[P001]
Package policy
A combination of property-liability coverages of two or more separate policies in one contract with one premium. The development of package policies is a move toward economy and efficiency in giving the policyholder one document instead of several.
[P002]
Paid business
A life and health insurance term used to designate the business that has been underwritten and accepted, and for which an initial premium has been received, and the policy issued but not yet been delivered to the insured.
[P003]
Paid-up additions
A life insurance option allowing the insured to use policy dividends to purchase additional limits of whole life coverage that are paid in full (paid-up).
[P004]
Paid-up insurance or paid-up at age life insurance
A whole life insurance policy giving standard lifetime protection, but where the policy becomes paid in full at a certain age, such as a policy paid in full at age 60.
(See limited-payment life insurance.)
[P182]
Paid-up policy
A life policy that requires no more premium payments. Death benefits are not paid, however, until death.
[P005]
Pair-and-set clause
An inland marine policy provision which requires the insurer, at the insured's option, to restore or pay for the entire pair or set of jewelry or fine arts when only a part has been lost, destroyed or damaged.
[P246]
PAMIC
(See Pennsylvania Association of Mutual Insurance Companies.)
[P006]
Panel wall
In building construction, a panel wall is normally an exterior, one-story, nonbearing panel. In multistory buildings, the panel must be anchored at each story.
[P007]
Paramedics professional liability
Specially designed professional liability coverage for the exposures experienced by paramedics who have quasi-medical malpractice loss potential.
[P008]
Parapet
A division wall or fire wall which, if it is to be accepted as a standard division, must extend through the roof and usually several feet above it. It (if brick or concrete) is usually topped with tile. The part above the roof is the "parapet."
[P009]
Parcel post insurance
An inland marine form that insures against the loss of merchandise in transit by government parcel post.
[P010]
Parent company
The organization which owns or controls one or more subsidiaries.
[P247]
PARMA
(See Public Agency Risk Managers Association.)
[P241]
Parol
Oral statements.
[P242]
Parol Evidence Rule
This rule preserves the intent of written agreements by prohibiting their content from being affected by any oral statements concerning such agreements. In other words, oral statements may not become part of a written agreement.
[P011]
Partial disability
Usually defined as inability caused by a covered illness to perform one or more of the functions of one's regular job.
(See permanent and total disability, and total disability.)
[P183]
Partial disability benefit
Most disability insurance plans pay only when a person is totally disabled (as defined by the policy). A person may be able to work part-time or at another less demanding job during recovery. Policies that provide partial disability benefits pay a percentage of the total benefit for these partial disabilities.
(See also residual disability benefit.)
[P012]
Partial disability insurance
Insurance coverage for insureds who may suffer a partial disability. Partial disability is defined as the inability caused by a covered accident, injury, or illness to perform one or more of the functions of one's regular job but which does not, however, limit the person's ability to perform other forms of employment. Often this insurance is called on to provide rehabilitation benefits and job retraining.
[P013]
Partial loss
One involving less than all of the values insured or calling on the policy to pay less than its maximum amounts.
[P014]
Participant
An individual who is eligible to be covered by a pension or group insurance plan.
[P015]
Participate
To share in the writing of a risk; the assumption of liability.
[P016]
Participating insurance
A designated class of insurance which shares in the dividends declared by the company to policyholders. While mutual insurers primarily issue participating policies, and stock insurers usually issue nonparticipating policies, either type of insurer may seek authorization from its domiciliary state insurance department to issue the other type of policy.
(See dividend, and nonparticipating insurance.)
[P184]
Participating reinsurance
Any form of reinsurance where the reinsurer participates with another on a pro rata basis. For example, in a quota share arrangement, primary insurer agrees to share 50/50 with reinsurer. If a $100,000 policy is involved, both primary and reinsurer pay $50,000.
(See pro rata reinsurance.)
[P017]
Particular average
In ocean marine insurance, a loss either partial or total, which falls on one or more property(ies) or interest(s) being shipped, as opposed to a general average.
(See general average.)
Partner controlled insurance program
An insurance program for larger construction projects that is purchased and administered by a collaboration of the project's owner and its general contractor. Also see wrap.
[P018]
Partnership insurance
Life and health insurance coverages available for partnerships. These policies are used when the partnership needs protection for the continuation of the operation should one of the partners die or become disabled.
[P019]
Party wall
A wall separating, but common to two buildings.
[P020]
Passenger bodily injury
Injury, sickness, disease, or death sustained by a passenger. Most aircraft liability contracts do not provide coverage for bodily injury to passengers. This coverage must be purchased separately.
[P021]
Passenger hazard exclusion
An exclusion in motorcycle liability policies that removes coverage for bodily injury suffered by passengers of the insured.
[P185]
Past service
The number of years an employee worked for the company before the company instituted a pension plan. Some plans give credit for past service.
[P022]
Patent insurance
1) Insurance coverage for losses the insured may suffer as a result of another party's infringing upon the insured's patent rights.
2) Insurance coverage for allegations against the insured of infringements upon the rights of a patent holder.
[P023]
Paul vs. Virginia
A famous lawsuit decided in 1869 by the U.S. Supreme Court, in which the court held that insurance was not commerce and, therefore, not interstate commerce; thus, insurance was not subject to federal control. This was upset by the Supreme Court in 1944 in an equally famous case brought against the Southeastern Underwriters Association, usually referred to as the S.E.U.A. case. The citation is Paul vs. Virginia, 8 Wall. 168, 19 L. Ed. 35T (1868).
[P224]
Payback period
Used in reinsurance rating to describe the number of years it would take for a policy's premium to equal the amount of indemnification.
[P025]
Paymaster robbery insurance
This form (now obsolete) covered payroll moneys against loss by robbery inside or outside the insured's premises. While there is no coverage specific to paymaster, coverage for loss of money and securities can be purchased in the Commercial Crime policy.
[P027]
Payor disability
A life insurance provision or rider that waives premium payments should the party paying the premium die or become disabled. Often attached to juvenile life or health insurance policies.
[P028]
Payroll audit
An examination and verification of an insured's records for the amount of payroll for classes of employees which is used in determining the premium for certain lines of insurance, such as workers compensation. The company sends out auditors to determine the accuracy of the figures provided by the insured.
(See auditor.)
[P236]
PCI
(See Property Casualty Insurers Association of America.)
PCIP
(See Partner Controlled Insurance Program, also see wrap.)
[P186]
PCLA
Property Claim Law Associate designation sponsored by the American Educational Institute. Headquarters: Basking Ridge, NJ.
[P187]
PD
A form of "third-party" protection covering the insured's legal liability for damage to property of others caused by the insured's negligence.
(See Liability insurance.)
[P029]
Peak season endorsement
A property endorsement that allows an insured to purchase additional property damage insurance for specified cyclical periods occurring on a regular basis. The insured purchases an underlying limit that remains constant throughout the entire year. Additional limits are purchased to increase the underlying limits for specified periods of time. Both the amounts and the dates of the increase are indicated in the endorsement. This type of endorsement provides protection for risks that are seasonal or have significantly higher inventories at set times each year, such as the holidays.
[P030]
Penalty of the bond
In a surety bond, the amount guaranteed or the limit of the company's liability.
[P248]
Pennsylvania Association of Mutual Insurance Companies
The Pennsylvania Association of Mutual Insurance Companies (PAMIC) consists of mutual P&C insurers operating and/or located in Pennsylvania. This trade association sponsors education seminars, holds annual conventions, monitors and informs members about insurance-related legal activity and performs other services. Headquarters: Wormleysburg, PA.
[P189]
Pension
In the general sense, a life income provided to an individual. In the formal sense, a plan established to provide such benefits to individuals (employees) usually in a format that meets IRS guidelines for being a qualified pension plan.
[P188]
Pension Benefit Guaranty Corporation (PBGC)
A federal agency. Defined benefit pension plans pay a fee to the PBGC that goes into an insurance fund to pay benefits to participants of insolvent pension plans.
[P031]
Pension trust liability insurance
Protection for those who administer pension and welfare funds, profit-sharing and other employee benefit programs against loss for errors and omissions by the administrator. The need for this coverage was created by the Employee Retirement Income Security Act (ERISA) of 1974.
[P213]
PEO (professional-employer organization)
A commercial firm that contracts with employers, allowing the latter to outsource functions such as employee benefits, human resources and payroll, reducing their payroll and operating expenses.
[P190]
Per capita
A life insurance beneficiary designation meaning "by head." The designation per capita by a mother (insured) with a father and two children would divide up the proceeds three equal ways: father - child 1 - child 2.
(See also per stirpes.)
[P035]
Per diem business interruption insurance
Coverage which provides that the amount recoverable is limited to a fixed amount per day or part thereof in which the manufacture of goods is prevented by an insured loss. This coverage has now been replaced by the business income coverage form.
Per occurrence limit
This refers to the cap amount an insurance company will pay for all claims arising from a single incident. In an automobile policy, it applies to bodily injuries suffered by all parties. When Bodily Injury coverage is purchased in split limits, the second limit is the "per occurrence" limit, e.g. $100,000 (per person) / $300,000 (per occurrence)
Per person limit
This refers to the maximum amount an insurance company will pay for any one person's injuries related to a single incident. In an automobile policy, it applies to bodily injuries suffered by each person. When bodily injury coverage appears in split limits, the first limit is the "per person" limit, e.g., $100,000 (per person) / $300,000 (per occurrence)
[P191]
Per risk excess reinsurance
A reinsurance term, it refers to excess coverage that applies to each given risk rather than on an occurrence or an aggregate basis. For example, Alpha Re agrees to reinsure Regular Fire & Casualty's losses on four-family dwellings only if a loss per risk exceeds $50,000. So if a city block containing five Regular Fire & Casualty four-family dwellings was lost in a fire, Alpha Re must pay the first $50,000 on each of the five dwellings ($250,000).
[P192]
Per stirpes
Means "by stock" or family line or branch. A beneficiary designation in life insurance that is used to designate a family line of individuals. Grandfather has a policy on his life with his son as beneficiary. Grandfather dies and the policy begins paying benefits to the son. The son dies before all benefits are paid. Any remaining benefits accrue to the grandchildren.
(See also per capita.)
[P193]
Per-cause deductible
A deductible in health insurance that pays per illness, e.g., Mary has a heart attack, then later has a stroke. Each of these is a separate cause and would incur a separate deductible.
[P194]
Per-cause maximum
The most a health insurance plan will pay for a single accident or illness.
[P032]
Percentage of loss deductible
A type of deductible that does not specify the exact amount that will be subtracted from each loss, but rather sets a percentage of loss that will be retained by the insured. Often, this type of deductible is subject to a minimum amount and capped by a maximum.
[P033]
Percentage of value deductible
A type of deductible that does not specify the exact amount that will be subtracted from each loss, but rather sets a percentage of the value of the property that is to be retained by the insured. Often, this type of deductible is subject to a minimum amount and capped by a maximum.
[P034]
Percentage participation
In health insurance, a contract provision making the insured responsible for a specified percent of covered expenses. For example, if 80%-20% participation is designated, the insurer will cover 80% and the insured will be responsible for 20% of covered expenses.
[P036]
Performance bond
In general terms, a surety bond guaranteeing the performance of a contract, usually associated with construction work, but possible for almost any kind of contract. Sometimes called a performance bond.
[P037]
Peril
The cause of loss, for example, fire, wind, vandalism, or accident.
(See economic perils, human perils, and natural perils.)
[P038]
Perils of the sea
Causes of loss unique to the operation of ships and their cargoes, such as sinking, stranding, heavy weather, etc., but not fire, lightning or theft.
[P195]
Period certain
In a life insurance settlement option or annuity, the period of time benefits will be paid even if the insured dies before the end of the period certain, e.g., 10 years. The remainder will be paid to the contingent payee.
[P039]
Periodic payments
The practice of spreading payment of an obligation over an extended period, instead of paying the obligation in a lump sum; often referred to as a structured claim settlement.
[P040]
Period of restoration
In time element or business income insurance, it is the period of time in which coverage is in effect. It starts at the occurrence of the direct physical damage loss and continues until the damaged property has been rebuilt, restored or replaced, as long as that period of time is reasonable, or until the limit has been exhausted.
[P041]
Permanent and total disability
Inability to perform one's own and sometimes any occupation, which lasts for a stated period of time and is caused by a covered illness or injury.
(See partial disability, and total disability.)
[P042]
Permanent partial disability
Usually defined as the permanent inability, caused by accident or illness, to perform one or more of the functions of one's regular career or occupation.
[P043]
Permanent total disability
The permanent inability, caused by accident or illness, to perform the functions of one's regular career or occupation. In many cases, the inability to perform any job or occupation.
[P043a]
Permit or license bond
A surety bond often required by municipalities and other public authorities to indemnify them against loss from breach of any regulation or ordinance under which the license or permit is issued.
[P044]
Perpetual insurance
A form of insurance, principally property or inland marine, written without an expiration date, which originated in Philadelphia and is largely confined to that city and its surroundings. The policyholder makes a deposit with the insurance company, and the interest earnings from the funds collected pay the losses suffered.
[P196]
Persistency
A life insurance term used to describe how many customers of an agency or a company actually pay their renewal premiums. Usually listed as percentage of premium or accounts.
[P045]
Personal accident insurance
Protection of an individual against loss caused by an accident.
[P046]
Personal articles floater
Worldwide coverage on an "all-risk" basis for scheduled, valuable personal property.
[P047]
Personal auto policy
Coverage designed to replace both the family auto policy and the special package auto policy as the "standard" form for insuring private passenger autos and certain types of nonbusiness trucks.
[P048]
Personal effects floater
An inland marine policy which insures articles, usually accompanying travelers, against "all-risks" while away from home.
[P049]
Personal injury
Injury, other than bodily injury, resulting from false arrest, false detention, false imprisonment, malicious prosecution, wrongful eviction, wrongful entry, or the invasion of privacy of a premises. It also includes injury caused by oral or written material that slanders a person, goods, products, services, or which violates the right of privacy.
[P050]
Personal injury protection (PIP)
Also known as no-fault insurance, PIP provides insurance for medical costs, loss of earnings, additional living expenses, and funeral costs for occupants of the insured automobile and pedestrians other than those insured under other policies.
(See no-fault automobile insurance, and automobile medical payments insurance.)
[P237]
Personal Insurance Federation of California (PIFC)
A trade association of insurers, operating in California, who specialize in writing personal lines (private vehicle and homeowners) coverage in that state. Headquarters, Sacramento, CA.
[P051]
Personal lines
Types of insurance written for individuals rather than businesses, for which the term commercial lines applies.
[P052]
Personal property
Property other than real (fixed, structural) property.
[P053]
Personal property floater (PPF)
A broad form of inland marine policy issued to householders, insuring all furniture and household effects wherever they may be, on an "all-risk" basis.
[P054]
Personal property of others
Contents, business personal property, and any other property excluding real property, that is not owned by the insured.
[P055]
Personal surety
Surety furnished by an individual, as distinguished from surety furnished by a surety company, called a "corporate surety."
(See surety.)
[P056]
Personal theft insurance
Coverage of personal property and household goods against loss by theft in and out of residential premises. Issued in the ordinary form and in a broad form, the latter including mysterious disappearance and certain more liberal provisions.
[P243]
Pesticide applicator coverage
This coverage supplements the protection of a Commercial General Liability policy by providing protection against loss or damage an insured causes by a pesticide or herbicide application. The loss must involve accidental introduction of a substance at a site that is not owned or controlled by the insured. Typically, the loss must occur in relation to an operation that complies with all government regulations.
[P057]
Pet insurance
Life and health insurance for animals, pets, or livestock.
[P058]
Pharmacists professional liability insurance
Protects pharmacists and their professional staff against claims for personal injury arising from malpractice, error or mistakes in the performance of their professional services.
[P225]
Philatelic property
Refers to postal or revenue (tax) stamps and related material.
[P239]
PHS
(See policyholder surplus.)
[P059]
Physical damage
1) As used in property or liability insurance, physical injury to tangible property.
2) As used in automobile insurance, actual damage or loss to the vehicle itself caused by collision, overturn, fire, theft, vandalism, or malicious mischief.
[P060]
Physical hazard
Danger of loss or liability arising from the condition, occupancy or use of property, as opposed to such danger arising from the character of the policyholder.
(See moral hazard, hazard, and morale hazard.)
[P061]
Physicians and surgeons professional liability insurance
Protects physicians and surgeons against claims for personal injury arising from malpractice, errors or mistakes in rendering professional services. Presently, a most expensive coverage due to high jury awards against the medical profession.
[P062]
PIA--Professional Insurance Agents
Formerly National Association of Mutual Insurance Agents, a trade association whose purpose is to protect the business interests of its members, who also are members of state associations. Headquarters: Alexandria, VA.
[P063]
P & I insurance
Protection and indemnity insurance for shipowners, contractors, and charterers against liabilities arising out of the operation of the vessel for loss of life to any person, illness or injury to passengers and crew, damage to cargo while loading, carrying or unloading cargo, damage to piers and docks, and removal of wreckage as required by law.
[P064]
Pilferage
Theft in small quantities; for example, not limited to the taking of a whole package or all of the property insured.
[P065]
PIP--personal injury protection
Also known as no-fault insurance, PIP provides insurance for medical costs, loss of earnings, additional living expenses and funeral costs for occupants of the insured automobile and pedestrians other than those insured under other policies.
(See no-fault automobile insurance.)
[P066]
Piracy
1. Robbery on the high seas; typically, the unlawful seizure of vessels and/or cargo.
2. Describes the unauthorized duplication (and redistribution) of copyrighted materials, particularly music, movies, game software, etc.
[P067]
P.I.V.--post indicator valve
When water mains are buried around industrial plants protected by automatic sprinklers, the flow of water in a buried pipe may be controlled by a valve which projects above the ground and has an indicator showing whether it is open or closed. Such valves are post indicator valves, abbreviated on diagrams as "P.I.V."
[P068]
Placed business
A life and health insurance term used to designate the business that has been underwritten and accepted, an initial premium has been received, and the policy has been issued and delivered (placed) to the insured.
[P069]
Placer
The person in an insurance broker's office who directly negotiates with insurance companies for the acceptance or rejection of business.
[P226]
Plaintiff
Any party who initiates a lawsuit.
[P227]
Plaintiff bonds
A bond required by law that guarantees that a plaintiff can pay any damages that may be determined by a court. The bond must be posted before a lawsuit begins.
[P197]
Plan determination letter
A pension plans must be filed with the IRS to determine if it meets the requirements for the qualified plan. This ruling is called a determination letter. Each year, the plan must meet continuing requirements to retain its classification as a qualified plan. For example, a plan must avoid "top heaviness" where too much of the pension funding or benefit accrues to top officers and other highly compensated employees.
[P198]
Plan participant
The person in a health, employee benefit or pension plan to whom the benefits accrue.
(See also plan sponsor.)
[P199]
Plan sponsor
The business or entity that adopts a pension, health or employee benefit plan for the plan participants.
(See also plan participant.)
[P070]
Plate glass insurance
Coverage against the breakage of glass.
[P071]
Platform insurance
A special type of ocean marine insurance designed to cover off-shore oil or gas platforms and drilling barges.
[P072]
Pleasure use
A rating classification term used in auto insurance that indicates the vehicle is not used for business and does not have commercial exposures, other than to drive back and forth from work.
[P214]
PLUS (Professional Liability Underwriters Society)
An organization begun in 1986 by industry professionals specializing in the field of professional liability. The society is a forum for education and discussion on addressing various aspects of complex insurance issues involving professional liability. Headquarters: Minneapolis, MN.
[P073]
PML--probable maximum loss
The anticipated maximum property fire loss that could result, given the normal functioning of protective features (firewalls, sprinklers, and a responsive fire department, among others), as opposed to maximum foreseeable loss which is a similar valuation, but on a worst-case basis with respect to the functioning of the protective features. Underwriting decisions would typically be influenced by PML evaluations, and the amount of reinsurance ceded on a risk would normally be predicated on the PML valuation.
(See maximum foreseeable loss (MFL), and maximum possible loss (MPL).)
[P073a]
Points or surcharge points
1) When referring to motor vehicle reports (MVRs), it is a grading system assigned by each state, where points are assessed against a driver based upon a combination of the number of violations and the degree of seriousness of those violations. When a specified point total is reached or exceeded within a stated period of time, the suspension of the driver's license usually results.
2) With respect to automated underwriting systems (AUS), it usually refers to deficiency points assessed against a risk being run through the system. When a specified number of points accumulate, the risk either receives a rating surcharge, is declined, or triggers a manual review of the account by an actual underwriter.
[P074]
Policies attaching
One way of defining coverage under a per-risk excess reinsurance agreement. Under a "policies attaching" cover, a loss is covered if the policy suffering the loss was issued during the term of the reinsurance, no matter when the loss actually occurred.
(See losses occurring.)
[P075]
Policy
The formal written contract of insurance.
[P076]
Policy fee
A charge made by an agent on small premium policies, in addition to the premium set forth in the policy, which is kept by the agent. The practice is made illegal under the insurance laws of most states.
[P077]
Policy loan
A life insurance policy nonforfeiture benefit, whereby the insured may borrow from or take a loan from the insurer based on the cash surrender value of the policy.
[P078]
Policy proof of interest, full interest admitted
In marine insurance, a provision whereby the insurer agrees not to deny coverage for lack of insurable interest. This creates an honorable rather than legally enforceable agreement.
[P079]
Policy reserve
The percent of premium that an insurer must set aside in a reserve to pay claims and fulfill the obligations of insurance contracts. On an individual policy basis, each policy has its own pro rata share of the total accumulated policy reserve covering the insured's entire book of business.
[P080]
Policy writing agent
An agent who has been extended the authority to prepare policies.
[P081]
Policy year
The year commencing with the effective date of a policy or with the renewal date of that policy, to be distinguished from the calendar year, which always starts from January 1. A term of particular importance in the collection of loss statistics.
[P082]
Policy year experience
The statistical segregation of all premiums and losses attributable to policies having an inception or renewal date within a given 12-month period. Accident year experience is the statistical matching of all losses occurring (regardless of when the losses are reported) during a given 12-month period of time, with all premium earned (regardless of when the premium was written) during the same period of time. Calendar year experience, on the other hand, is the statistical matching of all losses incurred (not necessarily occurring) within a given 12-month period, usually beginning on January 1, with all premium earned within the same period of time.
(See accident year experience, and calendar year experience.)
[P083]
Policyholder
The party to whom a policy is issued and who pays a premium to an insurer in consideration of the latter's promise to provide insurance protection.
(See insured.)
[P084]
Policyholder surplus
As reported on a statutory basis, the sum of all unassigned surplus of a mutual insurer, or for a stock insurer, the sum of all unassigned surplus and capital.
[P200]
Policyowner
In life insurance, the person who owns the policy. It could be the applicant or the insured. Incidents of ownership can be assigned to others.
(See also policyholder.)
[P085]
Political risk insurance
A highly specialized property coverage for risks with foreign or international exposures that provides protection against loss or damage to the covered property as a result of such acts as nationalization, expropriation, deprivation, confiscation and, at times, war and terrorism.
[P086]
Pollution cleanup indemnity
A specialty type of ocean marine coverage that was designed to protect vessel owners and operators for liability exposures imposed by the Federal Water Pollution Control Act, not only to third-parties, but also to the EPA or other federal or state agencies.
[P087]
Pollution insurance
Insurance designed to provide protection for the liability exposures that may result from damage, injury and, in some cases, clean-up costs caused by pollution. This coverage is excluded in the standard CGL, and the attempt has been to make the CGL exclusion as broad or absolute as possible.
[P088]
Pool
A joint insurance or underwriting operation in which the participant insurers assume a predetermined interest in all business written. Pools are managed by professionals with expertise in the classes of business undertaken. The members share proportionately in the premiums, losses, expenses, and profits. An "association" or a "syndicate" is synonymous with a pool.
(See syndicate.)
[P201]
Pooling
A term used in group health insurance where the experience and premiums of smaller groups are aggregated to form a larger and more credible group.
[P089]
Port
A place from which goods are sent out of a country or are received from abroad. The location of customs officials will usually determine what is called a port.
[P092]
Port risk insurance
An ocean marine insurance designed to protect a vessel that is portside for a lengthy period of time. Coverage terminates as soon as the vessel leaves port.
[P202]
Portability
The ability of a pension plan participant to take the benefits from one plan and roll it over without incurring immediate taxation. Portability is a key feature to the 401(k) plan.
[P090]
Portfolio
A defined body of:
1) insurance policies in force or a premium portfolio
2) outstanding losses or a loss portfolio or
3) company investments or an investment portfolio.
(See book of business.)
[P203]
Portfolio reinsurance
A term used in reinsurance generally to define the situation where the reinsurer is insuring all risks in a particular line of business for a primary insurer, e.g., in commercial property insurance the reinsurer may pay all commercial property claims in excess of $50,000.
[P091]
Portfolio transfer
A term used to indicate the transfer of an entire portfolio of business. This may be done either by an agent in transferring a book of business or portfolio from one insurer to another, or, as it applies to reinsurance, by transferring the book of business from a primary insurer to a reinsurer.
[P093]
Position schedule bond
A bond that guarantees the honesty of those holding named positions in a firm, as opposed to a bond that refers to named individuals.
[P094]
Post indicator valve (P.I.V.)
When water mains are buried around industrial plants protected by automatic sprinklers, the flow of water in a buried pipe may be controlled by a valve which projects above the ground and has an indicator showing whether it is open or closed. Such valves are post indicator valves, abbreviated on diagrams as "P.I.V."
[P215]
Post-judgment interest
After a court makes an award, the losing party is required to pay a set amount of interest that accrues until the amount is paid. Insurance policies often specify whether this is an expense that is paid by the policy.
[P095]
Postmortem dividend
For a participating life insurance policy, it is the dividend paid after the death of the insured which includes the earnings owed since the last dividend payment up to the date of the insured's death.
[P096]
Poultry insurance (chickens)
A broad, often "all-risk" version of animal mortality insurance designed specifically to protect poultry farmers and other residual industries that have vested interest in poultry operation, such as food processors and feed.
(See animal insurance, and livestock mortality insurance.)
[P097]
Power interruption insurance
Property and time element endorsements designed to cover the insured for losses that result from the interruption of services by an insured cause of loss. The current endorsements allow the insured to select coverage for off-premises services, whether supplied by a private or public utility. Protection may be purchased for the following options: water suppliers, communication suppliers, or power supplies.
[P098]
Power of attorney
A document which authorizes a person to act for another within the limitations it contains. A subscriber to an interinsurance exchange executes such a document in favor of the person who operates the exchange.
[P099]
Power plant insurance
Formerly used as a substitute title for boiler and machinery insurance.
[P100]
PPF--personal property floater
A broad form of inland marine policy issued to householders, insuring all furniture and household effects, wherever they may be, on an "all-risk" basis.
[P101]
PPO--preferred provider organization
A group of health care providers, each of whom agrees to offer services to a given employer or insurer at a lower cost in return for a stable volume of patients or other incentive(s).
[P249]
Practice program
A term used to describe the non-wrap-up-based insurance coverage carried by the entities enrolled in a wrap-up.
[P204]
Preadmission review
One of the managed care features in health insurance that requires the plan participant to have the attending physician call the insurer to discuss a nonemergency hospital admission. If this is not done or is not acceptable to the insurer, the insurer (depending upon contract provisions) can deny or pay reduced benefits for the admission.
[P238]
Predecessor firm
Refers to a partnership or professional corporation that has been dissolved and where at least 50 percent of its lawyers are still affiliated with the named insured under a professional liability policy.
[P102]
Pre-existing condition
Injuries from accidents which occur earlier than, and sicknesses which begin earlier than, the date on which insurance becomes effective. Individual health insurance policies and some group policies generally cover only injuries from accidents which occur after the individual's coverage becomes effective, and only sicknesses that begin or are first manifested after the individual's coverage has been in effect for a period of time, often 15 days.
[P103]
Preferred provider organization (PPO)
A group of health care providers, each of whom agrees to offer services to a given employer or insurer at a lower cost in return for a stable volume of patients or other incentive(s).
[P104]
Preferred risk
The subject matter of an insurance policy considered to be particularly desirable.
[P104a]
Prejudgment interest
An additional amount that an insurer may be required to pay as part of a court settlement. The amount basically represents an interest charge on the disputed settlement. The intent is to provide compensation for any settlement gap related to the payment delay caused by the lawsuit and trial process.
[P228]
Prejudice
A condition that adversely affects a party's legal rights and that in an insurance contract could endanger coverage.
[P104b]
Pre-licensing education requirement
State requirements mandating that applicants seeking an insurance license must first complete a specified education program before being eligible to obtain an insurance license.
[P105]
Premises
The building or section of a building, insured or containing the insured property. Depending on policy conditions, it may also include an adjacent area.
[P106]
Premises liability insurance
Insurance protection for the liability exposure that develops from the normal ownership, maintenance, and use of a premises, and from the conduct of the risk's business operations, not including products or completed operations liability which is treated separately.
[P107]
Premium
The amount of money an insurance company charges to provide coverage.
[P108]
Premium adjustment provision
Policies for which a deposit or estimated premium is charged at inception but recalculated at expiration, based on the actual exposure covered during the policy period.
[P229]
Premium base
The written or earned premium that a reinsurer uses to develop its reinsurance premium.
[P109]
Premium deficiency
When the premiums on a policy or a book of business are inadequate to pay losses and all types of expenses.
[P110]
Premium discount
A percentage reduction based upon the size of the premium. Justification for this is that the proportionate cost for issuing and servicing a policy often becomes less as the premium increases. Not available in all states.
[P111]
Premium dispersion credit plan
A plan for large commercial fire insurance accounts, with two or more locations providing premium credits for:
1) size of premium, to reflect savings in expenses in handling a substantial account, and
2) number of locations and dispersion of values to reflect spread of risk.
[P112]
Premium earned
The portion of the policy premium allocable to the expired portion of the policy term.
(See unearned premium.)
[P113]
Premium load
In life insurance, the premium load is either the percent that is loaded onto or the amount that is added to premiums for expenses.
[P114]
Premium payment mode
With respect to an individual policy, it is the payment method that has been selected from the payment options offered by the insurer. Some of the options that may be available are whether the agency or insurer bills, as well as how often the premium payment is to be made, for example, monthly, quarterly, semiannually, or annually.
[P205]
Premium receipt
A receipt given to the premium payor when the first mode of life insurance premium is given to the agent or insurer prior to policy issuance.
[P115]
Premiums in force
A figure in the standard form of the annual financial report of an insurance company, representing the initial premium on all policies which have not expired or been canceled, for example, those which are still in force.
[P116]
Prepaid legal expense insurance
Insurance covering legal costs, written generally on a group basis. Includes the indemnification through providing agreed legal services, as well as the payment of money to compensate the insured for costs. Also referred to as prepaid legal insurance.
[P206]
Preretirement survivor annuity
If a pension plan participant dies before retirement, the plan is required to provide the surviving spouse a benefit that can be all of or a portion of the deceased participant's vested benefit.
[P117]
Present value
The current or present worth of a future account receivable or benefit payment.
[P207]
Presimplified
Refers to policies that existed before the mid-1980s trend to simplify the wording found in both commercial and personal lines contracts. Such policies have a more legalistic-styled format and wording.
[P118]
Pressure vessel
Something designed to contain gas or vapor such as steam under pressure. A steam boiler is an excellent example.
[P119]
Presumptive disability
When an insurer is able to presume that a disability is permanent or for the life of the insured, based upon the type of injury experienced such as loss of sight or limb.
[P120]
Primary beneficiary
In a life insurance policy, the individual named to be first to receive the policy benefits and proceeds. If any others should be listed, they are considered contingent or secondary and will collect only if the primary is deceased.
[P121]
Primary insurance
The insurance policy providing the first layer of coverage that will respond first to any loss exceeding the deductible.
[P122]
Primary layer
The initial layer or amount of insurance applying to loss; the underlying or level of coverage that will respond first.
[P123]
Principal
In suretyship, the principal is the one whose honesty, fidelity or ability to perform is guaranteed.
[P124]
Principal sum
The stated amount that a policy of health or accident insurance will pay in the event of a certain happening, such as accidental death, dismemberment or loss of eyesight.
[P125]
Principals protective liability insurance
Insurance against claims which arise out of some secondary cause, such as the negligent acts of an independent contractor engaged by an organization or principal contractor, or an employer for the act of an employee.
Prior acts coverage
A provision that, under defined circumstances, protects against loss involving acts or events (typically professional) that occurred before the effective date of a given policy. Usually applies with either professional liability/errors or omissions coverage. The protection is usually available as optional coverage requiring additional premium.
Prior acts limitation date
(See Retroactive Date.)
[P126]
Priority company
An insurer needing special regulatory attention as determined by a review of financial ratio reports produced under the NAIC Insurance Regulatory Information System.
[P127]
Prison guard captivity coverage
A specialty life or health insurance coverage designed to provide benefits for prison guards or their families, should an incident or riot occur and the guard is injured, killed, taken prisoner, abducted or held hostage.
[P128]
Private passenger automobile
Any auto, car, station wagon, pickup or van type of vehicle not used for business purposes.
[P129]
Private passenger car
An automobile primarily operated by the owner for personal use, as distinguished from commercial use, such as a truck or taxicab.
[P130]
Privatization
Transfer of ownership and control of a government asset to a nongovernment owner.
[P131]
Prize indemnification insurance
A specialty insurance designed to provide coverage or indemnification for large prize giveaways, based on the odds faced by the insured.
[P132]
Probable maximum loss (PML)
The anticipated maximum property fire loss that could result, given the normal functioning of protective features (firewalls, sprinklers, and a responsive fire department, among others), as opposed to maximum foreseeable loss which is a similar valuation, but on a worst-case basis with respect to the functioning of the protective features. Underwriting decisions would typically be influenced by PML evaluations, and the amount of reinsurance ceded on a risk would normally be predicated on the PML valuation.
(See maximum foreseeable loss (MFL), shock loss, and maximum possible loss (MPL).)
[P235]
Probate bond
A fidelity bond that protects a dependent party (such as a legal estate) against the dishonest acts of a fiduciary.
[P133]
Probationary period
When a health insurance policy is issued, it is the period of time between when the policy goes into effect and when coverage actually becomes available to the insured, usually for periods of 30, 60, or 90 days. This is done to preclude any pre-existing conditions.
[P134]
Proceeds
Another name for the policy benefits that are payable upon maturity of the policy or death of the insured.
[P135]
Processor
As distinguished from a manufacturer, one who changes the condition of merchandise without changing its fundamental character such as a dyer, a printer of patterns on fabric, or one who hardens metal parts for the owner.
[P136]
Processors policy
An inland marine form which insures the property of a policyholder when it is on the premises of another for processing (such as dyeing or finishing), as well as while in transit to and from the premises of the processor.
[P137]
Producer
The person who solicits insurance from the buyer and places it with the insurer. A broker, an agent or a salaried solicitor.
[P230]
Producer commission
The fees paid to a broker for getting reinsurance coverage placed and for related services.
[P138]
Product-completed operations insurance
Coverage designed to protect against the liability for injury, loss, or damage that a merchant or a manufacturer may incur as the result of some defect in the product sold or manufactured.
[P139]
Products liability
The liability that a merchant or a manufacturer may incur as the result of some defect in the product sold or manufactured.
[P140]
Product recall insurance
Pays the expense associated with government-dictated recall of a product suspected of being defective and dangerous to consumers. Pharmaceutical, automobile and aircraft manufacturers are types of risks that often are affected. This expense is not covered by the standard general liability policy.
[P141]
Product tampering insurance
Specialty coverage designed to protect a product seller or manufacturer to cover the cost of recalling items that may have been tampered with, as well as loss of income, and related expenses. One condition often found in this type of policy is that an actual occurrence of tampering or a valid threat must occur before coverage would be available.
[P142]
Product warranty inefficacy insurance
A highly specialized performance surety or guarantee insurance designed originally for investors or manufacturers of alternative energy sources. The coverage provides financial protection should a system not perform as engineered or designed. This type of insurance encourages investment and development not only of alternative energy sources, but also of other types of manufactured products.
Conten[P209]
Professional
A class of insurance policies that indemnifies the insured for third-party liability claims due to negligence in the performance of professional services. Professionals include doctors, lawyers, engineers, insurance agents and others.
[P216]
Professional-employer organization
A commercial firm that contracts with employers, allowing the latter to outsource functions such as employee benefits, human resources and payroll, reducing their payroll and operating expenses.
[P143]
Professional Insurance Agents (PIA)
Formerly National Association of Mutual Insurance Agents, a trade association whose purpose is to protect the business interests of its members, who also are members of state associations. Headquarters: Alexandria, VA.
[P208]
Professional liability
A class of insurance policies that indemnifies the insured for third-party liability claims due to negligence in the performance of professional services. Professionals include doctors, lawyers, engineers, insurance agents and others.
[P217]
Professional Liability Underwriters Society (PLUS)
An organization begun in 1986 by industry professionals specializing in the field of professional liability. The society is a forum for education and discussion on addressing various aspects of complex insurance issues involving professional liability. Headquarters: Minneapolis, MN.
[P144]
Professional reinsurer
A term used to designate an organization whose business is primarily reinsurance and related services as contrasted with other insurance organizations, which may operate reinsurance assuming departments in addition to their basic primary insurance business.
[P210]
Profit commission
Found in reinsurance and involves a profit-sharing agreement between the ceding company and the reinsurer after expenses and losses are calculated. Formulas vary and are normally individually negotiated.
[P145]
Profit-sharing commission
A type of commission paid to an agent, based upon the profit the company has realized from the agency's operations.
[P211]
Profit-sharing plan
Profit-sharing plans can take many forms. An informal plan pays a portion of profits to employees. A formal qualified profit-sharing plan pays a portion of profits in the form of cash or stock into a plan that meets IRS guidelines as a qualified profit sharing plan.
[P146]
Profits insurance
Coverage for the loss of profit that the policyholder could have earned if the merchandise destroyed in a fire or by a covered cause of loss could otherwise have been sold. A fire insurance policy on a stock of merchandise pays only for the value of damaged or destroyed merchandise, hence the need for profits insurance. Such insurance is generally provided by adding a selling price clause to a policy covering stock.
(See selling price clause.)
[P147]
Prohibited list
A list of those risks which a company is not willing to write.
[P148]
Prohibited risk
A risk which a company will not insure.
[P149]
Proof of loss
A written statement of a claim giving the pertinent facts and data which may be in the form of an affidavit.
(See protest.)
[P150]
Property and casualty insurance
Non-life insurance. Basically there is a broad insurance distinction between companies writing life and health insurance and those writing the property insurance or "non-life" lines of fire, marine, casualty and surety. Numerous descriptive titles have been employed to describe this "non-life" area of operation. Although no one definition has yet been firmly established, some use the generic title "property and casualty" insurance, while others use "property and liability" insurance.
[P240]
Property Casualty Insurers Association of America
A trade association of more than 1,000 U.S. P&C insurers. It began in 2004 from a merger between the National Association of Independent Insurers and the Alliance of American Insurers. The combined organization performs numerous functions, focusing on advocating membership concerns from the national to the local level. It also acts as an advisory organization and statistical agent for independent insurers. Headquarters: Des Plaines, IL.
[P151]
Property damage liability insurance
A form of "third-party" protection covering the insured's legal liability for damage to property of others caused by the insured's negligence.
(See liability insurance.)
[P152]
Property insurance
"First-party" insurance of real and personal property against physical loss or damage, not to be confused with property damage liability insurance.
[P153]
Property Insurance Plans Service Office (PIPSO)
An advisory organization formed in 1972 to provide technical and administrative services to state property or fair plans and windstorm pools. Headquarters: Boston, MA.
[P231]
Proportional reinsurance
Reinsurance arrangements by which the reinsurer agrees to take a specified percent of each covered loss for the same percent of premium.
[P154]
Proposal
In life insurance and, to a limited extent, in property-liability insurance, a written plan prepared by an agent or insurer proposing to a prospective insured that insurance be applied for; thus, the proposal is not an offer, but rather an invitation to negotiate in the form of a sales brochure.
[P155]
Pro rata cancellation
Termination of a policy by the insurer, for which the return premium due the policyholder is the full proportion for the unexpired term based upon the calculation of the number of days of coverage provided to the premium charge per day. In other words, the pro rata refund is not a "short-rate" return.
(See short rate cancellation.)
[P157]
Pro rata distribution clause
A provision in a property policy that states that the insurance which has been written "blanket," or as one amount covering several items, shall be limited on each item to the proportionate amount which the value of the particular item bears to the total value of all insured items.
(See average clause.)
[P158]
Pro rata liability clause
Most standard coverages now place this clause within the other insurance clause to clarify which policy will respond should there be more than one insurer on a risk and all the policies are primary or excess. The amount of loss is proportioned among the insurers based on the percent of their limits of coverage to the total limits provided.
[P218]
Pro rata liability formula
A formula used to determine the amount of coverage each insurer pays when more than one source of insurance is available to handle a given loss. Take the coverage written by Company A, divide that amount by the total coverage written by all sources and multiply the resulting percentage by the actual loss amount.
[P159]
Pro rata reinsurance
Reinsurance arrangements by which the reinsurer agrees to take a specified percent of each covered loss for the same percent of premium.
[P160]
Proration of benefits
When two or more health insurers provide coverage or benefits for the same insured loss, the obligation of each insurer is calculated proportionally between the responding insurers.
[P161]
Prospect
One to whom insurance may be sold as a prospective purchaser or insured.
[P244]
Protected cell captive
A form of rent-a-captive company where the assets, reserves, dividends (if applicable) and liabilities are assigned to separate accounts (cells) along with a general or core cell. This variant is designed to protect each participant's assets from having to respond to another participant's liability, a substantial financial advantage over a regular rent-a-captive where liabilities are shared.
[P162]
Protection
1) Water supplies and fire departments to fight fires. Real property is referred to as protected property when located in an area served by a public fire department.
(See town grading.)
2) The insurance afforded by a policy.
[P163]
Protection and indemnity insurance (P & I insurance)
Protection and indemnity insurance for shipowners, contractors, and charterers against liabilities arising out of the operation of the vessel for loss of life to any person; illness or injury to passengers and crew; damage to cargo while loading, carrying or unloading cargo, damage to piers and docks; and removal of wreckage as required by law.
[P163a]
Protection class
A 10-category ranking or schedule of public fire protection of cities and towns established in 1916. The grading is currently maintained by the Insurance Services Office for use in making fire insurance rates and to encourage local governments to maintain better fire fighting equipment and personnel. A city or town is ranked in one of the categories by receiving deficiency points for failing to meet established standards under each of these major headings: water supply, fire department, fire service communications, fire safety control, climate, and divergence between fire department and water supply. Protection Class I is the best class (a city or town having fewer than 501 points), and Protection Class 10 is the worst (more than 4,500 points). Also known as fire protection class or town class.
[P164]
Protective liability insurance
Insurance against claims which arise because of some secondary cause, such as the negligent act of some subcontractor engaged by a principal contractor or against an employer for the act of an employee.
(See contingent liability.)
[P165]
Protective safeguards clause
In property insurance, a clause or provision that clarifies that coverage was granted or a premium credit given based on the existence of, continual maintenance of, and operation of a specified protective device by the insured. The insurer has the right, in some jurisdictions, to void the coverage should a loss occur as a direct result of the lack of maintenance or operation of the specified device. Common examples are sprinkler systems and fire or theft alarms.
[P166]
Protest
The master's statement of the facts regarding an accident as a part of the ocean marine proof of loss. The protest is so named, because the master is "protesting" that it was not the master's fault.
(See proof of loss.)
[P219]
Protist
Any member of the Protista family of organisms. Also see toxic mold.
[P220]
Protista
Refers to the entire body of organisms (animal or plant) that are single-celled (unicellular), including fungi and molds. Also see toxic mold.
[P167]
Provisional premium
A provisional or deposit premium charged at the start of a policy term, with the final premium determined after the policy has expired.
[P168]
Provisions
The clauses within an insurance policy that clarify exclusions, conditions, terms, or benefits essential to the contract.
[P169]
Proximate cause
That which brings about a result without the intervention of any other force. Important in insurance since it establishes which policy(ies) will pay for a loss, i.e., the one(s) insuring the peril which was the proximate cause of the loss.
[P170]
Psychology of entitlement
Refers to the expectation of people that their desires and legitimate needs which society can and must fulfill. The expectation affects insurance when the law expands to permit more plaintiffs to recover from insurers in cases of questionable coverage. For example, when courts rule that insurance coverage exists if there is any indication that the insured expected such coverage to exist, or when jury awards increase beyond economic justification.
[P221]
Public adjuster
An insurance professional that represents insureds (policyholder) in the preparation, presentation and conclusion of insurance claims for insured property damage and any associated coverages, with the policyholder paying a fee for these services.
[P250]
Public Agency Risk Managers Association
The Public Agency Risk Managers Association focuses on providing resources to assist risk management professionals who manage government agencies. Headquarters: San Jose, CA.
[P172]
Public and institutional property plan
Insurance against fire and allied perils specially designed for property such as hospitals, schools, churches, etc. Rates are reduced for fire prevention and fire safety programs by the insured and lower acquisition and handling expenses to the insurer.
[P245]
Public Company Accounting Reform and Investor Protection Act
(See Sarbanes-Oxley (SOX) Act.)
[P173]
Public entity insurance
Insurance contracts specifically designed to meet the coverage needs of the various city, state, township, county or other municipalities. Normally offered by specialists in the industry and tailored to meet the hazards and exposures of this type of entity.
[P174]
Public Law 15
Enacted on March 9, 1945, a law by which Congress granted authority to the states to continue to tax and regulate the business of insurance after the insurance business in 1944 had been held by the Supreme Court in a landmark case to be commerce and, therefore, subject to federal regulation whenever subject to interstate regulation. The act provided further that the antitrust laws should not apply to the extent the business of insurance is regulated by the states, except for coercion, intimidation and boycott. Also known as Public Law 15, 79th Congress, 1945. McCarran-Ferguson Regulation Act: 15 U.S.C. 1011-15.
(See Southeastern Underwriters Association (SEUA).)
[P175]
Public liability insurance
Protection which pays sums that an insured is legally obligated to pay, or that the insurer has agreed to pay, as damages to others as a result of the insured's negligence. May cover bodily injury to another or damage to the property of another.
[P175a]
Public livery conveyance
A motor vehicle used for the transport of persons or goods for hire. Also known simply as livery.
[P232]
Public official bond
Refers to a government unit requirement to carry a bond guaranteeing that a given public official will perform his or her required job.
[P233]
Puffback
Refers to a furnace, boiler or similar equipment that releases soot, smoke, vapors or fumes onto the covered property and causes damage.
[P176]
Punitive damages
Damages awarded separately and in addition to compensatory damages, usually on account of malicious or wanton misconduct, to serve as a punishment for the wrongdoer and, possibly, as a deterrent to others. Sometimes referred to as "exemplary damages" when intended to "make an example" of the wrongdoer.
(See exemplary damages.)
[P222]
Purchasing group
A coverage alternative to using the traditional insurance market, it refers to a number of parties with similar coverage needs who incorporate into a group to buy liability insurance. Such arrangements are authorized by the Federal Liability Risk Retention Act of 1986.
[P178]
Pure annuity
A straight annuity policy or contract designed to make specified installment payments at specified intervals for the life of the annuity holder.
[P179]
Pure captive
An insurance company formed by a parent company to provide coverage only for that parent company.
[P180]
Pure mortality cost
In life insurance, it is the base premium developed for the coverage, which is calculated by taking the factor from the mortality table, based on the insured's age and sex, times the amount of coverage. To this base factor, other charges and factors are added to achieve a final premium.
[P234]
Pure no-fault insurance
A theoretical concept in which no party would sue another for injury or damage from an automobile accident. Each party's insurer would pay the loss without considering who was at fault. In practice, only modified versions of this concept are actually used.
[P181]
Pure premium
1) That part of the premium which is sufficient to pay losses and loss adjustment expenses only, but not other expenses.
2) The premium developed by dividing losses by exposure, disregarding any loading for commission, taxes and expenses.
[P223]
Pure risk
Involves only the possibility of loss; gain is not a possible outcome. Insurance is designed to protect against pure risks such as fire, earthquake, or windstorm.
[P212]
PWCCLA
Property-Workers Compensation Claim Law Associate designation sponsored by the American Educational Institute. Headquarters: Basking Ridge, NJ.
