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Glossary of Termse Earned Premium The amount of written premium equal to the expired portion of the time for which the insurance was in effect.For example, if a one year policy has been in effect six months, half of the total premium has been earned.Effective Date The date on which the protection of an insurance policy or bond goes into effect. Endorsement A written or printed form attached to the policy which alters provisions of the contract. Ex Gratia Payment Latin for “from favor”.A payment by an insurer to an insured for which there is no liability under the contract.In some cases an insurer may feel there has been a mistake or a misunderstanding and may pay a claim even though he does not appear to be liable. Excess Insurance A coverage designed to be in excess over one or more primary coverages and which does not pay a loss until the loss amount exceeds a certain sum. Exclusion A contractual provision that denies coverage for certain perils, persons, property, or locations.Specific situations, conditions, or circumstances that are listed in the contract as being not covered. Extra-Contractual Damages Monetary awards required by a court of law against an insurer for its negligence to its insured.Such extra contractual obligations (ECO) are beyond the insurance contract between the insurer and insured.f Fiduciary A person holding the funds or property of another in a position of trust. Fire Mark An insignia, generally metal, once placed on buildings insured by the insurer represented by the mark.Since the insurers had their own fire brigades, they had to check the mark on a burning building to determine whether or not they should extinguish the fire. “First” Named Insured The first named insured appearing on a commercial policy.The latest forms permit the insurer to satisfy contractual duties by giving notice to the “first” named insured rather than requiring notice to all named insureds. Flesch Test A method for determining the degree of ease or difficulty for reading material.This method counts not only the number of words in a sentence, but also the number of syllables in each word.It has come into popular use because of recent state laws requiring that contracts of insurance be easily understandable at the eighth grade level. Foreign Insurer An insurer domiciled in a state of the United States other than the one in which the insured’s insurance is written. Fortuitous Event See Accident. g Gambling The creation of a situation where there is a chance of either loss or gain.This is the opposite of insurance, which either eliminates or reduces the risk of loss and presents no chance of gain. Grantee The buyer of real estate. Grantor The seller of real estate. Guaranteed Cost A form of premium that has no adjustable features.The final premium rate for the coverage is exactly as set forth ab initio in the contract. Guaranty Fund Funds created by state law from contributions by insurance companies operating in the state which are used to make good any unpaid claims or otherwise to make money available to insolvent companies. Each state which has a fund has a different plan.Also known as Insolvency Funds.h Hazard A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence the extent of the loss.For example, fire, flood, collision, burglary and sickness are perils. Improperly stored flammable materials, blocked flood channels, congested traffic and driving while talking on a cell phone, unlocked premises, and unsanitary food handling are hazards. Moral Hazard A condition of morals or habits that increase the probability of loss from a peril.An individual who previously burned his own property would be an example of moral hazard. |
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