT |
A written form
attached to an insurance policy that alters the policy’s coverage, terms, or
conditions. Sometimes called a rider.
|
|
ENVIRONMENTAL IMPAIRMENT LIABILITY COVERAGE |
A form of
insurance designed to cover losses and liabilities arising from damage to
property caused by pollution.
|
| EQUITY |
In investments,
the ownership interest of shareholders. In a corporation, stocks as opposed
to bonds.
|
| EQUITY
INDEXED ANNUITY |
Non-traditional
fixed annuity. The specified rate of interest guarantees a fixed minimum
rate of interest like traditional fixed annuities. At the same time,
additional interest may be credited to policy values based upon positive
changes, if any, in an established index such as the S&P 500. The amount of
additional interest depends upon the particular design of the policy. They
are sold by licensed insurance agents and regulated by state insurance
departments.
|
| ERRORS AND
OMISSIONS COVERAGE / E&O |
A professional
liability policy covering the policyholder for negligent acts and omissions
that may harm his or her clients.
|
| ESCROW
ACCOUNT |
Funds that a
lender collects to pay monthly premiums in mortgage and homeowners
insurance, and sometimes to pay property taxes.
|
| EXCESS AND
SURPLUS LINES |
Property/casualty coverage that isn’t available from insurers licensed by
the state (called admitted insurers) and must be purchased from a
non-admitted carrier.
|
| EXCESS OF
LOSS REINSURANCE |
A contract
between an insurer and a reinsurer, whereby the insurer agrees to pay a
specified portion of a claim and the reinsurer to pay all or a part of the
claim above that amount.
|
| EXCLUSION |
A provision in
an insurance policy that eliminates coverage for certain risks, people,
property classes, or locations.
|
| EXCLUSIVE
AGENT |
A captive
agent, or 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 company. (See
Captive agent)
|
| EXCLUSIVE
REMEDY |
Part of the
social contract that forms the basis for workers compensation statutes under
which employers are responsible for work-related injury and disease,
regardless of whether is was the employee’s fault and in return the injured
employee gives up the right to sue when the employer’s negligence causes the
harm.
|
| EXPENSE
RATIO |
Percentage of
each premium dollar that goes to insurers’ expenses including overhead,
marketing, and commissions.
|
| EXPERIENCE |
Record of
losses.
|
| EXPOSURE |
Possibility of
loss.
|
| EXTENDED
COVERAGE |
An endorsement
added to an insurance policy, or clause within a policy, that provides
additional coverage for risks other than those in a basic policy.
|
| EXTENDED
REPLACEMENT COST COVERAGE |
Pays a certain
amount above the policy limit to replace a damaged home, generally 120
percent or 125 percent. Similar to a guaranteed replacement cost policy,
which has no percentage limits. Most homeowner policy limits track inflation
in building costs. Guaranteed and extended replacement cost policies are
designed to protect the policyholder after a major disaster when the high
demand for building contractors and materials can push up the normal cost of
reconstruction. (See
Guaranteed replacement cost coverage)
|