Each or Line

Term marked against the single reinsured amount in respect of a fleet of vessels to indicate that each vessel is reinsured for that sum or the original insurer's line on the vessel, whichever is the less.

Early signing

Where a broker has difficulty in getting money out of a country, the underwriter may agree to the signing of a policy before the actual premium can be noted.

Earned premium

Premium is said to be earned by a particular date to the extent that the insurance has by then run its course.

Earned-incurred basis

A basis for calculating an insurer's loss ratio by comparing the premiums earned in a period with the estimated cost of claims arising during the period.


Damage occasioned by or happening through earthquake is excluded from the standard fire policy but may be insured as an additional peril. Earthquake damage is the subject of separate insurance in some countries.

Earthquake fire damage

Damage by fire occasioned by or happening through an earthquake.

Earthquake shock damage

Damage by earthquake shock as opposed to earthquake fire damage.

Earthquake zone

An area particularly subject to earthquakes / A division of a country that is particularly subject to earthquakes, made by insurers for the purposes of rating and of controlling the extent of their exposure to risk from a catastrophe.

Economy wording

Where, in fire insurance, co-insurers issue separate policies the full specification may be included only in the policy of the leading insurer, other policies containing an outline only, as a measure of economy.


The European Currency Unit, a unit of value, based on a number of European currencies and used by the European Community to express sums of money.

Effective date

The date on and from which an insurance comes into force.


Goods and chattels.

Eighty-five per cent reinstatement average scheme

A scheme for the insurance of buildings under the reinstatement clause of a policy whereby average is applied only if the sum insured is less than 85% of the reinstatement value.

Ejusdem generis rule

A legal rule of construction. Where a specification of things of the same nature, or genus, is followed by a general word or phrase (e.g., "etc." or "and all other perils") it will be interpreted as being confined to things of the same genus.

Elective benefits

Benefits as to which the beneficiary has an option either whether to insure or, if he insures, as to the form in which to take the benefit.

Electrical clause

A clause in a fire insurance policy to exclude damage to electrical plant and apparatus caused by abnormal currents or self-heating.

Embedded value valuation

A method of valuing a portfolio of life insurances that takes account of probable future surplus arising from continuing contracts.


Fraudulent diversion to one's own use of the money or property of another that is in one's care.

Emergency medical treatment

Under the Road Traffic Act 1988, a motor insurer must pay a fee to a medical practitioner who renders emergency treatment to a person injured in an accident arising out of the use of the insured vehicle on a road.

Employer's form

The proposal form in fidelity guarantee insurance.

Employers' Liability (Compulsory Insurance) Act 1969

An Act that made it obligatory for businesses to insure in respect of their liability to employees for bodily injury or disease arising out of and in the course of their employment.

Employer's Liability (Defective Equipment) Act 1969

An Act rendering an employer liable for personal injury to employees caused by defects in equipment provided by the employer, even if the defect is attributable to the fault of a third party such as a manufacturer or repairer.

Employers' liability insurance

Insurance by employers in respect of their liability to employees for injury or disease arising out of and in the course of their employment.


Any writing on a policy in addition to its normal wording which supplements or modifies its terms. It may be added when the policy is prepared, or subsequently / Writing on the back of a document, e.g., the payee's signature on the back of a cheque.

Endowment assurance

Life assurance providing for the payment of a sum of money at the end of a specified period or on death if death occurs meanwhile.

Engineering insurance

The insurance of various perils arising out of plant and machinery, such as explosion or collapse of boilers, breakdown of electrical or mechanical plant and lifts and cranes, and resultant damage to the insured's surrounding property and liability to third parties.

Engineering interruption insurance

Insurance covering the insured's pecuniary loss resulting from interruption to or interference with the insured's business caused by an accident to machinery or a failure in public supply (e.g., of water or electricity).


An engineer employed by an insurance company to inspect plant and machinery.

Enhanced ordinary charges

Increases in the charges for handling insured cargo resulting from the fact that the cargo has been damaged.

Environmental impairment liability insurance

Insurance against liability for accidents or loss arising out of impairments of the environment by the insured, such as the escape of pollutants or smells, noises, vibration or heat.

Equal access

Statutory provision whereby pension schemes for male and female members must treat the sexes alike in various respects.

Equalisation fund

A fund that may be set up by insurers to smooth out the incidence of claims over a number of years, as where the incidence of insured perils, such as damage by hail, is irregular.


Fairness, natural justice / The application of a standard of what seems just in particular circumstances, as opposed to the strict enforcement of legal rules when that would result in unfairness / A body of principles and rules developed by chancery courts in England to mitigate the rigours of other courts. Since 1875 these principles and rules have been applied in all courts / The value of property in excess of any charges upon it.

Equity of redemption

The right of a mortgagor, on paying off his debt, to recover the mortgaged property notwithstanding any agreement to the contrary.

Equity-linked policy

A life insurance policy the benefits of which are calculated according to the value from time to time of certain specified categories of ordinary shares.

Erection all risks

See Contractors' all risks.

Errors and omissions insurance

Insurance against losses due to errors or unintentional omissions.


Provision for automatic increases on some defined basis in premiums and sums insured.

Escalator clause

A clause in a policy providing for a possible increase in the insured value of property on account of rising costs.

Escalator pension

Same as Dynamised pension.

Escape clause

A clause in a reinsurance treaty enabling the reinsurer to terminate the contract upon notice.


A document which has been sealed and delivered to a person who is not a party to it on the understanding that it is not to take effect until some event happens or some condition is fulfilled.

Estimated maximum loss

Same as Probable maximum loss.

Estimated premium

A provisional premium subject to eventual adjustment.


A rule of evidence which prevents a person from being heard to say that a particular state of affairs does or does not exist, because either (a) a judgment has established to the contrary, (b) he has made a contrary statement in a deed, or (c) he has previously made a contrary statement or has acquiesced in a contrary statement, so allowing another person to act on the strength of that statement.

European accident statement

A form issued by motor insurers in many European countries to their policyholders for use if an accident occurs. It is for completion and signature by the parties concerned on the spot so that the basic facts about the accident can be established at the outset.

Evidence of age

In life and health insurance and before paying annuities insurers require evidence of the insured's age as the premium rate or even eligibility for insurance is affected.

Evidence of health

Evidence of good health is required by insurers at the outset of a life or health insurance and when a lapsed policy is to be revived. In group schemes it is sometimes waived. It is not required on renewal of a permanent life or health insurance. Policies with options to effect additional insurances may grant the option without further evidence of health being required.

Ex gratia payment

A sum paid by an insurer who maintains that he is not liable to make the payment.

Ex parte

A step in a legal action taken by one party in the absence of the other is said to be ex parte.

Ex turpi causa non oritur actio

No (right of) action arises out of an immoral cause.


A peril or contingency specifically excluded from the insurance cover.

Exceptional circumstances clause

A clause in a business interruption policy providing that adjustments shall be made in calculating the amount of a claim by allowing for the trend of the business and other circumstances which would have affected the business if the material damage had not occurred.


An amount being the first part of the cost of a claim, which the insured has to bear in accordance with the terms of the insurance / The balance of a risk that cannot be placed in an insurance market, so that additional cover is needed.

Excess floating policy

A collective fidelity guarantee policy which provides that in addition to the specified sum insured in respect of each employee there is a further floating amount which can be used to indemnify the insured against unexpectedly large losses.

Excess insurance

An insurance that takes effect only in respect of losses exceeding a stated amount or the amount covered by a previous (or primary) insurance to which it does not make contribution.

Excess line broker

An insurance broker who places a surplus line (2) (U.S.).

Excess of average loss reinsurance

Excess of loss ratio reinsurance where the excess point is recalculated annually as a moving average of the loss ratio experienced over an agreed number of preceding years and the ceding company is required to bear an agreed share of any loss in excess of that average.

Excess of line reinsurance

The marine insurance equivalent of Surplus reinsurance (q.v.).

Excess of loss policy

A policy that covers claims only to the extent that they exceed a stated amount.

Excess of loss ratio reinsurance

Reinsurance under which the reinsurer agrees that if the loss ratio on the original insurances exceeds a given percentage he will pay a proportion (say 90%) of the loss in excess thereof, subject to some maximum.

Excess of loss reinsurance

Reinsurance covering claims only to the extent that they exceed a stated amount.

Excess point

Term used in excess of loss reinsurance for the point at which the reinsurance comes into effect.

Excess reinsurance

Reinsurance whereby the ceding company retains the whole amount up to a specified limit and the reinsurer covers the excess beyond that amount though subject as a rule to some specified maximum.

Excess value policy

A policy effected by an insured to protect himself where the value of a vessel stated on a marine hull policy is less than its true value and the insured may therefore incur liabilities, e.g., for salvage payments or general average contributions, in proportion to the under-valuation.


A part of the insurance contract that limits its scope.

Execution of policy

The formal act of completing a policy whether by signing or by sealing.


A person appointed by a will to give effect to it after the testator's death.


A female executor (q.v.).

Exemplary damages

Exceptionally heavy damages awarded by a court to deter persons from behaving as the defendant has done. Cf. Punitive damages.

Exempt approved scheme

See Approved scheme.


The removal of a life from mortality statistics on account of death or the maturity of a policy.

Expectation of life

The number of years which an individual aged exactly X would expect to live if he (or she) were subject to the same probabilities of death as the rest of his age group. Complete expectation of life includes fractions of a year; curtate expectation excludes them.

Expected value

The results obtained by multiplying the value of each possible event by its respective probability and totalling.

Expense loading

The addition made to the pure premium for an insurance to allow for the insurer's expenses.

Expense ratio

The proportion that the expenses of the insurer bear to his income from premiums.


The comparison of claims, or claims and premiums, over a period, in respect of a particular insured or a group of insurances.

Experience rating

Rating of an insurance based on the record of a particular insured.

Experience refund

In life reinsurance, a refund by the reinsurer of part of the premium in proportion to the profitability of the business.


The ending of the period of insurance.


A standard fire policy covers damage by fire, whether resulting from explosion or otherwise, and explosion of domestic-type and heating or lighting boilers only. It excludes other damage by explosion, whether the explosion is caused by a fire or not. Other explosion damage may be covered as an additional peril. Boiler explosion is also the subject of engineering insurance.

Expona clauses

Clauses in reinsurance treaties that define the extent if any to which exposure to liability in North America is included.

Export credit insurance

Insurance for exporters against the risk of non-payment for political and/or commercial reasons.


The state of being subject to the possibility of loss / The measurable extent of risk / The possibility of loss to insured property caused by its surroundings

Exposure hazard

The extent to which property is subject to the possibility of a fire spreading from a nearby building.

Express warranty

A promise by the insured, set out in a policy, that a given thing shall or shall not be done or that a state of affairs will or will not exist.

Expression of wish form

A form on which a member of a pension scheme may indicate his wishes as to the disposal of benefits accruing on his death, for the guidance of those administering the scheme in the exercise of any discretion they may have.


The act of taking over property or rights in property by a sovereign body or an authority vested with powers thereby.

Extended protest

A declaration by the master of a vessel more detailed than a protest (q.v.) made in view of litigation.

Extended terms insurance

A form of export credit insurance where credit is being granted in excess of 180 days.


A clause in a policy which gives extra cover, e.g., in a business interruption policy, cover in respect of loss through fire at a supplier's premises, or in a cash policy, cover in respect of personal accident benefits to injured employees.

External member (or External Name)

An underwriting member of Lloyd's who is not (or was not, just before retirement) occupied principally with business at Lloyd's by a broker or underwriting agent. (Cf. Working member).

Extra premium

An amount added to the premium for some increase in hazard.

Extra-contractual obligations

A term used in reinsurance contracts to cover or exclude damages awarded in courts against an insurer that go beyond the insurer's contractual liability because, for example, the insurer has been negligent in negotiations or has failed to pay a claim promptly.

Extraneous perils

Perils covered by an "all risks" policy on marine cargo other than navigation perils, e.g., negligence, short delivery, leakage.