Insurance Information
Family Purpose Doctrine
Concept that imputes negligence committed by immediate family members while operating a family car to the owner of the car

Farmowners-Ranchowners Policy
A package policy for a farm or a ranch, providing property and liability coverages against personal and business losses.

Federal Crime Insurance
Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists.

Federal Crop Insurance
Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake.

Federal Flood Insurance
Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.

Fiduciary
A person holding the funds or property of another in a position of trust, and who is obligated to act in a prudent and ethical manner. An example would be an attorney, bank trustee, the executor of an estate, etc.

File and Use
Regulatory rule whereby the insurer must have rates, rules, and/or forms on file with a department of insurance prior to implementing them.

Financial Responsibility Law
A state law which may require motorists (the insured) to furnish evidence, either before or after involvement in an auto accident (depending on the individual state's law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more.

Fire
A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.

Fire Insurance
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.

First Party Coverage
An insurance coverage under which the policyholder collects compensation for losses from the insured's own insurer rather than from the insurer of the person who caused the accident.

Flat Cancel
Cancellation of an insurance contract as of its date of inception, without premium charge.

Floaters
Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.

Flood Insurance
Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.

Foreign Insurer
An insurance company licensed to operate in a state but has its home office in another state.

Franchise Insurance
Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless its simultaneously discontinues or modifies all other policies in the same group.

Fraternal Insurance
A cooperative type of insurance provided by social organizations, such as members of a lodge or a fraternal order, for their members.

Fronting Company
An insurer that issues policies with the intention of transferring most of the insured exposure through reinsurance or other means to unauthorized insurers or reinsurers or captive insurers. This fronting insurer assumes little or no loss exposure; instead, financial arrangements are made to guarantee claims administration and payments. The fronting insurer is usually paid a percentage of the premium.

Insurance Information (cont'd)
Package Policy
A combination of two or more individual polices or coverages into a single policy. A homeowners policy, for example, is a package combining property, liability and theft coverages for the homeowner.

Paid-up Insurance
Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a nonforfeiture option.

Paramedical Examination
Physical examination of an applicant by a trained person other than a physician.

Partial Disability
A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.

Participating Insurance
Insurance issued by an insurance company providing participation in dividend distribution.

Participating Policy
A life insurance policy under which the company agrees to distribute to policyholders the part of its surplus which its Board of Directors determines is not needed at the end of the business year. Such a distribution serves to reduce the premium the policyholder had paid. (See also - Policy dividend; Nonparticipating policy)

Pension Benefit Guaranty Corporation (PBGC)
The Federal body responsible for administering the plan termination insurance program under ERISA.

Pension Benefits
A series of payments to be provided in accordance with the plan of benefits.

Pension Plan
A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable benefits to participants after retirement.

Percentage Participation
A provision in a health insurance contract that the insurer and insured will share covered losses in agreed proportions. Also see Coinsurance.

Peril
The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.

Permanent Life Insurance
A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life or endowment.

Persistency
The degree to which policies stay in force through the continued payment of renewal premiums.

Personal Articles Floater
A form of coverage designed to meet the needs for insurance on property of a moveable nature. The coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of property covered include jewelry, furs, silverware, fine arts.

Personal Injury Protection (PIP)
First-party no-fault coverage in which an insurer pays, within the specified limits, the wage loss, medical, hospital and funeral expenses of the insured.

Personal Lines
Those types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organizations.

Personal representative
A person appointed through the will of a deceased or by a court to settle the estate of one who dies.

Physical Damage
Damage to or loss of the auto resulting from collision, fire, theft or other perils.

Physician's Expense Insurance
Coverage which provides benefits toward the cost of such services as doctor's fees for nonsurgical care in the hospital, at home or in a physician's office, and X-rays or laboratory tests performed outside the hospital. (Also called Regular Medical expense Insurance.)

Plan Administrator
The person or persons controlling the money or property contributed to the plan, usually designated in the plan agreement.

Point-of-Service Plans
Often known as open-ended HMOs or PPOs, these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.

Policy
The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.

Policy Dividend
A refund of part of the premium on a participating life insurance policy reflecting the difference between the premium charged and actual experience.

Policyholder
A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.

Policyholders' Surplus
Sum left after liabilities are deducted from assets. Sums such as paid-in capital and special voluntary reserves are also included in this term. This surplus is an additional financial protection to policyholders in the event a company suffers unexpected or catastrophic losses. In effect, it is the financial base that permits a company to sell insurance.

Policy Loan
A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.

Policy Reserves
The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.

Policy Term
That period for which an insurance policy provides coverage.

Pollution Liability
Exposure to lawsuits for injury or cleanup costs that result from pollution damage

Pool
An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed-upon amounts.

Portability
The transfer of pension rights and credits when a worker changes jobs.

Preadmission Certification
Process in which a health care professional evaluates an attending physician's request for a patient's admission to a hospital by using established medical criteria.

Preexisting Condition
A physical and/or mental condition of an insured which first manifested itself prior to the issuance of his/her policy or which existed prior to issuance and for which treatment was received.

Preexisting Condition
A physical condition that existed before the effective date of coverage.

Preferred Provider Organization (PPO)
An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.

Preferred Stock
Evidence of ownership which entitles the owners to receive dividends from the corporation before the common stockholders and which usually also provides a prior claim to corporate assets if the corporation is dissolved.

Premium
The sum paid by a policyholder to keep an insurance policy in force.

Premium finance
allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.

Premium Loan
A policy loan made for the purpose of paying premiums.

Premium Tax
A tax, imposed by each state, on the premium income of insurers doing business in the state.

Prepaid Group Practice Plan
A plan under which specified health services are rendered by participating physicians to an enrolled group of persons, with a fixed periodic payment in advance made by or on behalf of each person or family. If a health insurance carrier is involved, a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contract. Such a plan is one form of Health Maintenance Organization (HMO).

Primary Insurance
Insurance that pays compensation for a loss ahead of any other insurance coverages the policyholder may have.

Principal Sum
The amount payable in one sum in the event of accidental death and in, some cases, accidental dismemberment. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof.

Probate
The court-supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.

Probate Estate
That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.

Probationary Period
A period from the policy date to a specified time, usually 15 to 30 days, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.

Product Liability
legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of its product.

Product Liability Insurance
Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product.

Professional Review Organization (PRO)
An organization in which practicing physicians assume responsibility for reviewing the propriety and quality of health care services provided under Medicare and Medicaid.

Proof of Loss
Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim form completed by the insured and the insured's attending physician. For medical expense insurance itemized bills must also be included.

Property Damage Coverage
An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.

Property Insurance
Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.

Proration
The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.

Prospective Payment
An advancement of payment for health care charges that are likely to occur.

Prototype Plan
A standardized plan, approved and qualified as to its concept by the Internal Revenue Service, which is made available by life insurance companies, banks and mutual funds for employers' use.

Provision
A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.

Proximate Cause
The dominating cause of loss or damage; an unbroken chain of events between the occurrence and damage.

Punitive Damages
a court-awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff.