Insurance Glossary: D-E

Question: What are Damages?

Answer: Damages are the pain and suffering, or special damages, such as out-of-pocket expenses claimed by the plaintiff and awarded as a form of punishment or compensation in a lawsuit.

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Question: What is a Death Benefit?

Answer: A death benefit is the limit of insurance or the amount paid by the insurance company to a beneficiary in the event of the death of the insured.

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Question: What is a Death Claim?

Answer: When the insured dies, a death claim can be submitted, along with proof of death in the form of the death certificate, to the insurer. The claim then may be investigated by the insurance company during the incontestable period.

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Question: What is a Debris Removal Clause?

Answer: A property insurance debris removal clause covers of the cost of cleanup and debris removal after a covered loss.

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Question: What is Decreasing Term Life Insurance?

Answer: In a decreasing term life insurance policy, the death benefit declines with time until reaching zero at the end of the policy term.

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Question: What is a Deductible?

Answer: A deductible is the amount that you must pay before the insurance company starts paying on a covered loss.

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Question: What is a Defense Clause?

Answer: A defense clause in commercial and personal liability insurance policies include a provision to defend a lawsuit against the insured, even when those suits are considered false or fraudulent.

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Question: What is a Deferred Annuity?

Answer: A deferred annuity delays benefit payments until the investor’s selected date. While the benefits may be deferred, the premiums are ongoing. A deferred annuity may be variable or fixed.

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Question: What is a Deferred Compensation Plan?

Answer: A deferred compensation plan can be one of the following:

1) A plan in which an employee may defer compensation until a later date.

2) A life insurance policy that allows the insured to build cash value for later compensation. If the policy holder dies before the payout, then the sum may go to a beneficiary.

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Question: What is Deferred Life Insurance?

Answer: A deferred life insurance policy pays a higher death benefit after an established period.

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Question: What is a Defined Contribution Plan?

Answer: A defined contribution plan is a pension plan that takes contributions from the employee and employer. The benefits of the plan vary based on income, contribution amount, age, number of years until retirement.

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Question: What is a Delayed Payment Clause?

Answer: A delayed payment clause in a life insurance policy states that the insurer can defer payments to the beneficiary in the event that the insured dies. Deferments are generally for certain circumstances such as when the insured and beneficiary are involved in the same accident or natural disaster.

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Question: What is Demututalization?

Answer: Demututalization is the conversion process in which an insurance company owned by policyholders changes to an insurance company owned by shareholders. Policyholders are either given stock or compensation for their loss in the conversion. This process is regulated at the state level.

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Question: What is Dependent Life Insurance?

Answer: A dependent life insurance policy is available to dependents or the spouse of the policy holder under a group plan. Usually the limits of coverage are less.

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Question: What is a Deposit Premium?

Answer: Deposit premium, also known as initial premium, is a tentative charge made at the inception date of certain policies. Will be adjusted when the actual earned charge has been determined after expiration.

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Question: What is Depreciation?

Answer: Depreciation is the reduction in value of real property caused by physical deterioration through aging.

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Question: What are Detached Structures?

Answer: Detached structures are two or more structures located on the same property, but not attached in any way.

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Question: What is Direct Bill?

Answer: A direct bill is the collection of premiums under which the insurance company sends a notice to the insured for the premium.

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Question: What is Direct Billing?

Answer: Direct billing is a system in which the insurance company directly bills the insured for premiums instead of through the agent.

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Question: What is a Direct Writer?

Answer: A direct writer is a company that sells insurance to the public either through employees licensed as agents or through licensed agents, compensated on a commission basis. Those agents represent only that company.

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Question: What is Directors and Officers Liability Insurance?

Answer: Directors and officers liability insurance protects officers and directors of a corporation against claims resulting from negligent or wrongful acts in the course of their duties. Also covers for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors.

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Question: What is Disability?

Answer: A disability is defined by each insurance policy. Generally speaking, an injury or illness that precludes a person from working.

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Question: What are Disability Benefits?

Answer: Disability benefits are periodic payments provided to a person who becomes disabled.

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Question: What is Disability Insurance?

Answer: Disability insurance is a health insurance policy that provides income for employees who have become disabled either through illness or an accident occurring outside of their employment.

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Question: What is Disappearing Deductible?

Answer: The amount of the deductible is directly related to the amount of the loss. If the loss is above a certain amount, the deductible disappears. For car insurance, certain plans have a disappearing deductible to reward the insured with increasingly lower deductibles if the insured continues to stay with the company.

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Question: What is Discovery Period?

Answer: Discovery period is the period of time after cancellation of an insurance contract or bond during which the insured can discover whether there would have been a recoverable loss if the contract had remained in force. The period varies considerably and, in the case of certain bonds and policies, could be indefinite.

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Question: What is Discrimination?

Answer: Discrimination is exercising choice when selecting certain risks.  Individual risks are matched with certain rates based on loss calculations.

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Question: What is Dismemberment?

Answer: Dismemberment is the loss of, or loss of the use of, parts of the body.

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Question: What is a Dismemberment Benefit?

Answer: Health and accident insurance pays a dismemberment benefit should something occur. The plan stipulates the amount paid based on the type of dismemberment.

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Question: What is a Dividend?

Answer: A dividend is money paid to policyholders of stock corporations or mutual insurers. The amount is based on the losses and expenses of the insurer as well as policy provisions.

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Question: What is Dividend Accumulation?

Answer: In life insurance policies, dividend accumulation is a way to leave policy dividends with the insurer in order to accumulate interest for the insured.

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Question: What is a Dividend Option?

Answer: In life insurance policies, some insureds are given a dividend option for ways to use their payments, such as lowered premiums, cash, and additions to policies.

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Question: What is Doctrine of Reasonable Expectations?

Answer: In a doctrine of reasonable expectations, courts may rule that coverage applies if a reasonable person would assume that the insurance policy would cover that circumstance.

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Question: What are Domestic Partners?

Answer: Domestic partners are two adults in a romantic relationship who share a household.

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Question: What is Double Indemnity?

Answer: Double indemnity is when the life insurance benefit is doubled if the death is caused by an accident.

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Question: What are Dram Shop Laws?

Answer: Dram shop laws, sometimes called liquor legal liability laws vary by state, but for the most part, the owner or operator of an establishment or an individual serving or providing alcoholic beverages is liable for injury or damages caused by or to an intoxicated customer.

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Question: What is Dram Shop Liability Insurance?

Answer: Dram shop liability insurance is for liquor legal liability.

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Question: What is a Dread Disease Policy?

Answer: A dread disease policy covers one or more of the following: cancer, heart disease, and/or major maladies.

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Question: What is Drive-Other-Car Coverage?

Answer: Drive-other-car coverage is a provision in an automobile policy designed to protect the policyholder when driving cars other than the one described in the policy.

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Question: What is Drive to and from Work?

Answer: Drive to and from work is a personal lines auto insurance classification for vehicle usage with respect to the distance driven by the principle operator when traveling to or from their job.

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Question: What is Driving Training Credit?

Answer: Many insurance companies charge lower rates to drivers who have successfully completed an approved training program through a driving training credit.

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Question: What is a Dwelling?

Answer: A dwelling is a building in which people live.

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Question: What is Early Retirement Age?

Answer: A person has an early retirement age if they take retirement before the target age of the pension plan. If a person chooses early retirement, the benefits might be lower because there was less time to accrue benefits.

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Question: What is Earned Premium?

Answer: Insurance policy premium is considered earned premium by the insurer as the policy period passes. If half the policy period has gone by, half of the premium has been earned.

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Question: What is Earthquake Insurance?

Answer: Earthquake insurance protects against damage caused by earthquakes and/or earth movement.

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Question: What is EDP Insurance?

Answer: EDP insurance provides protection on electronic data processing equipment, software, and expenses. It is an “all-risk” policy that protects against insured loss and loss of earnings.

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Question: What is Effective Date?

Answer: An effective date is when the policy is considered in effect. Also known as the inception date.

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Question: What is Efficient Proximate Cause?

Answer: Efficient proximate cause is a particular event which was the primary cause of a loss or damage.

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Question: What is Elective Contributions 401(k)?

Answer: Elective Contributions 401(k) is tax deferred money that an employee elects to contribute to their 401(k) plan.

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Question: What are Elements of Negligence?

Answer: Elements of negligence is a legal concept that considers four elements: duty of care, breach of duty, factual causation, and damages. Causing damage to someone, or failing to stop it from happening by you or someone else.

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Question: What is Eligibility Period?

Answer: An eligibility period is a set period of time in which an employee can sign up for life and health insurance through their employer’s plan. No proof of insurability or physical exams are required.

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Question: What is Elimination Period?

Answer: Elimination period is also known as the waiting period. The length of time after a disability occurs in which no indemnities are paid.

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Question: What is Embezzlement?

Answer: Embezzlement is the use of money in a fraudulent manner for yourself that has been entrusted by another.  A similar term, called conversation, applies to property instead of money.

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Question: What is Emergency Road Service?

Answer: Emergency road service is part of an insurance plan that provides services to road emergencies, like flat tires and dead batteries.

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Question: What is Emotional Distress?

Answer: Emotional distress is an injury where the victim suffers anguish and other disorders.  It is not considered to be bodily injury in many jurisdictions. However, physical manifestations may result which may be considered bodily injury.

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Question: What is an Employee Benefit Plan?

Answer: An employment benefit plan is set of benefits provided by the employer to employee that is either partially or fully subsidized by the employer. Such benefits may include: health insurance, life insurance, and retirement plans.

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Question: What is Employee Retirement Income Security Act of 1974 (ERISA)?

Answer: Employee Retirement Income Security Act of 1974 (ERISA) established rules and standards to protect employee pension benefits.

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Question: What is Employers Liability Insurance?

Answer: Employers liability insurance is the common law liability of a workers compensation law and policies.

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Question: What is Employment-Related Practices Liability (ERPL) or Employment Practices Liability Insurance (EPLI)

Answer: Employment-Related Practices Liability (ERPL) or Employment Practices Liability Insurance (EPLI) is coverage for legal costs to defend claims involving sexual harassment, wrongful termination and discrimination, including legal liability for such acts.

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Question: What is an Endorsement?

Answer: An endorsement is an addition to a basic policy for the purpose of changing the policy that can be added at any time.

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Question: What is an Endowment Policy?

Answer: An endowment policy is a type of life insurance policy, often used as a retirement account, in which the stated amount is paid to the beneficiary upon policy maturity.

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Question: What is Epicenter?

Answer: The epicenter is the point on the surface of the earth directly above where the earthquake began. Movement then expands along the fault line.

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Question: What is Equipment Floater Insurance?

Answer: Equipment floater insurance is an all-risk form of inland marine insurance which covers different types of equipment.

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Question: What is Equity?

Answer: On property, equity is the value of the property minus the amount owed on the property. On business, it is the total assets minus total amount of liability.

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Question: What is Errors and Omissions Insurance?

Answer: Errors and omissions insurance is professional liability insurance providing coverage for mistakes made by a person or persons in a profession not involved with the human body, such as lawyers, architects, engineers, or for either a mistake or a failure to act in a service business.

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Question: What is Evidence of Insurability?

Answer: Evidence of insurability is a person’s proof of health and occupation in order to qualify for health or life insurance policies.

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Question: What is Excess Liability Insurance?

Answer: Excess liability insurance is an extra layer of protection over and above the primary layer with higher limits and catastrophic protection. This only takes effect after the primary layer is exhausted.

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Question: What is an Exclusion?

Answer: An exclusion is a clause in an insurance policy which specifies what is specifically not included in the policy’s coverage.

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Question: What is an Executor?

Answer: An executor is a person named in the will as the administrator of the deceased’s estate.

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Question: What is an Executrix?

Answer: An executrix is a female executor, named administrator in a deceased’s will.

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Question: What are Exemplary Damages?

Answer: Exemplary damages are compensation awarded to a person to make an example of, or punish, the wrongdoer. Also called punitive damages.

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Question: What is Expense Ratio?

Answer: An expense ratio is the claims expenses incurred (actual and reserved). It is often shown as a percentage of net written premiums.

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Question: What is Expiration?

Answer: Expiration is a date an agreement ends, usually an insurance policy.

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Question: What is Extended Coverage Insurance?

Answer: Extended coverage insurance is protection against loss or damage caused by windstorm, hail, smoke, explosion, riot, civil commotion, vehicles, and aircraft provided by a fire policy.

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Question: What is Extortion Insurance?

Answer: Extortion insurance is designed to protect an individual or business against loss of money, property, or assets from threats by another party.

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Question: What is Extra Expense Insurance?

Answer: Extra expense insurance is coverage for additional expenses incurred because of an insured loss.

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Question: What is a Fault (Earthquake)?

Answer: A fault (earthquake) is a fracture along the ground’s surface that, when displaced, may cause the earth’s crust to move, often times resulting in an earthquake.

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