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Business Insurance Glossary — P Through R

P

R


P

Package policy
Several separate business insurance coverages bundled into one and sold as a single unit.

Peril
A risk identified in an insurance policy (such as fire, flood and vandalism) that may or may not be covered.

Performance bond
A form of surety bond that guarantees the person named in the policy will perform the defined duties as stated in the terms of a business contract.

Personal Injury Protection — PIP
Often used interchangeably with the term "no-fault coverage," this type of insurance covers medical expenses, replacement services and lost income if a policy holder is injured in an accident involving an uninsured driver. (See also no-fault coverage)

Point of Service — POS
An alternative to an HMO or PPO, this is a medical service plan where members choose a primary care doctor from a network of health care professionals who have agreed to provide reduced-cost services to plan members. Members may also see an out-of-network provider for an additional cost. (See also Health Maintenance Organization — HMO, Independent Practice Association — IPA and Preferred Provider Organization — PPO)

Personal insurance
Coverage for consumers such as homeowners, auto, pet, life or property insurance.

Personal property
Non-real estate items that belong to a policy holder, such as vehicles, clothing, electronics, household goods and furniture.

Policy
A contractual agreement prepared by an insurance company that outlines the terms of insurance coverage for the purchaser.

Policy holder
The individual or organization that owns and controls an insurance contract.

Policy proceeds
The financial benefits for which a named beneficiary may be eligible under an insurance policy.

Pre-existing condition
An ailment for which an individual was treated prior to the effective date of coverage for a health care policy.

Preferred Provider Organization — PPO
A medical service plan where a group of health care providers have contracted with an insurer to offer members discounted fee-for-service medical treatments according to a specially negotiated fee structure. This plan is often included in an employer-sponsored benefits package. (See also Point of Service — POS, Independent Practice Association — IPA and Preferred Provider Organization — PPO)

Premium
The cost of insurance coverage for a specific risk provided by an insurer for a set length of time.

Premium Waiver
Commonly available for life insurance, this is a provision that allows continuation of coverage, even if premiums have not been paid, if certain conditions are met.

Professional liability insurance (errors and omissions)
This type of coverage protects businesses against potentially catastrophic lawsuits involving professional negligence, or charges of failing to perform professional duties.

Provider
A company that supplies insurance.

Public adjuster
A professional who works on behalf of policy holders to settle claims with insurance companies.
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R

Rate
The per-unit price of insurance, this amount is used when calculating premiums and is generally based on state regulations and historical losses for comparable risks.

Rate regulation
State-supervised monitoring of insurance premium rate changes.

Rating agencies
Consumer confidence in an insurer's financial strength is largely determined by rankings assigned by A.M. Best Company, Duff & Phelps, LLC., Fitch Ratings, Moody's Investors Service, Standard & Poor's, and TheStreet.com, Inc. (formerly Weiss Ratings, Inc.) These independent research firms, known as rating agencies, analyze insurers' data including earnings, operating expenses and investment performance, and assign ratings accordingly.

Rating bureau
An organization such as the Insurance Services Office (ISO), which provides pooled industry data to small insurers and insurers focusing on special lines of business, to help them develop rates and loss adjustment expenses.

Reinsurer
An insurance company that contractually assumes part of the risk and part of the premium originally taken by the insurer.

Replacement cost
If a business has replacement cost coverage built into its policy, the policy holder will be reimbursed for the actual cost of repurchasing the item when a claim is filed. Depreciation would not be factored into this amount. (See also actual cash value)

Reserves
An insurance company's best estimate of the amount it will pay out for claims.

Retention
The amount of risk retained by an insurance company that is not reinsured.

Rider
An attachment to an insurance policy that alters the policy's coverage or terms. This may also be referred to as an endorsement.

Risk
A peril that could potentially cause loss to a policy holder.

Risk management
A process designed to systematically manage an organization's accidental losses.
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