Glossary

A practice insurance policy refers to a policy that covers a professional's entire "practice," versus one that is written to apply to a specific project. The term is most commonly used in design liability insurance, where project-specific coverage is a common alternative to having design professionals provide their own insurance.

The pre-claim advice credit is a provision found in professional liability policy forms affording a reduced deductible (or retention) if, prior to the time a claim is made, the insured reports the "incident" giving rise to the claim to the insurer. The purpose of the provision is to encourage insureds to make such reports, which allow the insurer to provide advice, generally from an attorney selected by the insurer, on how to handle the situation. For example, prior to terminating an employee, if an insured contacts the insurer's employment counsel, the insured will receive instructions on how to reduce the possibility of being sued for wrongful termination (e.g., advice regarding how to conduct the exit interview, how much severance to pay, what to say to the ex-employee regarding the providing of references).

The pre-set allocation provision is found in directors and officers (D&O) liability policy forms indicating the specific percentage of each claim that will be "allocated to" (i.e., paid by) the insured and the insurer, respectively. Pre-set allocation provisions apply only to section C, entity securities coverage, of D&O policies. Most often, these percentages are either 70/30 or 60/40 (insurer/insured).

A preadmission review (PAR) is a review required by some health insurance plans prior to an insured being admitted to a hospital for a nonemergency procedure. The review of the necessity and appropriateness of such an admission is done by members of the health plan's utilization review committee.

A preamble is an introductory paragraph in a contract that identifies the parties by name and the date on which the parties entered into the contract and typically includes the place of residence of an individual or the place of business of a corporation or other entity. It is also a preliminary statement or clause at the beginning of a statute stating its purpose and often explaining the reason for its enactment.

A preauthorized check plan is where the insured authorizes an insurer to periodically debit his bank account for the purpose of making premium payments.

Precedent is a case that provides guidance or authority for deciding subsequent cases involving identical or similar facts, or similar legal issues.

Predecessor firm coverage refers to a provision found in professional liability policies written mainly for lawyers or accountants that affords coverage for the acts of the firm that preceded the current insured organization. For example, assume that two accountants, "A" and "B," form a partnership. After 5 years, they merge their practice with an existing partnership consisting of accountants "C," "D," and "E." The predecessor firm provision in the professional liability policy purchased by this new combination would provide coverage for errors and omissions committed during the AB partnership even if claims arising from those errors or omissions are not made until after the merger of the two firms.

Predictive analytics (PA) or modeling is the discipline that analyzes current and historical facts to make predictions about future events. It is a much deeper dive than traditional reports. And PA involves more than just claims data as it also seeks information from as many divergent sources affecting claims as possible. In reviewing claims leakage, PA will focus on areas such as fraud detection: either missed through inadequate investigation or identification of actual fraud (i.e., revealing a coterie of law firms, chiropractors, auto body shops, and professional claimants working together).

A predominate cause is the peril having the most significant impact in bringing about the loss in a situation involving two independent perils that operate concurrently to produce the loss, as determined by the courts. The predominant cause is then selected as the proximate cause.