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MORTGAGE (or MORTGAGEE) CLAUSE—a provision attached to a fire or other direct damage insurance policy covering mortgaged property reciting that the loss should be payable to the mortgagee as his interests may appear and that his right of recovery shall not be defeated by any act or neglect of the insured and giving the mortgagee other rights and privileges.

NAMED INSURED—any person or organization, or any member thereof, specifically designated by name as insured in a policy as distinguished from others who, though unnamed, are protected under some circumstances. A common application of this latter principle is in liability policies wherein by a definition of "insured" protection is extended to interests (not designated by name) according to their status or in particular situations or circumstances—e.g., employees are automatically insureds under a CGL. (See FIRST NAMED INSURED)

NAMED PERILS—an insurance policy that specifies what PERILS are insured against, contrary to so-called ALL-RISK policies.

PERSONAL INJURY PROTECTION (PIP)—the no-fault portion of an auto policy that pays for insureds’ medical costs, lost wages, loss of services, or death due to physical injury arising from use of or contact with an automobile. (See F.S. 627.730 – 627.7405)

PERSONAL & ADVERTISING INJURY—defined in the CGL policy as liability arising from nonphysical injuries, such as libel, slander, false arrest, invasion of privacy, wrongful eviction, malicious prosecution, copyright infringement, and misappropriation of advertising ideas. Coverage is provided for these exposures under Coverage B of the CGL (bodily injury liability and property damage liability are covered under Coverage A). Within the legal system “personal injury” has a broader definition, encompassing both the nonphysical injuries described above and bodily injury. It may also be used differently is some non-ISO insurance policies.

POLICYHOLDER--one who possess an insurance contract. In most states this term is used synonymously with “Insured.”

POLICY YEAR--a year during the life of an insurance contract beginning at a designated date, usually the policy anniversary.

POLICY YEAR EXPERIENCE—experience on business during the 12-month period from the effective date of the policy which became effective during a given year regardless of when the transactions (payment of premium or loss payment) may actually have taken place.

PREMISES—the property conveyed in a deed; hence, a piece of land or real estate. In insurance policies it is generally a building or buildings on land, or in some cases it may only be a part of a building, such as a suite or unit occupied by the insured, depending on how it is described in the DECLARATIONS.

PREMISES LIABILITY —the LIABILITY exposure arising from the ownership or use of premises, such as that for injuries to guests, customers or passersby. One’s personal premises liability exposure is generally addressed in their Homeowners policy, and their business premises liability exposure is normally covered by a Commercial General Liability policy. (See INVITEE, LICENSEE and TRESPASSER)

PREMIUM—in insurance and bonding, the consideration to be paid for a policy or bond. "Premium" refers to the price a particular insured pays for a particular policy, while RATE refers to the base cost of a unit of insurance before applying other factors to produce the premium. This term has a variety of meanings in other business practices.

PRODUCT LIABILITY—liability imposed for DAMAGES caused by accident and arising out goods or products manufactured, sold, handled, or distributed by the insured or others trading under his name, if the accident occurs (a) after possession has been relinquished to others and (b) away from premises owned, rented, or controlled by the insured. If a company’s product injures someone on the company’s premises, it is treated like any other injury arising out of the insured’s premises (with the exception of food at a restaurant, which is considered a product exposure once it is served, even if the injury occurs on the premises). If the product injures someone while the insured is using or demonstrating it off the insured’s premises, it is considered to have arisen out of the insured’s operations. This distinction can be relevant if, like the ISO CGL, the insured’s policy has a Premises-Operations Liability limit and a separate Products-Completed Operations Liability limit.

PROFESSIONAL LIABILITY—LIABILITY arising out of the rendering of or failure to render professional services, such as a medical error by a doctor, dentist, or nurse causing injury to a patient; bad advice by a lawyer, accountant, or insurance agent causing financial damage to a client; a design error by an architect or engineer leading to the construction of a defective building. The professional liability exposure is generally in addition to the ordinary business liability exposures—e.g., a law firm would need professional liability coverage for this exposure, and they would still need general liability coverage in case someone were injured on their premises. Different terminology is used for different professions—e.g., doctors’ professional liability coverage is referred to as “malpractice” insurance, and insurance agents’ professional liability coverage is referred to as “errors and omissions” or “E&O” coverage.

PROOF OF LOSS—a formal statement made by the insured to the insurance company regarding a loss. The purpose of the proof of loss is to place before the company sufficient information concerning the loss to enable it to determine its liability under the policy or bond.

PROPERTY DAMAGE LIABILITY INSURANCE—protection against liability for damage to the property of another not in the care, custody, and control of the insured, as distinguished from liability for bodily injury.

PRO RATA—(a) Distribution of the amount of insurance in one policy among the several objects or places covered in proportion to their value or to the amounts shown. (b) The proportional distribution of liability among the several insurers having policies on the risk.

PRO RATA CANCELLATION—the termination of an insurance contract or bond, the premium charge being adjusted in proportion to the exact time the protection has been in force. (See SHORT RATE)