Insurance Terms Glossary – PQR

Other Insurance: The existence of another contract covering the same interest and perils. Outpatient: A patient who is not a bed patient in the hospital in which she receives treatment.

Paid-Up: Life insurance on which all premiums have been paid but has not yet matured by death or endowment.

Partial Disability: A condition in which, as a result of injury or sickness, the insured cannot perform one or more of the duties of his occupation but can perform some. Follows a period of Total Disability.

Permanent and Total Disability: Total Disability from which the insured does not recover. When used as a definition of disability in a policy, “Permanent” is presumed after a stated period of time.

Permanent Insurance: Life insurance with some type of cash-value accumulation.

Policy: The written contract effecting insurance or the certificate thereof by whatever name called, and papers attached thereto and made a part thereof.

Policy Dividends: The Policy owners’ share of a company’s divisible surplus.

Policy owner: The person who has the right to exercise the privileges and rights in the policy contract. Also called policyholder.

Policy Loan: A loan taken by the policyholder from the insurer using the insurance cash value as collateral. May be deferred up to six months.

Pre-existing Condition: A condition of health or physical condition that existed before the policy was issued..

Premium: 1) Consideration for the insurance. 2) Periodic payment made to keep a policy in force.

Primary Beneficiary: Named beneficiary first to receive proceeds or benefits, if living, when proceeds or benefits are due.

Probationary Period: A period of time between the effective date of a Health policy and the date coverage begins for certain pre-existing conditions.

Proceeds: Amount payable by a policy, usually used in reference to the face amount of a Life policy payable at death of the insured.

Proof of Loss: A formal statement by the insured to the insurance company regarding a loss. The purpose is to place before the company sufficient information concerning the loss to enable it to determine its liability under the policy.

Pro Rata Cancellation: The termination of a contract with premium charge being adjusted in proportion to the exact time the protection has been in force.

Protection: Tenn used interchangeably with the word “coverage” to denote insurance provided under the terms of a policy.

Rate: The per-unit cost of insurance. Life insurance is rated based on units of $1,000.

Rated: A policy issued with an extra premium charge because of physical or moral impairment. A surcharge.

Rated-Up Policy: A policy issued to an applicant that reflects a higher rate, due to the presence of a greater risk, in the eyes of the underwriter. Rated-up policies often result from substandard health cases revealed in a medical examination.

Rebating: Any practice that involves the covert return of money or other value, in excess of $2.00, to an applicant in order to induce a sale; it is considered an illegal act.

Reduced Paid-Up Insurance Option: A Nonforfeiture option under which the insured uses the cash value of his present policy to purchase a single-premium Whole Life policy, at attained-age rates, for a reduced face amount, to age 100.

Reimbursement: Payment of an amount of money related to the amount of the loss to or on behalf of the insured upon the occurrence of a defined loss.

Reinstatement Clause: Provides the conditions under which a lapsed policy may be reinstated, if approved by the insurance company.

Reinsurance: Agreement between insurance companies under which one accepts all or part of the risk of loss of the other.

Renewable Term: Term insurance that can be renewed without proof of the insured’s insurability.

Renewal: The continuation in full force and effect of a policy that is about to expire.

Representations: Facts that the applicant represents as true and accurate to the best of his knowledge and belief.

Reserve: The amount that, when increased by future premiums on outstanding policies and interest on those premiums, will enable the company to meet the future Death claims that will arise because of those contracts of insurance.

Rider: A form attached to a policy that modifies the conditions of the policy by expanding or decreasing its benefits or excluding certain conditions from coverage.

Risk: The uncertainty of loss that exists whenever more than one outcome is possible. In the area of Life insurance, death is certain, but time of death is uncertain.

Risk Selection: The process of selecting insureds’with a normal life expectancy.

Pair and Set Clause: A clause found in various Property insurance contracts that states that when part of a set is damaged or destroyed, the insured is not entitled to reimbursement for the entire set. Policies provide various methods for determining the amount of reimbursement. Fine Arts floaters do not contain this clause.

Partial Loss: A loss that does not either 1) completely destroy or render worthless the insured property, or 2) exhaust the insurance applying thereto.

Performance Bond: A Surety Bond that guarantees a job will be completed by the contractor according to contract specifications.

Peril: Cause of a potential loss. An insurance policy
may name the perils insured against, or it may be an All-Risk form: one that insures against all Perils not specifically excluded in the policy.

Personal Articles Floater: Personal Inland Marine insurance that provides All-Risk coverage on nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections and coin collections.

Personal Auto Policy: Easy-to-read auto policy that provides broad coverage for both owned and non owned autos that are used, maintained, and/or operated by the insured and family.

Personal Injury Coverage: Liability coverage for third-party claims for damages that are other than physical, such as libel, slander, false arrest, wrongful eviction, invasion of privacy, etc.

Personal Lines: Insurance coverages intended to protect individuals and their families.

Personal Property Floater: Personal Inland Marine floater that provides All-Risk coverage on unscheduled personal property.

Personal Yacht Insurance: A form of Ocean Marine insurance available to individuals who own large boats. Provides both Hull and Protection and Indemnity insurance.

Physical Damage: In Auto insurance, damage or loss to the insured’s own autos or autos in the insured’s care, custody, or control.

Physical Hazard: The material, structural, or operational features of the risk itself, apart from the morale or moral hazards of persons owning or managing it.

Policy: The written contract or certificate effecting insurance, including papers attached to and made a part of it.

Premium: 1) Consideration for the insurance. 2) Periodic payment made to keep a policy in force. Principal: In Bonds, the party who promises to do (or not to do) a specific thing. 330

Private Passenger Autos: Ordinary cars, station wagons and jeeps, utility autos (pickups, panel trucks, and delivery vans not used commercially), and utility trailers designed to be pulled by a private passenger auto:

Products And Completed Operations: A form of General Liability insurance that covers a company against liability arising out of its products (a manufacturer) or its completed operations (a contractor or architect).

Professional Liability: Liability arising out of the rendering or failure to render services of a professional nature.

Proof of Loss: A formal statement by the insured to the insurance company regarding a loss. The purpose is to place before the company sufficient information concerning the loss to enable it to determine its liability under the policy.

Property Damage: A type of loss covered under many Liability contracts. Includes the insured’s liability for damage to property of others or loss of use of other’s property.

Property Insurance: Insurance that indemnifies a person with an interest in property for its loss.

Pro-Rata Cancellation: The termination of a contract with premium charge being adjusted in proportion to the exact time the protection has been in force. All unearned premium is returned to the insured.

Pro-Rata Liability Clause: Clause in a Fire Policy that provides a method of sharing loss when more than one policy is applicable. Each company covers no more than its share. Also known as the Other insurance Clause.

Rebating: Giving or offering a benefit other than those specified in the policy, to induce a customer to buy insurance.

Removal: Process of removing property for the purpose of preserving it from a Peril insured against. Property contracts provide coverage for loss to property during removal. (For example, during a fire, you remove your furniture from your dwelling, exposing it to other risks.)

Renewal: The continuation in full force and effect of a policy that is about to expire.

Rental Value: An indirect Property coverage available under the Dwelling and Homeowners policies, also available with certain Commercial contracts, that reimburses the insured for rents lost when rented property,is damaged by a Peril insured against.

Replacement Cost: The cost of replacing property without deduction for depreciation.

Representations: Facts that the applicant represents as true and accurate to the best of her knowledge and belief.

Retention Limit: In an Umbrella Liability policy, the amount the insured must pay for a loss not covered by an underlying policy, before the Umbrella will begin to cover losses.

Risk: The uncertainty of loss that exists whenever more than one outcome is possible. (In the area of Life insurance, death is certain, but time of death is uncertain.)

Robbery: In Crime insurance, the forcible and felonious taking of property by violence or threat of violence from a messenger or custodian.