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Insurance Terms  -  A B C D E F G H I J K L M N O P R S T U V WHome / Insurance Dictionary



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 part of the total property/casualty policy premium earned by the insurance company which applies to the expired portion of the policy period.


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.


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.)


Employers’ Liability Insurance:

Provides protection for the employer for those injuries arising out of and in the course of employment which were not covered under the workers’ compensation law.



An additional piece of paper, not a part of the original contract, which cites certain terms and which becomes a legal part of that insurance contract. Additions to life insurance contracts are accomplished through the use of riders, which are similar to endorsements.


Environmental Impairment Insurance:

A form of insurance designed to cover losses and liabilities arising from damages to property by pollution.


Equipment Breakdown Insurance:

See Boiler and Machinery Insurance.



In investments, the ownership interest of shareholders. In a corporation, stocks as opposed to bonds.


Errors and Omissions Insurance (E&O):

A type of professional liability insurance which indemnifies insured professionals—who include, but are not limited to, lawyers, insurance agents and Group, accountants, real estate agents, appraisers, abstracters, title insurance agents, architects and engineers, advertising agents, adjusters, directors and trustees, fiduciaries, travel agents and data processing firms—for losses sustained because of their errors or oversights.


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.


Excess Limits:

Coverage against losses in excess of a specified dollar limit.



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:

The ratio of a company’s operating expenses to premiums written. (Expenses include losses and loss adjustment expenses.)



The loss record of an insured or of a particular class of coverage.


Expiration Date:

The date shown on the declarations page of the policy when coverage will stop. It may be a specific date or a statement that coverage is continuous until cancelled.



This term in the insurance field may have several meanings: (1) possibility of loss; (2) a loss potential as measured by type of construction, area or values; (3) a possibility of a loss being communicated to an insurance risk from its surroundings; or (4) a unit of measure of the amount of risk a company assumes (for example, one car insured for one year).


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 Coverage Property Insurance:

An extension of the fire insurance policy to protect the insured against property damage caused by the additional perils of windstorm, hail, explosion, or riot, civil commotion, aircraft, vehicle and smoke.


Extended Replacement Cost Coverage:

Pays a certain amount above the policy limit to replace a damaged home, generally 120% or 125%. 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 Replacement Cost Coverage.)



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