Glossary of Terms - P
Payee
An insured individual or a beneficiary who receives a loss or benefit payment from an insurer.
Peril
A specific cause of loss. Common examples include fire, flood, earthquake, vandalism, and theft.
Personal Liability Insurance
Part of a standard homeowners policy that covers financial losses you suffer when you accidentally cause bodily injuries to others or damage to their property.
Personal Property
For homeowners insurance purposes, this term generally includes all the contents of your household (e.g., furniture, jewelry, knickknacks, etc.). Coverage for personal property is automatically set at 50 percent of your coverage limit for your house, unless you choose to raise your coverage. This coverage is generally subject to a deductible.
Points
Prepaid fees, often used to decrease the interest rate on a mortgage, or to induce lenders to make a mortgage loan. One point equals one percent of the loan principal. Points have the effect of reducing the amount of money advanced by the lender. Mortgage lenders commonly charge one point as a loan origination fee. Additional points may be charged to raise the loan yield to current market interest rates.
Policy Period
Time period during which an insurance policy is in force.
Post Mortem
After death.
Power of Attorney
A written document that authorizes an individual to perform certain acts on behalf of the person signing the document. The document, which must be witnessed by a notary public or some other public officer, may bestow either full power of attorney or limited power of attorney and it becomes void upon the death of the signer.
Preferred Risk
An insured or applicant for insurance who has a lower expectation of incurring a loss than the standard applicant and can obtain favorable premiums.
Premium
The payment required for an insurance policy to remain in force.
Principal
The amount borrowed or unpaid on a loan.
Principal Residence
The home that a taxpayer lives in most of the time during the taxable year.
Probate
The court-supervised process of administering a will.
Probate Estate
Property that passes to beneficiaries according to the terms of a will.
Probated
Refers to a will that has gone through the legal process of probate and thereby determined by a court to be either valid or invalid. Once the probate process is complete and the will proven valid, the property in the estate can be distributed according to the terms of the will. In current usage, the term 'probate' has been expanded to generally include all matters and proceedings relating to the administration of to estates, guardianships, etc.
Promissory Note
A written promise committing the borrower to pay the lender a specified sum of money either on demand or at a fixed or determinable future date, with or without interest. Instruments meeting this criteria are generally negotiable.
Property Damage Liability Coverage
Part of a standard auto insurance policy that covers you (up to the policy limit) for losses that result when you damage or destroy someone else's personal property. This is required coverage in most states.
Provisions
Words, sentences, and paragraphs in an insurance contract that specify the terms and limitations of the policy as well as the rights and obligations of the insured and the insurer.
Proximate Cause
In property/casualty insurance, the cause of a loss whereby that cause, the loss itself, and all intervening events form an unbroken chain.