We hope that our extensive glossary of common (and some not-so-common)
insurance terms and phrases proves helpful to you! Simply start
below by choosing the first letter of the word or phrase you want to
learn more about.
A - B - C - D - E - F - G - H - I - J - K - L - M
N - O - P - Q - R - S - T - U - V - W
PACKAGE POLICY - A single insurance policy that
combines several coverages previously sold separately. Examples
include homeowners insurance and commercial multiple peril insurance.
PAY-AT-THE-PUMP
- A system proposed in the 1990s in which
car insurance premiums would be paid to state governments through a per-gallon
surcharge on gasoline.
PENSION BENEFIT GUARANTY CORPORATION - An independent federal
government agency that administers the Pension Plan Termination Insurance program
to ensure that vested benefits of employees whose pension plans are being terminated
are paid when they come due. Only defined benefit plans are covered. Benefits
are paid up to certain limits.
PENSIONS - Programs to provide employees with retirement
income after they meet minimum age and service requirements. Life insurers hold
some of these funds. Since the 1970s responsibility for funding retirement has
increasingly shifted from employers (defined benefit plans that promise workers
a specific retirement income) to employees (defined contribution plans financed
by employees that may or may not be matched by employer contributions). (See
Defined benefit plan; Defined
contribution plan)
PERIL - A specific risk or cause of loss covered by an insurance
policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers
the policyholder only for the risks named in the policy in contrast to an all-risk
policy, which covers all causes of loss except those specifically excluded.
PERSONAL ARTICLES FLOATER - A policy or an addition to a
policy used to cover personal valuables, like jewelry or furs.
PERSONAL INJURY PROTECTION COVERAGE / PIP - Portion of an
auto insurance policy that covers the treatment of injuries to the driver and
passengers of the policyholder’s car.
PERSONAL LINES
- Property/casualty insurance products
that are designed for and bought by individuals, including homeowners and automobile insurance
policies. (See Commercial
lines)
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POINT-OF-SERVICE PLAN - Health insurance policy
that allows the employee to choose between in-network and out-of-network care
each time medical treatment is needed.
POLICY - A written contract for insurance between
an insurance company and policyholder stating details of coverage.
POLICYHOLDERS' SURPLUS - The amount of money
remaining after an insurer’s liabilities are subtracted from its assets.
It acts as a financial cushion above and beyond reserves, protecting policyholders
against an unexpected or catastrophic situation.
POLITICAL RISK INSURANCE - Coverage for businesses
operating abroad against loss due to political upheaval such as war, revolution,
or confiscation of property.
POLLUTION INSURANCE - Policies that cover property
loss and liability arising from pollution-related damages, for sites that have
been inspected and found uncontaminated. It is usually written on a claims-made
basis so policies pay only claims presented during the term of the policy or
within a specified time frame after the policy expires. (See Claims-made
policy)
POOL - See Insurance
pool
PREFERRED PROVIDER ORGANIZATION - Network of medical
providers which charge on a fee-for-service basis, but are paid on a negotiated,
discounted fee schedule.
PREMISES - The particular location of the property
or a portion of it as designated in an insurance policy.
PREMIUM - The price of an insurance policy, typically
charged annually or semiannually. (See Direct
premiums; Earned premium;
Unearned premium)
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PREMIUM TAX - A state tax on premiums paid
by its residents and businesses and collected by insurers.
PREMIUMS IN FORCE - The sum of the face amounts,
plus dividend additions, of life insurance policies outstanding at a given
time.
PREMIUMS WRITTEN - The total premiums on all
policies written by an insurer during a specified period of time, regardless
of what portions have been earned. Net premiums written are premiums written
after reinsurance transactions.
PRIMARY COMPANY - In a reinsurance transaction,
the insurance company that is reinsured.
PRIMARY MARKET - Market for new issue securities
where the proceeds go directly to the issuer.
PRIME RATE - Interest rate that banks charge
to their most creditworthy customers. Banks set this rate according to
their cost of funds and market forces.
PRIOR APPROVAL STATES - States where insurance
companies must file proposed rate changes with state regulators, and gain
approval before they can go into effect.
PRIVATE MORTGAGE INSURANCE - See Mortgage
guarantee insurance
PRIVATE PLACEMENT - Securities that are not
registered with the Securities and Exchange Commission and are sold directly
to investors.
PRODUCT LIABILITY - A section of tort law
that determines who may sue and who may be sued for damages when a defective
product injures someone. No uniform federal laws guide manufacturer’s
liability, but under strict liability, the injured party can hold the
manufacturer responsible for damages without the need to prove negligence
or fault.
PRODUCT LIABILITY INSURANCE - Protects manufacturers’ and
distributors’ exposure to lawsuits by people who have sustained
bodily injury or property damage through the use of the product.
PROFESSIONAL LIABILITY INSURANCE - Covers
professionals for negligence and errors or omissions that injure their
clients.
PROOF OF LOSS - Documents showing the insurance
company that a loss occurred.
PROPERTY/CASUALTY INSURANCE - Covers damage
to or loss of policyholders’ property and legal liability for damages
caused to other people or their property. Property/casualty insurance,
which includes auto, homeowners and commercial insurance, is one segment
of the insurance industry. The other sector is life/health. Outside the
United States, property/casualty insurance is referred to as nonlife
or general insurance.
PROPERTY/CASUALTY INSURANCE CYCLE - Industry
business cycle with recurrent periods of hard and soft market conditions.
In the 1950s and 1960s, cycles were regular with three year periods each
of hard and soft market conditions in almost all lines of property/casualty
insurance. Since then they have been less regular and less frequent.
PROPOSITION 103 - A November 1988 California
ballot initiative that called for a statewide auto insurance rate rollback
and for rates to be based more on driving records and less on geographical
location. The initiative changed many aspects of the state’s insurance
system and was the subject of lawsuits for more than a decade.
PURCHASING GROUP - An entity that offers insurance
to groups of similar businesses with similar exposures to risk.
PURE LIFE ANNUITY - A form of annuity that
ends payments when the annuitant dies. Payments may be fixed or variable.
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