April 26, 2017

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Earned Premium

The amount of the policy premium used at the time of a cancellation or expiration relative to the policy term. For example, if the policy term is one year then the earned premium at the six month point is 50% of the total premium. This is not an indicator of how much you'll get back if you cancel the policy because the total premium was partially based on the term.

Earthquake Coverage

Protects against damage by earthquakes and earth movement. Deductibles are typically a percentage of the property value.

Effective Date

The first day of a policy term. Denotes the beginning of the insurance coverage.

Electronic Data Processing (EDP) Coverage

A Standard property insurance policy leaves something to be desired in addressing special EDP-related exposures. Electronic data processing equipment and its software is particularly susceptible to damage from electrical or magnetic disturbance and changes in temperature or humidity -- perils which are excluded in a standard "special" perils property policy. Except for prepackaged software programs, which are typically covered on an actual cash value basis, coverage for programs and data in a standard property policy is essentially limited to replacement with blank tapes or diskettes plus transcribing expense. Finally business interruption coverage in connection with damaged EDP Media {not equipment} is limited to 60 days from the date of loss or the time when the other damaged property is repaired, whichever is longer. Therefore, if the building repairs are complete, but normal operations cannot resume because replacement computer programs, data or media are not readily available, an uninsured business interruption loss may result.

The best way to resolve these coverage inadequacies for EDP exposures is to buy a special EDP policy. Typically, EDP policies provide "special" peril coverage similar to that provided by "special" property forms, PLUS coverage for all electrical and magnetic damage, mechanical breakdown and often temperature and humidity changes as well. Some insurers include these perils in the basic form, while others make them available by endorsement for an additional premium. Usually these broader coverages are subject to a higher deductible as well. Valuation can be on either a replacement cost or actual cash value basis, and coverage may be available on a blanket as well as a scheduled basis. Media coverage includes the cost to reconstruct software developed in-house {subject to the limit of liability selected for the coverage}, if necessary.

Perhaps most importantly, an EDP policy will respond appropriately to extra expense or income loss from the loss of EDP equipment, programs and data, provided that these coverage options in the policy have been elected and adequate limits of liability have been established.

Eligibility Period

In employee benefits such as employer provided health and life insurance, the eligibility period is the time alloted for a new employee to enroll without having to prove insurability through health examinations. Once the the eligibility period has passed, an employee may be denied coverage based on a physical examination.

Employee Benefits Plan Liability Coverage

Protects the insured employer against claims by employees or former employees resulting from negligent acts or omissions in the administration of the insured's employee benefits programs.

The term "employee benefits programs" is defined to include group life insurance and group accident and/or health insurance; profit sharing plans; employee stock subscription plans; and workers' compensation, unemployment insurance, social security benefits, disability benefits, etc.

Coverage is intended to extend to the "administration" of these plans, including counseling employees, interpreting employee benefits programs, handling records, enrolling/terminating/cancelling employees in specified plans on a timely basis, etc.

Employee Dishonesty Coverage

Employee dishonesty coverage protects an employer from financial loss due to the fraudulent activities of one or more employees. The coverage includes protection for loss of money, securities, and other property of the insured.

Some scheduled policies are still available, but the majority are written on a blanket basis. This provides coverage for all employees, subject to the policy definitions.

The limit of liability is "per loss" and is applied on an "occurrence" basis. All acts involving the same employee or group of employees is considered one occurrence.

Employment Practices Liability Coverage

Protects the corporation, directors & officers and employees for claims resulting from wrongful termination, discrimination, sexual harassment, wrongful discipline and failure to employ or promote.

Whether you are right or wrong in the eyes of the jury, the typical defense costs alone average $100,000 - $200,000 per case!

Endorsement

A document which changes or alters the basic insurance policy.

Equipment Floater

Covers various kinds of equipment against all potential risks.

Errors & Omissions Coverage

Coverage for liability resulting from errors or omissions in the performance of professional duties. Applicable as a general rule to professional business activities such as banking, accounting, law, insurance and real estate.

Excess Coverage

A type of insurance which covers all or a portion of a loss which exceeds an agreed amount. Excess policies usually do not come in to effect until the primary insurance limit has been reached. Excess policies provide higher limits and offer protection against very large losses.

Extra Expense Coverage

If your building was rendered untenantable by fire or any other insured peril, it would probably be necessary to secure other quarters to continue your business operations. However, the use of such buildings would undoubtedly involve many extra expenses, such as rent, installation of telephones, etc. Extra Expense insurance covers such expenditures over and above your normal monthly expenses.