Package Policy

Any insurance policy including two or more lines or types of coverages in the same contract. Personal and commercial package policies are very common today. In fact, most policies sold are package policies.

Paid Losses

The amount actually paid in losses during a specified period of time, not including estimates of amounts that will be paid in the future for losses that occurred then.


Insurance on which the premium has been paid.

Paid-In Capital

The amount paid for the stock sold by a corporation.

Paid-In Surplus

Surplus paid in by stockholders, as contrasted with surplus earned through the operations of a business.


A person having professional training in some area of medical care but who is not a doctor. An adjective used to denote training or treatment by paramedical personnel.

Partial Loss

A loss covered by an insurance policy which does not completely destroy or render worthless the insured property.

Participating (Par)

Insurance that pays policy dividends. In other words, it entitles a policy owner to participate in allocations of the insurer's surplus. In Life Insurance there are several options available for the use of such dividends. Insurance that contributes proportionately with other insurance on the same risk.


An acronym for Protected Health Information, defined as Identifiable health information that is transmitted or maintained by the group health plan in oral, electronic or written form.

Physical Hazard

Any hazard arising from the material, structural, or operational features of the risk itself apart from the persons owning or managing it.


Professional Insurance Agents. An association of independent agents involved in educational programs, consumer efforts, and government and industry affairs pertaining to the insurance industry.


Petty theft, particularly theft of articles in less than package lots. This term is associated with the insuring of cargo under an Inland Marine Insurance form.

Plain Language Laws

Mandatory state law that requires policies to be written in everyday language so that the are easily understood. Technical terms with their technical meanings are used only where required by law or substitution would be misleading.


The written statement of a contract effecting insurance, or certificates thereof, by whatever name called, and including all clauses, riders, endorsements, and papers attached thereto and made a part thereof.

Policy Anniversary

The anniversary of the date of issue of a policy as shown in the policy declarations.

Policy Owner

The person who has ownership rights in an insurance policy and who may or may not be either the policyholder or the insured. Often used loosely to refer to the policyholder and/or the insured.

Policy Period (or Term)

The period during which the policy contract affords protection, e.g., six months or one or three years.

Policy Year Experience

The measure of premiums and losses for each 12-month period a policy is in force. Losses occurring during this 12-month period are assigned to the period regardless of when they are actually paid.


The person in actual possession of an insurance policy. Often used loosely to refer to the policy owner and/or insured.


An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses, and expenses shared in agreed ratios.

Pool (Association or Syndicate)

An organization of insurers or reinsurers through which particular types of risks are written with the premiums, losses, and expenses shared in agreed amounts among the insurers belonging to the pool. A pool is often the entity to write large values, such as those on commercial aircraft.


All of the insurer's in-force policies and outstanding losses, respecting described segments of its business. Also, the total securities owned by an insurer.

Portfolio Reinsurance

In transactions of reinsurance, it refers to all the risks of the reinsurance transaction. For example, if one company reinsures all of another’s outstanding Automobile business, the reinsuring company is said to assume the “portfolio” of Automobile business and it is paid the total of the unearned premium on all the risks so reinsured (less some agreed commission).

Power of Attorney

The authority given to one person or corporation to act for and obligate another to the extent set forth in the agreement creating the power. The authority given to the chief administrator of a reciprocal insurance exchange, who is called an attorney in fact, by each subscriber.

Pre-certification Authorization

A cost containment technique which requires physicians to submit a treatment plan and an estimated bill prior to providing treatment. This allows the insurer to evaluate the appropriateness of the procedures, and lets the insured and physican know in advance which procedures are covered and at what rate benefits will be paid.

Preemptive Right

A current stockholder's right to maintain his or her proportionate ownership in a corporation through the exercising of this right to purchase new issues of stock before the public.

Preferred Risk

Any risk considered to be better than the standard risk on which the premium rate was calculated.

Preliminary Term

The period of a short-term insurance issued to cover a risk to a date which the policy owner wishes to establish as the anniversary date for future premiums.


The price of insurance protection for a specified risk for a specified period of time.

Premium Discount

A discount allowed on premiums paid in advance of one year, which is based on projected interest to be earned. A discount allowed on certain Workers Compensation and Comprehensive Liability policies to allow for the fact that larger premium policies do not require the same percentage of the premium for basic insurer expenses such as policywriting. The discount percentage increases with the size of the premium. This is not available in all states.

Premium Notice

A form notice from an insurer or agency to a policy owner that a premium will be due on a given date.

Premium Rate

The price per unit of insurance. An example would be a Property Insurance rate of 10 cents per $100 of the value of the property to be insured.

Premium Receipt

The receipt given a policy owner for the payment of a premium.

Present Value

The amount of money that future amounts receivable are currently worth. For example, a Life Insurance policy may provide for payments to be made monthly for 10 years. The present value of that money would be less than the total amount of the monthly payments for 10 years because of the amount of interest that a present lump sum could earn during the term that the payments otherwise would have been made.

Primary Coverage

Insurance coverage that covers from the first dollar, perhaps after a deductible, as distinguished from excess coverage that pays only after some primary coverage has been exhausted. Contrast with Excess Insurance.

Privacy Notice

A notice a company issues to all its customers stating that their PHI (Protected Health Information) will be protected.

Pro Rata Rate

A rate charged for a period of coverage shorter than the normal period. An example, if an insured had coverage for only one quarter of a year, his premium would be only one quarter of the annual premium.

Professional Reinsurer

A term used to designate a company whose business is confined solely to reinsurance and the peripheral services offered by a reinsurer to its customers as opposed to primary insurers who exchange reinsurance or operate reinsurance departments as adjuncts to their basic business of primary insurance. The majority of professional reinsurers provide complete reinsurance and service at one source directly to the ceding company.

Prohibited List

A list of types of business or types of risks that an insurance company will not insure. Also called the "undesirable list," the "do not solicit list," and other designations.


To develop, publish and put into effect insurance rates or forms. To make public, by publishing or announcing, the fact that a statute or rule of court is a legal order or direction enforceable by law, and violation of such is punishable as provided by law.

Proof of Loss

A formal statement made by a policy owner to an insurer regarding a loss. It is intended to give information to the insurer to enable it to detemine the extent of its liability.

Prospective Rating

A method used in arriving at the rate and premium for a specified future period, based in whole or in part on the loss experience of a prior specified period.

Prospective Rating Plan

A plan which uses a formula for determining premiums for a specified period on the basis, in whole or in part, of the loss experience of the previous period.


A term used interchangeably with "coverage" to denote insurance provided under the terms of a policy. The fire-fighting facilities in the area in which a risk is located.

Public Law 15

A Congressional Act of 1945 exempting insurance from federal anti-trust laws to the extent that it is regulated properly by states. This law was passed after the reversal of the Paul versus Virginia case by the SEUA decision.