Earned Premium

The amount of the premium that has been "used up" during the term of a policy. 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.


A written or printed form attached to the policy which alters provisions of the contract.


Formerly known as the Retail Credit Company. It is an organization widely used by insurers to obtain information on applicants for underwriting purposes and sometimes on claimants. Their reports are known as Retail Credit Reports.


The money value of an insurance company that is over and above its liabilities. Liabilities include almost all of its reserves.

Estimated Premium

A provisional premium which is adjusted at the end of the year. For example, in Workers Compensation Insurance an estimated premium is based on estimated payrolls for the coming year. At the end of the year, final payrolls are determined and the final premium is computed.

Evidence Clause

A clause in a policy which requires the insured to cooperate in the investigation of a claim by producing records and submitting to examinations. This is required to help an adjuster establish the validity of a claim. An Evidence Clause in a Health policy requires the insured to submit to physical examinations.

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 he 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. Contrast with Primary Coverage.

Excess of Loss

A form of reinsurance under which recoveries are available when a given loss exceeds the cedant’s retention defined in the agreement.


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.

Expense Allowance

A compensation paid to an insurance agent in excess of prescribed commissions.