Glossary P 

PD See property damage insurance.

PIP See personal injury protection.

PPO See preferred provider organization.

package policies A combination of coverages marketed as a single policy. Homeowners Multi-Peril and Businessowners policies are examples of package policies.

paid-up additions Additional insurance purchased by participating policy dividends on a net single premium basis. The premium is determined by the insured’s attained insurance age at the time additions are purchased.

paid-up policy A policy on which no future premiums are due while the company is still liable for the benefits provided under the terms of the contract.

partial disability Defined in many accident policies as “Inability to perform one or more important duties of one’s occupation.”

partial loss In property insurance, a loss which does not completely destroy the property or exhaust the applicable insurance.

participating policy A policy under which the insured shares in the saving resulting from good underwriting and favorable loss experience. Such policies are usually written by mutuals, sometimes by reciprocals, and occasionally by stock companies.

payor benefit A benefit available under certain juvenile policies, upon payment of an extra premium. It provides for the waiver of future premiums in the event the named payor dies or is disabled while the benefit is in effect.

payroll audit An examination of the insured’s accounts by the insurer to determine exactly the amount of premium due when the policy has been written on a payroll basis and the advance premium has been merely estimated.

per capita rule Under this rule, the death proceeds of a life insurance policy are divided equally among the living primary beneficiaries.

peril The specific event causing a loss, such as fire, windstorm or accidental death.

· A “named peril” policy covers losses from perils specifically named in the policy.
· An “Accidental Direct Physical Loss” (ADPL) policy covers losses from all perils except those it excludes.

persistency The “staying” quality of life insurance policies. High persistency means that a low percentage of policies lapse for nonpayment of premiums.

personal injury Distinguished from “bodily injury,” this term relates to injury arising from false arrest, libel, slander, wrongful eviction, etc.

personal injury protection (PIP) The formal name usually given to no-fault benefits in states that have enacted mandatory or optional no-fault automobile insurance coverages. PIP typically includes benefits for medical expenses, loss of work income, essential services, accidental death and funeral expenses.

personal lines Used to refer to insurance for individuals and families, such as private passenger automobile insurance and homeowner policies.

personal property floater This is similar to the personal effects floater, but it may be written on any kind of personal property, and it covers property in the principal residence of the insured as well as elsewhere.

PER STIRPES RULE Under this rule, the death proceeds of a life insurance policy are divided equally among the named beneficiaries. If a named beneficiary is deceased, his or her share then goes to the living descendants of that individual.

physical hazard A hazard created by the condition, occupancy, or use of the property itself.

pilferage Petty theft, especially theft of articles in less than package lots. In auto insurance this would include the theft of such things as hubcaps, spotlights, spare wheels, and so on.

policy The written contract effecting insurance, or the certificate thereof, by whatever named called, and including all clauses, riders, endorsements, and papers attached thereto and made a part thereof.

policy fee A fee added to the premium to help defray the costs of acquisition and/or maintenance. The fee may be one-time or annual; some policies have no policy fee.

policyholder The person in possession of an insurance policy.

policy owner The legal owner of a life insurance or annuity policy; may be the insured or annuitant or another party.

pre-existing condition A physical or mental condition that existed before issuance of a policy.

preferred provider organization (PPO) A health care delivery system in which the employer or insurer enters into contracts with health care providers (physicians, hospitals, etc.), to provide health care services at a discount.

preferred risk A class of risk that is considered to be particularly desirable.

premium A periodic payment by the insured to the insurance company in exchange for insurance coverage.

premium notice Notice of premium due, sent out by the company or one of its agencies, to an insured and/or policy owner.

primary beneficiary The party who is usually first entitled to receive the policy proceeds upon the insured’s death.

principal The person, firm or corporation whose performance of certain obligations is covered or guaranteed by a bond.

principal sum In a health and accident policy, the amount specified to be paid in the event of covered losses. In a life policy, the amount of insurance provided by the policy at the time of issue.

prior-approval law A law for regulating insurance rates under which the rates must be filed and approved by the state insurance department before they can be used.

proceeds The net amount of money payable by the insurer at the death of an insured or at the maturity of a policy.

producer In insurance, this refers to any person engaged in the production of business, i.e., sales. In most other forms of business, the producer is the manufacturer who turns out the product to be sold.

product liability insurance Protection against liability arising out of the handling or use of the existence of any condition in goods or products manufactured, sold, handled or distributed by the insured if the accident occurs after the insured has relinquished possession to others and away from the insured’s premises. Coverage also applies to accidents caused by faulty workmanship if the accident occurs away from the insured’s premises and after the work has been allegedly completed.

prohibited risk A risk which an insurance company will not insure.

proof of death A usual requirement before paying a death claim is that a formal statement (proof of death form of some type) be submitted to the insurer.

proof of loss A formal statement that the insured typically must furnish before the insurance company will pay any property insurance loss.

property damage insurance Coverage for liability due to damage to the property of others.

property insurance Insurance written to cover the loss, by damage or theft, to specified objects of value owned, possessed, or held by the insured. Sometimes called physical damage in case of automobile insurance.

pro rata cancellation A cancellation by the insurer that refunds an amount equal to the daily earned premium multiplied by the days remaining in the policy.

pro rata distribution clause A form usually attached to a fire policy covering several buildings. It provides that the insurance shall apply to each building only in the proportion that the value of such building bears to the total value of all buildings covered under the policy.

prospect A potential buyer for insurance.

protection class The rating of the local fire department’s capabilities and the availability of fire hydrants and other water supply sources. Protection classes are typically numbered one through 10, with one being best and 10 having essentially no fire protection. Used in pricing property insurance.

provisional rate Estimated temporary rate. Always subject to adjustment.

proximate cause The factor causing damage or loss for which there is an unbroken chain of events between the occurrence of an insured peril and the resulting injury or damage.

punitive damages Money awarded by a jury as a result of a negligent act, to punish a negligent party and deter others from committing the same act. These damages are over and above compensatory damages.

pure premium The amount of premium required to pay losses alone. An amount, usually a percentage, must be added to pay the cost of acquiring and managing the business in order to determine the manual rate.