Efficacy risk

The risk (usually excluded under a public liability or products liability policy) of loss or damage caused by a product failing to perform its intended purpose or function.

Electrical clause

A clause used in fire insurance policies to exclude damage to electrical plant by its own self-heating or overrunning.

Employers' liability insurance

A compulsory class of insurance business in the UK that covers the employer's legal liability for death, illness and injury claims by employees acting in the course of their employment. A limit of no less than £5 million must apply (market practice is to provide £10 million automatically) and certificates must be displayed at each of the insured's locations. Certificates must be retained for 40 years.

Endorsement

(a) Any written, printed or typed amendment to the standard terms of a policy; for booklet-style policies there are often many endorsements pre-printed that will be effective only if identified as being operative in the policy schedule.

(b) An amendment to a driving licence indicating that the holder has been convicted of a motoring offence, defined by category on the licence.

Engineering insurance

A class of business that includes damage and business interruption covers for boilers, plant and machinery (including computer and electrical equipment) and the carrying out of inspections for such items.

Environmental impairment liability insurance (EIL)

A claims-made policy, either for a fixed period (3 to 10 years) or annually renewable, designed to cover legal liabilities to third parties for pollution, and clean-up costs for the insured's or third party's site.

Errors and omissions

Same as professional indemnity.

Estimated maximum loss (EML)

A financial sum representing the largest likely loss from an insured peril, assuming that protection and detection devices fail (in the case of non-sprinklered risks) but that emergency services attend within a reasonable time. Also known as probable maximum loss (PML). The basis for assessment is defined in ABI guidelines.

Ex gratia payment

A payment in settlement of a claim when legal liability to pay is denied.

Ex works (EXW)

A contract term for the sale of goods whereby the buyer is responsible for the goods, including the insurance, from the factory.

Exception

A peril or contingency specifically excluded from the policy cover. Marine insurers call this an exclusion.

Excess

The first part of each and every claim that the insured must bear. An excess may be voluntary, in which case a reduction in premium will be allowed, or compulsory if imposed by the insurer as one of the policy terms. See also Deductible.

Excess of loss

A general term for insurances that pay losses only if they individually exceed a defined threshold and then only for the amount above the threshold figure up to the policy limit. See also Non-contribution clause.

Exclusion

(a) A policy term that limits policy cover in a specific area or for specific risks.

(b) In marine insurance, a peril or contingency specifically excluded from the policy cover.

Exemplary damages

See Punitive damages.

Exhibition insurance

(a) A package arrangement of property, business interruption and liability insurances for exhibitors covering the preparation stage and attendance at an exhibition; see also Abandonment, ATA carnet.

(b) An extension to a cargo or goods in transit policy, to cover the goods while exhibited and, if necessary, returned.

Experience

The comparison of claims, or claims and earned premium, over a period in respect of an insurance or group of insurances.

Explosion

(a) A limited form of cover provided by a standard fire policy (ABI recommended wording) that includes concussion damage only from boilers used for domestic purposes; Lloyd's standard form gives a slightly wider cover.

(b) An additional peril that may be added to a fire policy to provide cover for explosion of whatever kind (other than explosion of the insured's own boilers and steam pressure vessels, cover for which is provided under a boiler and pressure plant policy).

Exposure

(a) The measurable or estimated extent of risk.

(b) The risk of loss from proximity to a hazard.

Express conditions

Those policy conditions that are specifically stated in a policy document, often reinforcing or amending implied conditions at common law.

Extension

(a) Extra cover beyond the standard terms of a policy.

(b) The provision of cover for a longer period.

Extinguishment costs

The costs associated with containing or putting out a fire. They are covered by the fire section of a property policy under the doctrine of proximate cause.

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