e-business - The transaction of business by way of electronic media, such as telephones, fax machines, computers, and video-teleconferencing equipment. This generally is broader than e-commerce although some may view e-business and e-commerce as interchangeable terms.
e-commerce - The buying and selling of goods by way of electronic media, such as telephones, fax machines, computers, and video-teleconferencing equipment.
Earned premium - Portion of a premium for which the insurer has already provided protection.
Earnings insurance - A simplified form of insurance covering business income loss, limited to a set percentage of the policy’s total amount for recovery of proved loss for each 30-day period.
Earth movement - Subject to an exclusion in property policies, this peril includes earthquake, landslide, mudflow, etc.
Effective date - The date shown in the declarations of a policy upon which coverage is to take effect.
Employee dishonesty coverage - Insurance protecting employers from loss due to theft by their employees.
Employers' Liability – Section B of the standard Workers' Compensation insurance policy, this is the part of the policy that has a dollar limit shown for the coverage. This section insures employers for liability towards employees that is not covered by the statutory Workers' Compensation provisions of the state (which are insured in Section A and have no set dollar limit on the policy).
Employers Nonownership Liability - Employers who buy commercial auto coverage on a basis other than "any auto" have this exposure whenever an employee uses his or her own auto on the employer’s behalf.
Employment Practices Liability Insurance - Coverage against allegations of illegal or discriminatory hiring and firing practices, sexual harassment of employees, and so on.
Endorsement - An amendment to a policy form.
Enterprise-wide Risk Management - An effort to categorize, measure, and treat all types of risk that may adversely affect a business. It includes both traditional hazard risks and other business risks, such as risks posed by competitors, by economic developments, and natural conditions the business cannot control, and by general operations.
Environmental Impairment Liability Insurance/ see Pollution Liability Insurance.
Equipment Floater/ see Floater.
ERISA - An acronym standing for the 1974 Employee Retirement Income Security Act which regulates certain employee benefit plans.
Errors and Omissions Coverage - A type of professional liability insurance, protecting the insured against claims alleging bodily injury or property damage caused by the professional or technical incompetence of the insured.
Escrow – The delivery by a grantor of a deed or of personal property to a third person for delivery to the grantee upon the happening of certain conditions
Estimated Premium, see Deposit Premium.
Estoppel - The legal doctrine that a party may be precluded from denying that certain rights exist if, by behavior or implication that such rights did, in fact, exist, another party has acted upon this information to his or her detriment.
Ex Gratia Payment - A payment by an insurer to an insured for which there is no contractual liability. Such payments are sometimes made as a goodwill gesture if there is the possibility of a misunderstanding or a mistake.
Examination Under Oath - Found in the conditions section of many insurance policies, the insurer’s right to examine an insured under oath following a loss.
Excess Insurance - Coverage that applies on top of underlying insurance that is primary, i.e., that pays until its coverage limit is exhausted at which point the excess coverage takes over.
Excess Losses – In the Experience Modification Factor, the amount of any single claim that exceeds $5,000.
Excess or Surplus Lines Market - The range of insurance available through non-admitted insurers, i.e., insurance companies that are not licensed in a particular state or territory. Specific provisions of state or territorial law control placements.
Exclusive Agency System/ see Captive Agent.
Execution – The sheriff’s attempt to enforce a judgment by searching for assets levy upon.
Expense Ratio - The dollar amount that represents acquisition and service costs, expressed as a percentage of written premium.
Experience - A record of losses.
Experience Modification - The raising or lowering of premiums under terms of an experience-rating plan.
Experience Modification Factor – An adjustment to Manual Premium, calculated by an advisory organization (also known as rating bureaus) such as NCCI, based on historic loss and payroll data of a particular insured. There seem to be a lot of myths and misconceptions that surround the Experience Modification Factor. This is an adjustment that is made to the Workers' Compensation insurance premium of companies that meet or exceed a certain size threshold. This threshold is measured in manual premium and varies from state to state. But typically, a company that has been paying $5,000 in manual premium for the past few years or has paid $10,000 or more in a single recent year qualifies to be experience rated.
This means that an adjustment factor will be calculated for such a company based on prior years' payroll and loss data, essentially comparing the loss data of that particular company to average loss data for all other employers in that state who share the same classification codes.
One common misconception is that these factors are calculated by the state. In most states, this is not true. Experience mods are calculated by rating bureaus (or as they are now designated, Advisory Organizations). Most states use the NCCI for this work, but a few states have their own rating bureau). But NCCI is a private corporation, created and funded by member insurance companies. It is approved by the states, but it is not connected with government in any way. But California, Delaware, Hawaii, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Pennsylvania, Texas, and Wisconsin have their own government-run rating bureaus that are separate from NCCI.
Another common misconception is that the experience modification factor compares a company's past premiums with past losses. It does not. Instead, the formula compares actual reported loss information for that particular employer with average loss data for all employers in that state who are also in the same classification codes.
Most experience modification factor calculations use data from three prior policy years, but sometimes mods can be calculated using fewer policy periods. The usual "window" used for the payroll and loss data goes back four years for the first policy year, and encompasses the next two policy years. The most recently completed policy year is excluded from the "window". For example, a mod effective August 1, 2001 would use policy data from the policies effective in 1997, 1998, and 1999. The data from the 2000 policy would not enter the "window" until the 2002 mod, when the data from the 1997 policy would drop out.
Since the mod is calculated based on data reported to the rating bureau by an employers' past insurers, incorrect or incomplete data can cause incorrect experience mods. It can be worthwhile for employers to review these mod calculations, to make sure the calculation is complete and accurate.
Experience Period – The window of time from which loss and payroll data is used to calculate an experience modification factor for an employer. Normally this window is a three-year period, starting four years prior to the effective date of the experience modifier. However, rating bureaus do not wait until three full years of data are in the experience period before producing an experience rating for an employer. If an employer reaches a certain, relatively low threshold of workers' compensation insurance premiums in any one of the three years in the experience period "window", this will make that employer eligible for experience rating.
Fronting: An arrangement between two insurance companies to produce an insurance policy (usually workers' compensation) for a third party wherein one insurance company produces the official policy (for a fee) but cedes all losses from that policy to the other insurer. This kind of arrangement is used in situations where the insurer writing the risk is not an admitted company in a particular state, and the coverage needs to be written by an admitted carrier. In order to meet the statutory requirements, the first insurer pays a second (admitted) insurer to "front" the policy, even though the first insurer remains responsible for paying all losses arising under the policy. This kind of arrangement is often used by captive insurers when they are not admitted carriers in a particular state.
Experience Rating - A method of rating that uses past experience to establish current rates.
Explosion - An extended coverage peril and currently a covered peril in nearly every policy of property insurance. The peril remains distinct from steam boiler explosion, which is covered by boiler & machinery insurance.
Extended Coverage - An early and indivisible "package" of property insurance perils said to have been devised to make possible the spread of windstorm insurance beyond the highly exposed coastal and plains states. For those whose exposure to windstorm was less, "extended coverage" also encompassed smoke damage, hail, riot and civil commotion, aircraft and vehicle damage, and explosion insurance. Included here for historic purposes only since the term, "extended coverage," is no longer in general use.
Extended Non-owner Liability - A personal auto policy endorsement that provides broader liability coverage for specifically named individuals. When attached, it covers: (1) non-owned autos furnished for the regular use of an insured; (2) use of vehicles to carry persons or property for a fee; and (3) broader coverage for business use of vehicles.
Extended Period of Indemnity - A time for recovery of proved business income loss after physical property is restored and business reopened. The 30-day extension included in many business income forms may be extended by endorsement.
Extended Recovery Period/ see Extended Period of Indemnity.
Extended Reporting Period, see Claims-made Coverage.
Extra Expense Insurance - Depending on an insured’s requirements, this coverage may be purchased as a supplement to business income insurance, applying to expediting expenses that aid in quickly restoring the insured’s operations after a covered loss; or it can be the primary coverage sustaining the extra cost of continuing doing business for those insureds who would find it extremely damaging to fail to meet customer commitments, e.g., newspapers, dairies, etc.
