A combination of two or more individual policies or coverages
into a single policy. A homeowners policy, for example, is
a package combining property, liability and theft coverages
for the homeowner.
The actual dollar total that has been paid on incurred losses
by issuing checks or drafts to claimants.
An impairment that prevents the insured from performing one
or more, but not all, important duties of his/her job.
The life insurance, sold by some life companies, on which
dividends may be payable to policy owners. The amount and
timing of the dividend payments are determined by the company
board of directors.
In ocean marine insurance, a concept providing that, where
a portion of vessel or cargo is jettisoned to save the entire
venture from peril at sea, the resulting loss is borne entirely
by that individual owning the property that is damaged or
sacrificed. No other interests contribute to payment of the
loss. (Distinct from General Average.)
A system proposed in the 1990s in which auto insurance premiums
would be paid to state governments through a per-gallon surcharge
The cause of a possible loss, such as fire, windstorm, theft,
explosion or riot.
The type of life insurance that develops cash value and includes
whole life, endowment, universal life and variable life insurance.
An insurance term used to refer to the probability of insurance
remaining in force.
Personal Articles Floater:
A form of coverage designed to meet the needs for insurance
on property of a movable nature. The coverage usually protects
against all physical loss, subject to special exclusions and
conditions. Examples of property covered include jewelry,
furs, silverware and fine arts.
“Personal Injury” Liability
Protects against liability for damages other than physical
injury arising out of false arrest, detention or imprisonment,
or malicious prosecution; libel, slander or defamation of
character; invasion of privacy, wrongful eviction or wrongful
Personal Injury Protection Automobile Insurance (PIP):
First-party coverage in no-fault states that usually pays
for medical expenses, loss of income and certain other expenses
resulting from an auto accident. Coverage’s scope varies
widely by state law so no two states have identical coverages.
(See No-Fault Automobile Insurance.)
Types of insurance written for individuals or families, rather
than for businesses.
This type of property is usually movable and easily transportable.
On the other hand, real property generally is considered
be immovable, such as land and things affixed to it. A rule
of thumb definition for personal property is “everything
other than real property.”
This refers to the material, structural or operational features
of the risk itself, apart from the persons owning or managing
it. Electrical wiring, building construction and type of heating
system are examples of physical hazards.
Physical Loss Form:
This property coverage protects against loss from risk of
physical loss to buildings except as limited or excluded in
Point of Service (POS) Plan:
An HMO that offers an indemnity-type option. The primary care
doctors in a POS plan make referrals to other providers in
the plan. However, members can refer themselves outside the
plan and still get some coverage as well.
Policies written and recorded on the books of the carrier
which are unexpired as of a given date. Usually applies to
property and liability insurance.
The name generally used to mean the written contract of insurance.
One who owns an insurance policy. A mortgagee often is issued
a copy of an insurance policy or certificate of insurance
at the request of the insured, but it is not a policyholder.
The sum an insurance company has remaining after all liabilities
are deducted from all assets. Sums such as paid-in capital
and special voluntary reserves are also included in this term.
This surplus is one form of financial protection to policyholders
in the event a company suffers unexpected or catastrophic
The borrowing against a life insurance policy’s cash
Political Risk Insurance:
Coverage for businesses operating abroad against loss due
to political upheaval such as war, revolution, or confiscation
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
An organization of insurers or reinsurers through which particular
types of risks are underwritten with premiums, losses and
expenses shared in agreed ratios.
A physical condition that existed prior to the issuance of
an insurance policy.
The building, other structures and land where the insurance
protection is applicable. It is usually described and defined
in the property and casualty policy.
The amount of money charged a policyholder for an insurance
policy. (Also see Direct Premiums
Written, Earned Premium,
Net Premiums Written, Unearned Premium.)
A person who examines a liability insurance policyholder’s
insurance records (sales, payroll, etc.) at the end of the
policy term to determine if the basis for the premium charge
has either increased or decreased. If the audited premium
is less than originally estimated and paid, the policyholder
will receive a refund; if greater, the policyholder will
a statement for the balance.
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.
The total premiums on all policies written by an insurer
during a specified period of time, regardless of what portions
been earned. Net premiums written are premiums written after
In a reinsurance transaction, the insurance company that is
Market for new issue securities where the proceeds go directly
to the issuer.
Interest rate that banks charge to their most creditworthy
customers. Banks set this rate according to their cost of
funds and market forces.
In suretyship, the party whose honesty or performance is guaranteed.
Prior Approval States:
States where insurance companies must file proposed rate changes
with state regulators, and gain approval before they can go
Private Mortgage Insurance:
See Mortgage Insurance.
Securities that are not registered with the Securities and
Exchange Commission and are sold directly to investors.
Any person directly involved in the sale of insurance.
A section of tort law that determines who may sue and who
may be sued for damages when a defective product injures
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
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.
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.
Property Damage Liability Insurance:
Protection against loss from legal liability for damage to
the property of another.
Provides financial protection against loss or damage to the
insured’s property, other than automobile, caused by
specified perils, such as fire, windstorm, hail, explosion,
riot, aircraft, motor vehicles, vandalism, malicious mischief,
riot and civil commotion, and smoke.
A November 1988 California ballot initiative that called
for a statewide auto insurance rate rollback and for rates
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.
The face amount of a life insurance policy, or amount of
money that will be paid to a beneficiary upon the death of
upon the policy. This amount will be reduced by the amount
of any outstanding policy loan.
The dominating cause of loss or damage; an unbroken chain
of events between the occurrence of an insured peril and damage
to property. As an illustration, weather damage occurring
from fire-fighting activities is covered under the fire policy
because fire was the proximate cause of the loss.
Public Liability Insurance:
A broad term meaning insurance to cover professional and commercial
risks against liability exposures other than those involving
employees or arising out of ownership or use of autos or airplanes.
An entity that offers insurance to groups of similar businesses
with similar exposures to risk.