Tools and Education


Insurance Terms M - P

Nonbinding procedure in which a third party attempts to resolve a conflict between two other parties.
Medical Payments Insurance
A coverage in which the insurer agrees to reimburse the insured and others up to a certain limit for medical or funeral expenses as a result of bodily injury or death by accident. Payments are without regard to fault.

Mine Subsidence Coverage
An endorsement to a homeowners insurance policy, available in some states, for losses to a home caused by the land under a house sinking into a mine shaft. Excluded from standard homeowners policies, as are other forms of earth movement.
Multiple Peril Policy
A package policy, such as a homeowners or business insurance policy, that provides coverage against several different perils. It also refers to the combination of property and liability coverage in one policy. In the early days of insurance, coverages for property damage and liability were purchased separately.
Mutual Holding Company
An organizational structure that provides mutual companies with the organizational and capital raising advantages of stock insurers, while retaining the policyholder ownership of the mutual.
Mutual Insurance Company
A company owned by its policyholders that returns part of its profits to the policyholders as dividends. The insurer uses the rest as a surplus cushion in case of large and unexpected losses.

Named Peril
Peril specifically mentioned as covered in an insurance policy.
National Flood Insurance Program
Federal government-sponsored program under which flood insurance is sold to homeowners and businesses. (See Adverse Selection; Flood Insurance)
Net Premiums Written
See Premiums written
Auto insurance coverage that pays for each driver’s own injuries, regardless of who caused the accident. No-fault varies from state to state. It also refers to an auto liability insurance system that restricts lawsuits to serious cases. Such policies are designed to promote faster reimbursement and to reduce litigation.
No-Fault Medical
A type of accident coverage in homeowners policies.
Notice Of Loss
A written notice required by insurance companies immediately after an accident or other loss. Part of the standard provisions defining a policyholder's responsibilities after a loss.
Occurrence Policy
Insurance that pays claims arising out of incidents that occur during the policy term, even if they are filed many years later.
Operating Expenses
The cost of maintaining a business’s property, includes insurance, property taxes, utilities and rent, but excludes income tax, depreciation and other financing expenses.
Ordinance Or Law Coverage
Endorsement to a property policy, including homeowners, that pays for the extra expense of rebuilding to comply with ordinances or laws, often building codes, that did not exist when the building was originally built. For example, a building severely damaged in a hurricane may have to be elevated above the flood line when it is rebuilt. This endorsement would cover part of the additional cost.
Original Equipment Manufacturer Parts / OEM
Sheet metal auto parts made by the manufacturer of the vehicle. (See Generic Auto Parts)
Package Policy
A single insurance policy that combines several coverages previously sold separately. Examples include homeowners insurance and commercial multiple peril insurance.
A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy in contrast to an all-risk policy, which covers all causes of loss except those specifically excluded.
Personal Articles Floater
A policy or an addition to a policy used to cover personal valuables, like jewelry or furs.
Personal Injury Protection Coverage / PIP
Portion of an auto insurance policy that covers the treatment of injuries to the driver and passengers of the policyholder’s car.
Personal Lines
Property/casualty insurance products that are designed for and bought by individuals, including homeowners and automobile policies. (See Commercial Lines)
A written contract for insurance between an insurance company and policyholder stating details of coverage.
Policyholders' Surplus
The amount of money remaining after an insurer’s liabilities are subtracted from its assets. It acts as a financial cushion above and beyond reserves, protecting policyholders against an unexpected or catastrophic situation.
See Insurance Pool
The particular location of the property or a portion of it as designated in an insurance policy.
The price of an insurance policy, typically charged annually or semiannually. (See Direct Premiums; Earned Premium; Unearned Premium)
Premium Tax
A state tax on premiums paid by its residents and businesses and collected by insurers.
Premiums In Force
The sum of the face amounts, plus dividend additions, of life insurance policies outstanding at a given time.
Premiums Written
The total premiums on all policies written by an insurer during a specified period of time, regardless of what portions have been earned. Net premiums written are premiums written after reinsurance transactions.
Professional Liability Insurance
Covers professionals for negligence and errors or omissions that injure their clients.
Proof Of Loss
Documents showing the insurance company that a loss occurred.
Property/Casualty Insurance
Covers damage to or loss of policyholders’ property and legal liability for damages caused to other people or their property. Property/casualty insurance, which includes auto, homeowners and commercial insurance, is one segment of the insurance industry. The other sector is life/health. Outside the United States, property/casualty insurance is referred to as nonlife or general insurance.
Property/Casualty Insurance Cycle
Industry business cycle with recurrent periods of hard and soft market conditions. In the 1950s and 1960s, cycles were regular with three year periods each of hard and soft market conditions in almost all lines of property/casualty insurance. Since then they have been less regular and less frequent.


Courtesy of the Insurance Information Institute (

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