INSURANCE GLOSSARY
The Insurance Terms Glossary is divided alphabetically for ease of browsing. Select the alphabet letter that corresponds to the first letter of the word you would like to be informed about to open the appropriate heading.

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Glossary Terms ' P '

Package Policy - A combination of two or more individual polices or coverages into a single policy. A homeowners policy for example is a package combining property liability and theft coverages for the homeowner.

Paid-Up Insurance - (1) Insurance on which all required premiums have been paid. (2) The reduced paid-up insurance available as a nonforfeiture option.

Paramedical Examination - Physical examination of an applicant by a trained person other than a physician.

Partial Disability - The result of an illness or injury which prevents an insured from performing one or more of the functions of his/her regular job. See also Disability.

Partial Disability Benefits - A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.

Participating Insurance - Life insurance under which an insurance company agrees to distribute to policyholders the part of its surplus which its Board of Directors determines is not needed at the end of the business year. Such a distribution serves to reduce the premium the policyholder had paid. See also: Policy Dividend; Nonparticipating Policy.

Pension Benefit Guaranty Corporation (PBGC) - The Federal body responsible for administering a retirement insurance programs under ERISA.

Pension Benefits - A series of payments to be provided to past employees in accordance with the rules of pension plan of a company or other organization.

Pension Plan - A plan established and maintained by an employer group of employers union or any combination primarily to provide for the payment of definitely determinable benefits to participants after retirement.

Pension Trust Liability Insurance - See Fiduciary Liability Insurance.

Percentage Participation - A provision in a health insurance contract that the insurer and insured will share covered losses in agreed proportions. Also see Coinsurance.

Performance Bond - Bond issued by a surety or insurance company to guarantee performance under or in conjunction with a contract.

Peril - The cause of a possible loss such as fire windstorm theft explosion or riot covered in an insurance policy.

Perils of the Sea - All perils which are unique to transportation and which could not be prevented by reasonable efforts including sinking of the vessel stranding heavy weather lightning collision with other vessels or submerged objects (such as Titanic's iceberg) and damage by sea water when caused by an insured peril.

Permanent Life Insurance - A phrase used to cover any form of life insurance except term; generally accrues cash value such as whole life or endowment.

Persistency - A term used to refer to the length of time insurance remains continuously in force.

Personal Articles Floater - A form of coverage designed to meet the needs for insurance on moveable property. The coverage usually protects against all physical loss subject to specific exclusions and conditions. Examples of property that can be covered include jewelry furs silverware fine arts.

Personal Injury Liability Insurance - Coverage designed to protect against false arrest detention or imprisonment or malicious prosecution; libel slander defamation or violation of right of privacy; and wrongful entry eviction or other invasion of right of private occupancy.

Personal Injury Protection (PIP) - First-party no-fault coverage in an automobile insurance policy in which an insurer pays within the specified limits the wage loss medical hospital and funeral expenses of the insured.

Personal Lines - Those types of insurance such as auto or home insurance for individuals or families rather than for businesses or organizations.

Personal Representative - A person appointed through the will of a deceased or by a court to settle the estate of one who dies.

Physical Damage - Damage to or loss of the auto resulting from collision fire theft or other perils.

Physician's Expense Insurance - Coverage which provides benefits toward the cost of such services as doctor's fees for nonsurgical care in the hospital at home or in a physician's office and X-rays or laboratory tests performed outside the hospital. (Also called Regular Medical Expense Insurance.)

Plan Administrator - The person or persons controlling the money or property contributed to a pension health or other plan usually designated in the plan agreement.

Plate Glass Insurance - Coverage designed to provide special protection except for the perils of war nuclear reaction and fire. (Fire is covered under the building policy.) This coverage is for full replacement cost and covers the expense of repairing frames installing temporary plates or boarding up openings of plate glass windows.

Point-of-Service Plans - Often known as open-ended HMOs or PPOs these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.

Policy - The legal document issued by an insurance company to a policyholder which outlines the conditions and terms of the insurance; also called the policy contract or the contract.

Policy Dividend - A refund of part of the premium on a participating life insurance policy reflecting the difference between the premium charged and actual experience.

Policy Loan - A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.

Policy Reserves - The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that together with future premium payments and anticipated interest earnings they will enable the company to pay all future claims. Compare Reserve.

Policy Term - That period for which an insurance policy provides coverage.

Policyholder - A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.

Policyholders' Surplus - Sum left after liabilities are deducted from assets. Sums such as paid-in capital and special voluntary reserves are included in this term. This surplus is an additional financial protection to policyholders in the event a company suffers unexpected or catastrophic losses.

Pollution Legal Liability Insurance - Coverage designed to protect for (1) all sums the insured is legally obligated to pay as a result of emission discharge release or escape of any contaminants irritants or pollutants into or on land the atmosphere or any water course or body of water provided this results in environmental damage; (2) to reimburse reasonable and necessary cleanup costs incurred in the discharge of a legal obligation validly imposed through governmental action provided such expense is incurred because of environmental damage and (3) for defense of any claim or suit that is the subject of this insurance.

Pollution Liability - Exposure to lawsuits for injury or cleanup costs that result from pollution damage.

Pool - An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums losses and expenses are shared in agreed-upon amounts.

Portability - The right to transfer pension rights and credits when a worker changes jobs.

POS - Like the HMO plan, members must choose their primary care physician from the PPO's member physicians. This physician will oversee your health care and needs to be consulted first for all medical care. PPO members are not required to stay in network. They can receive care from a non-member physician. Normally this will be at the expense of a larger co-pay, deductible and/or coinsurance. There is a financial incentive to stay in network but still the option of out of network care.

PPO - In a Preferred Provider Organization, or PPO, an employer can also provide employees with reduced costs billed to their health insurance plan. Similar to a HMO and POS, but the employees can choose the physician they want to see instead of being solely restricted to the HMO or POS providers. An employee can choose between a member or nonmember provider. The member provider would be the least expensive choice for the employee.

Preadmission Certification - Process in which a health care professional evaluates an attending physician's request for a patient's admission to a hospital by using established medical criteria.

Preexisting Condition - A physical and/or mental condition of an insured which first manifested itself prior to the issuance of his/her policy or which existed prior to issuance and for which treatment was received.

Preferred Provider Organization (PPO) - An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.

Preferred Stock - Evidence of ownership which entitles the holders to receive dividends from the corporation before the common stockholders but after bondholders and which usually also provides a claim prior to common holders to corporate assets if the corporation is dissolved.

Premium - The sum paid by a policyholder to keep an insurance policy in force.

Premium Finance - Payment terms that allow the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.

Premium Loan - A loan sometimes made by a third party made for the purpose of paying premiums to the insurer.

Premium Tax - A tax imposed by each state on the premium income of insurers doing business in the state.

Prepaid Group Practice Plan - A plan under which specified health services are rendered by participating physicians to an enrolled group of persons with a fixed periodic payment in advance made by or on behalf of each person or family. If a health insurance carrier is involved a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contract. Such a plan is one form of Health Maintenance Organization (HMO).

Primary Insurance - Insurance that pays compensation for a loss ahead of any other insurance coverages the policyholder may have.

Principal Sum - The amount payable under life and health insurance policies in one sum in the event of accidental death and in some cases accidental dismemberment. When a contract provides benefits for both accidental death and accidental dismemberment each dismemberment benefit is an amount equal to the principal sum or some fraction thereof.

Probate - The court-supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.

Probate Estate - That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.

Probationary Period - A period from the policy date to a specified time usually 15 to 30 days during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.

Product Liability - Legal liability incurred by a manufacturer merchant or distributor because of injury or damage resulting from the use of its product.

Product Liability Insurance - Coverage designed to provide protection against financial loss arising out of the legal liability incurred by a manufacturer merchant or distributor because of injury or damage resulting from the use of a covered product.

Professional Liability Insurance - See Errors and Omissions Insurance.

Professional Review Organization (PRO) - An organization in which practicing physicians assume responsibility for reviewing the propriety and quality of health care services provided under Medicare and Medicaid.

Proof of Loss - Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim form completed by the insured and for health insurance claims by the insured's attending physician. For medical expense insurance itemized bills must also be included.

Property Damage Coverage - An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.

Property Insurance - Insurance providing financial protection against the loss of or damage to real and personal property caused by such perils as fire theft windstorm hail explosion riot aircraft motor vehicles vandalism malicious mischief riot and civil commotion and smoke. Available on Special and All-risk forms depending on the property being insured.

Property Management Errors and Omissions Insurance - Coverage designed to pay on behalf of the insured all sums he/she becomes legally obligated to pay by reason of any act error or omission rising out of services rendered or that were failed to render. Such services include arranging for property maintenance renting or leasing construction alteration land development etc. Coverage also provides for defense of any claim or suit that is the subject of this insurance.

Proration - The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.

Prospective Payment - An advancement of payment for health care charges that are likely to occur.

Prototype Plan - A standardized life insurance plan approved and qualified as to its concept by the Internal Revenue Service which is made available by companies banks and mutual funds for employers' use.

Provision - A clause sentence or paragraph of an insurance contract that describes or explains a feature benefit condition requirement etc. of the insurance protection afforded by the contract.

Proximate Cause - (1) The principal cause of loss or damage; (2) An unbroken chain of events between an event and damage.

Punitive Damages - A court-awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff.