A Guide to Insurance Terminology

Insurance is difficult enough to understand in general terms so at CarrierHQ we decide to help break it down for you. Thanks to the variety of insurance types for commercial auto, home, pet, etc. it’s a never-ending list of terms that gets confusing. This guide can help provide you with an overview of some of the commonly used insurance terms. It is important for you to be aware that insurance policies can vary significantly depending on the provider and policy.

Since we specialize in commercial auto insurance, we wanted to help you decode the terms with a commercial auto insurance glossary.

A

ACH: Known as an automated clearing house, an electric fund transfer made between banks and/or credit unions.

Adjustable Premiums: An insurance policy’s monthly payment that fluctuates over time.

Auto Liability: Designed for incidents that you are found responsible for while using a company vehicle.

B

Bodily Injury Liability Coverage: Helps cover medical bills if anyone is injured in an accident when you are at fault.

Broker–Agent: A licensed individual who can act as an agent representing one or more insurers and as a broker.

C

Cargo Insurance: Provides insurance on the freight or commodity hauled that covers liability for cargo damaged or lost due to fire, collision, or striking of a load.

CDL (Commercial Driver’s License): Special license needed to operate a tractor, vehicles over 26,000 GVW, or vehicles carrying over seven passages.

Claim: A request for payment from your insurance company for a covered expense.

Collision Insurance: An optional coverage that can help pay to repair or replace a commercial vehicle if it hits another object, overturns in an accident, or is damaged by a hit-and-run.

Commercial Auto Policy: A business insurance policy that provides coverage for vehicles used for business purposes.

D

Deductible: Out-of-pocket expense that you agree to pay for losses of a set amount.

DOT # (): identifies carriers operating in interstate commerce.

E

ELD (Electronic Logging Device): Devices used to collect and provide telematics data in various areas for truck maintenance and needs.

Endorsement: A change or addition to your insurance policy that modifies the terms of your coverage.

Exclusion: A specific circumstance or event that is not covered under your insurance policy.

F

Factoring; Agreement with a third-party company to purchase accounts receivables (invoices) at a reduced amount.

Full Coverage: Liability insurance and additional protection to cover damage to your own vehicle.

G

Garaging Location: Place where the insured vehicle is primarily parked when you’re not using it.

Garaging State: Where you store your vehicle when you are not using it.

General Liability: Provides coverage for the harm you may cause to others arising out of premises, operations, products, and completed operations.

H

Hired Auto Liability: Provides liability insurance coverage for a vehicle you lease, hire, rent, or borrow to use in connection with your business as a short-term replacement to a scheduled vehicle.

I

Insurance: Agreement between a person or a company and an insurance provider.

Interstate Travel: If you cross the border of one state into another state.

Intrastate Travel: If you stay within the borders of one state.

Invoice: a list of goods sent, or services provided, with a statement of the sum due for these; a bill.

Insured: The person or entity that is covered by an insurance policy.

Insurer: The company that provides insurance coverage to the insured in exchange for premium payments.

J-L

Liability Coverage: Pays for property damage and/or injuries to another person caused by an accident in which you’re at fault.

Loss Runs: Provides a summary of a small business’ insurance claims history, including the types of claims filed in the past, the frequency of past claims filed and the related costs.

M

MC# (Motor Carrier #): a carrier who transports regulated commodities for hire in interstate commerce.

Motor Truck Cargo Insurance: Covers damage or loss to the cargo that your commercial truck is carrying.

N

Name Insured: The named insured is the name of the business or person who owns the insurance policy.

Non-Trucking Liability Insurance: Covers your commercial truck when it is being driven for personal use, rather than for business purposes.

O

Owner-Operator: A truck driver who works as an independent carrier of goods instead of an employee of one trucking company.

P

Policy: A contract that states the rights and duties of the insurance company and the insured.

Premium: The amount you pay for your insurance coverage.

Property Damage Liability Coverage - helps cover expenses if you damage someone’s physical property.

Q-R

Renewal: The process by which your insurance policy is extended for another term.

Risk: The likelihood or an event or circumstance occurring that could result in a loss or damage that is covered by your insurance policy.

S-T

Telematics: Telematics combines two sciences; telecommunications (i.e. phones) and informatics (i.e. computer systems. Telematics is primarily used with commercial fleet vehicles.

Trailer Interchange: Physical Damage insurance for trailers owned by other motor carriers and typically pulled under a trailer interchange agreement and protects you if the trailer is damaged by collision, fire, theft, explosion, or vandalism.

U

Uninsured (UM) / Underinsured (UIM) Motorist: UM / UIM; Coverage for bodily injury & in some states, property damage incurred by an insured when an accident is caused by a motorist who is not insured/not sufficiently insured.

Underwriting: The process by which the commercial auto insurance company determines whether it will approve your insurance application.

V

Vehicle Identification Number (VIN): A combination of 17 letters and numbers that can be used to identify the make, model, and year of a vehicle.

W

Waiting Period: The amount of time that must pass before your insurance coverage begins for a specific event or circumstance.

X-Z

Understanding insurance terminology can be a large part of individuals, business owners, etc. to make sure they are informed about insurance coverage. Need a word to add to our glossary, let us know. Reach out to us via email at info@carrierhq.com.