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 auto 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).
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 policies.
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.
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
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 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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NOTICE: These glossary definitions provide a brief description of the terms and phrases used within the insurance industry. These definitions are not applicable in all states or for all insurance and financial products. This is not an insurance contract. Other terms, conditions and exclusions apply. Please read your official policy for full details about coverages. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control. Additionally, this informational resource is not intended to fully set out your rights and obligations or the rights and obligations of the insurance company, agent or agency. If you have questions about your insurance, you should contact your insurance agent, the insurance company, or the language of the insurance policy.