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Escalation

(01) Increase in the value of the property insured during the period of Insurance. (02) Provision for automatic increases on some defined basis in premiums and sums insured.
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UK: Annual increase in the level of annuity, policy benefits or limits based on a fixed percentage or in line with an index, e.g Retail Price Index, subject to an upper limit, e.g. 5 per cent. Dynamised pensions have automatic increases in the pension payments or contributions. Builders’ risk marine risk policy escalate to cover a possible increase in the insured value of the vessel under construction.
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UK: provision for automatic increases on a defined basis in premiums and sums insured.

Escalation Clause for Fire Insurance

To allow automatic regular increase in the sum insured throughout the period of the policy in return for an additional premium to be paid in advance. Selected percentage increase shall not exceed 25% of the sum insured. The additional premium at 50% of the final rate to be charged on the selected percentage increase in advance. Sum insured at any point of time would be assessed after application of the Escalation Clause which is applicable all policies (and not only reinstatement value policies) covering Building, Machinery and Accessories only and shall not apply to stock.

Escalation Clause under Standard Fire and Special Perils Policy

In consideration of the payment of additional premium amounting to 50% of the premium produced by applying the specified percentage to the first or the annual premium the sum insured for the prescribed items shall be increased each day by an amount representing 1/365th of the specified percentage increase per annum. At renewal the insured shall notify the sums to be insured under each such specified items and the specified percentage increase required by the forthcoming period of insurance.

Escape clause

A clause inserted into sliding scale treaties to permit the reinsurer to give notice of termination should a maximum rate become payable in any year and the cedant has the same facility if the minimum rate becomes payable in any year.

Escheat laws

State statutes under which unclaimed interest or financial values including life insurance benefits return (escheat) to the state because no designated beneficiary or heir can be located. Also called unclaimed property statutes . See also unclaimed benefits .

Escrow

A document which has been sealed and delivered to a person who is not a party to it on the understanding that it is not to take effect until some vent happens or some condition is fulfilled.