Obsolescence
Impairment of desirability and usefulness brought about by changes in public preference or by forces in addition to those which cause deterioration. Functional obsolescence refers to impairment of functional capacity or efficiency. Economic obsolescence refers to impairment of desirability or utility arising from economic forces such as changes in highest and best land use, legislative enactments which restrict or impair property rights, and changes in supply demand relationships.

Occupancy
Occupancy is the act of holding possession of property or premises. The term implies the use of the building for the purposes described in the policy, and no other. An occupied building has furnishings and/or people in it.

Occurrence
A happening or event. Liability policies are usually written on either an accident or occurrence basis. For coverage on an accident basis, the loss or damage must be due to accident, whereas on an occurrence basis all that is required is the happening or the continual or repeated exposure to an unfavorable situation, neither intended nor expected to cause injury or damage. In re insurance and insurance, it is also the grouping of related losses into a single loss situation.

Off Premises Clause
A provision in residential policies affording coverage on some of the household goods when away from the premises. within certain limits.

Operations
The business of an Insured or the type of business of an Insured.

Optional Settlement Clause
A clause in an insurance policy permitting the insured under certain circumstances to have a choice of benefits.

In accident and health policies the insured may have a choice of payment of various amounts as periodical indemnity for a certain period of time or a lump sum settlement of a predetermined amount set out in the policy.

Other Insurance
Normally an insured must disclose to an insurance company from whom he is purchasing insurance, information about what insurance he already carries on the property.

As a matter of principle, the insured should also advise existing insurance carriers of new policies which he is taking out. This is an essential point in the matter of disclosure.

It is however frequently waived, as the more routine policies carry some such wording as "other concurrent insurance permitted without notice until required."

Outboard Motor Boat and Outboard Motor Policy
A class of inland marine insurance covering boats, motors and equipment for named perils (fire, collision and theft) or, at a higher premium, for all risks. Some policies include liability cover for property damage to other vessels.

Overlapping Insurance
When two different kinds of policies cover the same loss, the insurance is said to be "overlapping." This does not mean, for example, when two fire insurance policies cover the same loss, which is called "contributing insurance." However, if an inland marine policy and a fire policy covered the same loss, they would be overlapping.

Owner's, Landlord's And Tenant's Liability
Liability insurance coverage which gives protection because of liability arising out of ownership, use or occupancy; operation or maintenance of buildings or premises.

P

Package Policy
Any insurance policy which covers two or more lines or types of insurance in the same policy.

Pair and Set Clause
Establishes that loss or damage to one of a pair or set of individual items does not represent the loss of the pair or set.

Partial Loss
A loss covered by an insurance policy where the property or the premises are not completely destroyed or rendered completely worthless.

Peril
The event that caused a loss covered by the policy, e.g., fire windstorm.

Perjury
Giving false evidence or information while under oath.

Personal Auto Policy
Insurance policy issued to individuals covering risks arising out of the ownership or operation of a licensed automobile.

Personal Effects Floater
A policy covering personal effects usually carried by tourists. Can be all risk or specified peril form. Covers worldwide but excludes coverage at the insured's residence.

Personal Injury Liability
Injury other than bodily injury arising out of defined causes which usually include false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander or violation of a person's right to privacy other than in the course of advertising, broadcasting, television, publishing.

Personal Lines
Insurance for individuals and families, such as private passenger auto insurance and homeowners policies.

Personal Property
Legally, any property of an insured other than real property. More often used to refer to the personal property of family members insured under a Homeowner's policy.

Personal Property Floater (P.P.F.)
A Broad Form policy covering all personal property worldwide including at the insured's home, usually on an all risks basis.

Policy Conditions
Provisions which state the rights and duties of the insured or insurer.

Policy Limit
The maximum that the insurance company is obligated to pay in actual claims under an insurance policy. Certain additional costs may also need to be paid.

Policy Provisions
Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.

Policy Year
Period between anniversary dates.

Policyholder
Individual or other entity who owns an insurance policy. The Insured.

Pollution Exclusion
Standard general liability policies include an exclusion for loss arising out of pollution. For certain exposures this exclusion may be modified. e.g., "sudden and accidental" pollution arising from a fire.

Power of Attorney
Authority given one person or organization to act for and obligate another to the extent of the instrument creating the power.

Preferred Risk
Any risk considered to be better than the average risk on which the premium rate was based.

Premises
Building including the land immediately surrounding it and belonging to it.

Premium
The price of insurance protection for a specified risk for a specified period of time.

Prescription
In law, a limitation of time within which legal action can be taken by a claimant. In insurance, the period of time in which a claim may be brought by the policyholder. Also Proscription.

Principle of Indemnity
The concept that an insured will be reimbursed for his loss (subject only to the policy limit and terms). If there is no loss there can be no indemnity.

Private Passenger Car
Four-wheeled motor vehicles of the private passenger, station wagon or van type, designed for use on public highways and subject to motor vehicle registration.

Product Liability
Liability insurance, generally for contractors, for products liability and for claims arising out of completed work.

Products & Completed Operations Insurance
Liability insurance, generally for contractors, for product liability and for claims arising out of completed work.

Professional Liability Insurance
Protects professionals against liability for damages and cost of defense based upon his/her alleged or real professional errors and omissions or mistakes, e.g., architects, engineers, medical malpractice, attorneys.

Proof of Loss
A formal statement made by a policy owner to an insurer regarding a loss. It is intended to give information to the insurer to enable it to determine the extent of its liability.

Property Damage Liability Insurance
Protection against liability for damage to the property of another including loss of the use of the property.

Property Insurance
Covers an insured's property against damage, destruction or loss by a covered peril.

Pro Rata Cancellation
Cancellation of an insurance policy or bond with the return premium credit being the full proportion of premium for the unexpired term of the policy.

Proscription
Outside the time period in which a legal action can be commenced. See also Prescription.

Protected
In fire insurance, a risk located in an area protected by a fire department.

Protection
Used interchangeably with "coverage" to denote insurance provided under the terms of a policy.

Proximate Cause
Cause of loss or damage. Unbroken chain of cause and effect between the occurrence of an insured peril and damage to property.

Punitive Damages
Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or willful character of his wrongdoing.