Insurance Glossary

Insurance terms and definitions

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

PACKAGE POLICY

A single insurance policy that combines multiple coverages that were previously sold separately, such as homeowners or commercial multiple peril insurance.

PAY-AT-THE-PUMP

A system proposed in the 1990s in which auto insurance premiums would be collected through a per-gallon gasoline surcharge paid to state governments.

PENSION BENEFIT GUARANTY CORPORATION (PBGC)

An independent federal agency that insures benefits under defined benefit pension plans and ensures vested benefits are paid when covered plans are terminated, subject to statutory limits.

PENSIONS

Retirement programs that provide income to employees after meeting age and service requirements. Responsibility for retirement funding has increasingly shifted from employers to employees through defined contribution plans.

PERIL

A specific cause of loss covered by an insurance policy, such as fire, theft, or windstorm. Named-peril policies cover only listed risks, while all-risk policies cover all risks except those excluded.

PERSONAL ARTICLES FLOATER

A policy or endorsement that provides broader coverage for valuable personal items such as jewelry, fine art, or furs.

PERSONAL INJURY PROTECTION (PIP)

A portion of an auto insurance policy that pays medical expenses and related costs for the policyholder and passengers, regardless of fault.

PERSONAL LINES

Property and casualty insurance products purchased by individuals, including homeowners, renters, and automobile insurance.

POINT-OF-SERVICE PLAN (POS)

A health insurance plan that allows members to choose between in-network and out-of-network providers at the time services are needed.

POLICY

A written contract between an insurer and a policyholder that specifies coverage terms, conditions, exclusions, and premiums.

POLICYHOLDERS’ SURPLUS

The excess of an insurer’s assets over its liabilities, serving as a financial cushion to protect policyholders against unexpected losses.

POLITICAL RISK INSURANCE

Insurance coverage for businesses operating internationally against losses caused by political events such as war, revolution, or government confiscation.

POLLUTION INSURANCE

Coverage for liability and property damage arising from pollution-related incidents, typically written on a claims-made basis.

PREFERRED PROVIDER ORGANIZATION (PPO)

A network of healthcare providers that offer medical services at negotiated, discounted rates while allowing members to seek care outside the network.

PREMISES

The location of insured property as identified and described in an insurance policy.

PREMIUM

The price paid for insurance coverage, usually charged annually, semiannually, or monthly.

PREMIUM TAX

A state-imposed tax on insurance premiums paid by residents and businesses, collected by insurers on behalf of the state.

PREMIUMS IN FORCE

The total face value of active life insurance policies, including dividend additions, at a specific point in time.

PREMIUMS WRITTEN

The total premiums on policies issued by an insurer during a given period, before deducting reinsurance. Net premiums written reflect reinsurance transactions.

PRIMARY COMPANY

In reinsurance, the original insurance company that transfers part of its risk to a reinsurer.

PRIMARY MARKET

The financial market in which new securities are issued and sold directly by the issuer to investors.

PRIME RATE

The interest rate banks charge their most creditworthy customers, influenced by market conditions and the bank’s cost of funds.

PRIOR APPROVAL STATES

States where insurers must receive regulatory approval before implementing insurance rate changes.

PRIVATE PLACEMENT

Securities sold directly to investors without registration with the Securities and Exchange Commission.

PRODUCT LIABILITY

A legal doctrine governing responsibility for injuries or damages caused by defective products, often applying strict liability standards.

PRODUCT LIABILITY INSURANCE

Insurance coverage that protects manufacturers and distributors against claims for bodily injury or property damage caused by their products.

PROFESSIONAL LIABILITY INSURANCE

Coverage for professionals against claims of negligence, errors, or omissions in the performance of their services.

PROOF OF LOSS

Documentation provided by the policyholder to verify that a covered loss has occurred.

PROPERTY/CASUALTY INSURANCE

Insurance that covers damage to property and liability for injuries or damage caused to others. This sector includes auto, homeowners, and commercial insurance.