We hope that our extensive glossary of common (and some not-so-common)
insurance terms and phrases proves helpful to you! Simply start
below by choosing the first letter of the word or phrase you want to
learn more about.
A - B - C - D - E - F - G - H - I - J - K - L - M
N - O - P - Q - R - S - T - U - V - W
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 insurance 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 noneconomic losses,
such as pain caused by an injury.
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 - A form of annuity whose value is
link to an index, generally the S&P 500. It also provides a guaranteed minimum
to protect against market risk.
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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 insurance 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) |
