Glossary Index

Glossary on General Insurance Terms starting with E


ECONOMIC LIMIT IN INCREASED COST OF WORKING : Maximum limit to which the insurance company will pay under fire consequential loss policy towards additional cost of working incurred by the insured for avoidance of partial or total decrease in turnover during the period of indemnity; economic limit is the gross profit that is saved through incurring the additional working cost

E & O.E. : Errors and omissions that are excepted

EACH AND EVERY LOSS : Excessive Loss Reinsurance arranged on the "Any one event" basis, which every loss arising due to the single event is accumulated and extra recovery effected towards accumulation of such losses in excess of the underlying loss retention of the reinsured; any event of loss defined as 168 consecutive hours and each & every loss during this period is aggregated as stated for the application of EL recovery

EACH AND EVERY RISK EACH AND EVERY LOSS : Related to treaty reinsurance; agreement providing reinsured to determine what one risk is (example one building or group of buildings under a single roof) and what one loss entails (having limits on geographical scope or period for the loss occurrence)

EARNED PREMIUM : The component of the premium related to property of an insurance service provider depending on the expired portion of the plan during the period; an insurance company is assumed to earn 75% of annual premium 9 months have elapsed on an annual policy

EARNED PREMIUM - REINSURANCE : Premium ceded and included during the year in question along with the reserve for the unexpired risk carried forward or portfolio premium entry after reducing reserve for unexpired risks at the completion of the current year or withdrawn portfolio premium

EARTHQUAKE FIRE AND SHOCK : Extension of the policy coverage to the standard fire and special perils plan by paying an additional premium; damage or loss occuring to the insured property due to fire or shock or both due to earthquake is covered within such extension

EARTHQUAKE ZONE : Differentiating between areas that are prone to earthquakes and those locations that are not prone to this phenomenon; offering different rating structures for earthquake-prone locations for procuring coverage under Fire Policy; Tariff Advisory Committee divides the country in 4 zones; details are available in the Fire Tariff

ECONOMIC LIFE : The remaining duration when the property or equipment yields higher returns than the cost of its maintenance and operations; it is an important consideration used for the determination of the market value while availing insurance coverage

ECONOMIC LOSS : Estimated loss (insured as well as uninsured) incurred by a person, family, or business resulting from accident or mishaps like automobile accidents, personal or work accidents, or fires; inclusive of factors like funeral costs, hospital, medical, and legal expenses, property damages, income loss, as well as third party liability

ECONOMICALLY VULNERABLE OR BACKWARD CLASSES : According to the IRDA guidelines, people who live below the poverty line

EFFECTIVE DATE : Actual date on which insurance coverage comes into force

EFFICIENT LEVEL OF RISK : Amount of risk balance after business or individual pursues activities like internal risk decrease, loss control, or loss financing to an extent where the marginal benefits are equivalent to the marginal costs

EIGHT SYSTEM : System adopted in the reinsurance business related to the Premium Portfolio Adjustment to ascertain unexpired risk liabilities; policies that are issued during the previous 12 months segregated in 8 blocks of one and half month each; unexpired premium is computed through the unepxired risk within each block

EJUSDEM GENERIS : Implies of the same type; where general words are followed by specific words having common quality, the general words are considered to merely refer to things of the same type; when policy contract mentions specific list of perils and the list ends with words like "all other perils" this expression is subjected to legal principles of ejusdem generis and implies only similar perils to the earlier specified perils

ELECTRICAL CLAUSE : Clause appearing as component of the General Exclusions within the Standard Perils Policy that relieves the insurance company from the liability of any loss or damage occuring due to electrical and/or electronic equipment or the installation resulting from arcing, over-running, electricity leaks, excessive pressure short circuiting, or self heating; the damages to adjacent insured items consequent to such causes is covered under the policy

ELECTRONIC EQUIPMENT INSURANCE : Insurance policy providing coverage from sudden unforeseen material damages to electronic equipment for any reason subject to some exclusions; broadly covers fire and allied risks, machine breakdown, explosion, short circuit, or other causes burglary, lack of skill, theft, entry of foreign bodies, humidity, gross negligence, water damage, faulty operations, et.; policy also extends to cover loss or damage to external data media as well as cost incurred for reconstruction of the data; further coverage provided for additional expense incurred due to failure of the electronic system making it necessary to substitute with another system

EMBARGO : Government prohition (either due to economic or political reasons) towards shipment of cargo and vessel movement

EMBEZZLEMENT : Fraudulent misappropriation or usage of another individual's property or money that has been entrusted to another's care

EML UNDERWRITING : Used in relation to Engineering Reinsurance whereby the ceding company's retention and treaty reinsurer's share is assessed as a percent of the Estimated maximum loss arising from one event

EMPLOYEE (BBI INS.) : Means all existing personnel (clerks, officers, and other sub-staff) either temporary or permanent, full or part time, contract basis or otherwise, and includes apprentices on the payroll of the company at all offices but excludes directors or partners who are not salaried

EMPLOYER FORM : Related to Fidelity Guarantee Insurance; form that must be completed by the employer (insured) that is in the nature of proposal form and is the basis of the insurance contract; seeks information about employer, nature of duties of the employee who is guaranteed, system of checks within the company, past defalcation (if any) by the employee, etc. in the end insured makes declaration that certifies truthfulness of the statements

EMPLOYMENT AND STUDY POLICY : Special policy for Indian citizens who temporarily are posted abroad in sedentary non-manual jobs or students pursuing studies or conducting research in foreign countries; cover has limits with relation to the age of person to be covered and the liability of the insurer; cover is available under 2 plans; worldwide exclusing the USA and Canada, and worldwide including Canada and USA

ENDORSEMENT : Memorandum issued towards effecting additions, deletions, or alterations in the coverage granted under the standard policies either when issued, or at the commencement period, or any other time during its validity through mutual agreement between the insurer and insured; is signed by authorized signatory of the insurance company and on issuance the policy and endorsement together include the contractual evidence

ENERGY INSURANCE PACKAGE POLICY : Risk cover against oil and energy risks covered under 5 sections; (1) well control expenses (2) property insurance cover for all off-shore properties comprising multipurpose support ships, platform, drill ships and barges, pipelines, cargo, materials on-board rigs, and seismic and other vessels, coverage available for strike or war risks (3) terrorism coverage for all interruptions (4) property insurance cover for on-shore property including drill equipment and land drills (5) third party liability comprising marine and specified offshore liabilities; because of the complexities of these risks and significant reinsurance needs, this coverage is finalized under direct involvement of reinsurers from the commencement and cover granted is as per the international standards

ENERGY TREATY : Reinsurance treaty related to off-shore drilling rig platforms in any oil field within the deep seas pipelines used for supply of oil to onshore refineries and units, which are defined as the Marine Hull Offshore Business

ENTREPOT TRADE : Import of goods for use of immediately re-exporting these to another nation; such cargo does not entail payment of customs duty

ENVIRONMENT : The National Environment Tribunal Act 1995 definition includes land, water, and air as well as the inter-relationships existing between land, water, and air and human beings along with other living things like microorganisms, plants, and property

ENVIRONMENT (PROTECTION) ACT 1986 : Comprehensive umbrella legislation towards the enforcement of measures to protect the environment and coordinating of the activities of the State and National Pollution Control Boards constituted under the Air and Water Acts

ENVIRONMENT RELIEF FUND : Fund founded according to the provisions of the Public Liability Insurance Act 1961; the funds are used to pay relief under awards offered by the Collector within the provisions of the said Act and is used for meeting excessive amount paid under the insurance plan

ENVIRONMENTAL DAMAGE : Injurious presence on or in land, atmosphere, or water course or body, solid, gaseous, thermal, or liquid contaminants, pollutants, or irritants

ENVIRONMENTAL IMPAIRMENT LIABILITY INSURANCE : Cover for liabilities and losses resulting from damage caused to the property due to pollution

ENVIRONMENTAL POLLUTANT : Any liquid, solid, or gaseous substance found in such concentration that causes or may cause environmental injuries

ENVIRONMENTAL POLLUTION : Presence of any environmental pollutant in the environment

ENVIRONMENTAL RISKS : Risks that relate to the release of contaminants in the air and disposal of industrial wastage in water or on land

EQUIPMENT LEASING : Purchasing and leasing of equipment; owner earns through lease rentals as well as has tax benefits; policies for leased properties is issued in the owner's name with the leasee's interest being noted in the policy document if required by both parties

EQUITABLE INTEREST : Interest that is recognized legally

ERECTION ALL RISKS INSURANCE : Insurance plan for covering projects that are under construction; provides coverage to all machinery and materials from all kinds of risks, subject to some predefined exclusions; cover is extended for inclusion of civil engineering works related to the project, surrounding property of the insured, and third party liabilities; policy commences on arrival of the first consigment of materials at the location of the site and continues until construction and testing is completed and project commissioning; sum insured represents estimated value of completed project; suitable coverage amounts need to be opted for by the insured for adjoining property and third party liabilities; policy is governed by the Tariff

ERROR, OMISSION & ALTERATION CLAUSE : Clause within proportional treaty wordings that provide accidental or inadvertent errors or omissions not prejudicing the treaty and these are to be corrected at the earliest and all required adjustments are to be made

EMBEZZLEMENT : Fraudulently using or taking property or money belonging to another person and has been entrusted to one's care

EXCESS AND SURPLUS INSURANCE : Insurance available for covering losses above a specific amount and losses below this amount being covered under standard policy; insurance coverage for unusual or one-time perils that are not covered within the normal policies available in the market

EXCLUSIONS : Specific circumstances or conditions listed within the policy document for which the plan does not provide any benefits or payments

EARNED PREMIUM : Part of the complete casualty or property plan premium applicable to the portion of the expired period

EFFECTIVE DATE : Date on which the coverage under the insurance policy commences

ENDORSEMENT : Amendment to the policy contract through a rider or rubber stamp

EARLY RETIREMENT : Retirement of the participant at a date earlier than the regular retirement date; often at reduced annuity amount; early retirement allowable during any time 5 to 10 years prior to the regular retirement date

EARNED INCOME : Employment income earned as salary, wages, fees, or commissions

EARNINGS TEST (RETIREMENT TEST) : Determining the amount of social security benefits that are available to beneficiaries after making the necessary adjustments to their earnings

ECONOMIC POLICY : Special kind of participating whole life plan under which the dividends are used for purchasing term plan or paid-up additions equivalent to difference between face amount of the insurance policy and certain guaranteed amount

ELEMENTS OF A NEGLIGENT ACT : The 4 elements injured persons need to show as evidence; existence of legal duty for using reasonable care; failure to perform such duty, injury or damage to the claimant, and proximate cause relation between infliction of damages and negligence

ELIGIBILITY DATE : Date on which individual member within a specified group is eligible for applying for insurance under the group health or life insurance plan

ELIGIBILITY PERIOD : Specified length of time (often 31 days) following the eligibility date during when the individual member of particular group continues to remain eligible to avail cover under the group plan without providing proof of insurability

ELIGIBILITY REQUIREMENTS : Conditions that the employee must satisfy for participating in the retirement plan (one condition being completion of 1 to 3 years of service and second being attaining the age of 25); conditions whereby the employee is required to satisfy to obtain the retirement benefit (attaining 65 years of age or completing 15 years of service)

ELIGIBLE EMPLOYEES : Members within the group meeting the eligibility requirements under the group health or life insurance policy

ELIMINATION PERIOD : Period of time between the commencement of the disability income insurance coverage and diasbility period when no benefits are payable

EMPLOYEE DISHONESTY COVERAGE FORM : Commercial crime insurance form that is drafted by Insurance Services Office covering monetary loss, securities, and other insured properties due to dishonest act by the employee/s covered under the plan

EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) : Legislation passed in the year 1974 that is applicable to most of the private pension and welfare plans requiring minimum standards for protecting the participating employees

EMPLOYMENT STOCK OWNERSHIP PLAN (ESOP) : Defined contributions pension plans that are designed for investing primarily in employee stocks

ENDORSEMENTS : Additional paper (not part of the original insurance contract) that cites certain terms and is attached to the original document becoming a legal part of the contractual agreement

ENDOWMENT : Life insurance that is payable to the policyholder/s if alive on the maturity date stated in the policy document or to the beneficiary if the insured passes away before the maturity date

ENROLLED ACTUARY : Individual performing acturial services for insurance plan and is enrolled with the Federal Joint Board for Enrollment of Actuaries

ENROLLMENT CARD : Document signed by any employee as notice of her or his desire to participate in the benefits of any group insurance program

ENTIRE CONTRACT CLAUSE : Provision within the Life Insurance policies that state the policy and attached application constitute complete contract between the parties; entity purchase agreement specifies the terms for business to buy back the share of the deceased owner in the business

EQUITIES : Investments made in the form of ownership of property generally common stock as differentiated from the fixed income securities like mortgage or bonds

EQUITY IN THE UNEARNED PREMIUM RESERVE : The amount through which any unearned premium reserve is over-stated because it is determined on the basis of gross premium instead of the net premium

ERRORS AND OMISSIONS INSURANCE : Liability insurance plan providing protection against any losses incurred by clients due to negligent acts, errors, or omissions of the insured

ESTATE : All the assets and liabilities of a deceased individual

ESTATE PLANNING : Development of the plan for transfering all the property from one generation to the next or within the same generation

ESTOPPEL : Law that prevents any individual from denying the truth of a previously represented fact especially when this kind of representation is used by another person to rely on the statements made

EVIDENCE OF INSURABILITY : Any statement of evidence related to the physical condition of an individual and/or other factual details affecting her or his acceptance for availing the insurance

EXCLUSIVE AGENT : An agent hired by only one insurance service provider soliciting business only on behalf of the company

EXCLUSIVE REMEDY DOCTRINE : Doctrine within workers compensation plan stating that workers compensation benefits will be the sole and exclusive form of recovery for workers who are injured on the job or suffer from work-related sickness; this doctrine has been eroded through several legal decisions

EXCLUSION OR EXCEPTION : Conditions or circumstances that are specified in the insurance contract under which the insurance policy will not offer the benefits

EXCLUSION RATIO : Portion of the annuity payment that is considered by taxation laws to be a return on the insured's initial investment and is not subject to income tax at the time of receipt

EXCLUSIVE PROVIDER ORGANIZATION (EPO) : Individuals belonging to an EPO receive care from affiliated providers; any service availed from unaffiliated providers is not reimbursed

EXPECTED CLAIM COST : Expected value of the losses being distributed for particular group of the insurance plans

EXPECTED VALUE : Total sum of losses that are divided by the number of exposures; which implies the average

EXPENSE LOADING : Amount that should be added to the pure premium amount towards expenditures, profits, and margin for possible contingencies

EXPENSE RATIO : Ratio of an insurance company's operating expenses with relation to the premiums

EXPERIENCE : Relatioship (expressed as a ratio or percent) of the premium to the claims under an insurance plan, benefits for any stated time, or benefits

EXPERIENCE MODIFICATION FACTOR : Related to workers compensation rating used for reflecting degree to which any particular employer has experience that is better or worse than expected for the industry; weighted by the credibility factor of the employer

EXPERIENCE RATING : Procedure used to determine premium rates for group risk, either partially or wholly based on the experience of the group

EXPERIENCE REFUND : Provision within group plans for calculating returns of premium to the holder due to lower than estimated claims; additional period post expiration of the policy during which any valid claim will be paid under the claims-made policy of liability plan

EXTENDED REPORTING PERIOD ENDORSEMENT : Added to the claims-made liability insurance plan for providing additional time during which all valid claims will be paid

EXTENDED TERM INSURANCE : Any form of insurance that is available as non-forfeiture option; provides original amount of insurance for a limited time period

EXTENDED UNEMPLOYMENT INSURANCE BENEFIT : Extra cash benefits paid by the federal-state umemployment insurance plans for workers who are unemployed unvoluntarily and have exhausted all the regular weekly benefits available to them during these longer unemployment periods

EXTORTION : Surrendering of property away from the premises due to threat of bodily harm to the insured, relatives, or invitees being held as captive

EXTRA EXPENSE INSURANCE : Kind of insurance income covering additional expenses incurred for continuing the operations after the occurrence of any loss

ELECTRONIC DATA PROCESSING COVERAGE (EDP) : Special kind of insurance available to cover computer equipment, information storage media, data systems, and income loss or expenses incurred to EDP losses

EMPLOYERS LIABILITY INSURANCE : Cover against common law liability of employers for accidents to the employees, which are different from liabilities arising from workers compensation laws

EMPLOYERS NON-OWNERSHIP AUTOMOBILE LIABILITY : Liabilities arising from the operations of automobiles not owned by the insured often occurs when any employee uses her or his personal car for conducting the insured's business activity; insurance coverage available to cover liabilities arising from such circumstances

ENGLISH JURISDICTION CLAUSE : Any condition printed in the MAR form whereby the underwriter agrees to recognize judgements only from courts convened under the English laws; subscribing underwriters may agree for replacing this clause with foreign jurisdiction laws clause

ENGLISH LAW AND PRACTICE : Clause appearing in Institute clauses published for using in the MAR form; applicable when foreign jurisdiction clause is attached to the plan and requires foreign court to base its decision on the basis of English law and practice

EXPOSURE : State when being subject to possible liability due to loss; risk extent as determined by payroll, area, gate receipts, etc; possible loss due to risk caused to the surroundings

EXTENDED COVERAGE ENDORSEMENT : Specific endorsement attached to standard fire policy providing cover due to wind storms, explosion, hail, vehicular damage, riot, smoke, riot due to civil strikes, civil commotion, or aircraft

EXTENDED REPORTING PERIOD (ERP) : Period of time allowed for making claims post the expiration of "claims-made" policy; also referred to as "tail"