Insurance Glossary

All | A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Abutting Coverage
When there are two or more policies providing the same coverage at the same time.

Accident Control
Inspection, engineering, and review work done to help remove potential causes of loss. Also referred to as loss control, safety engineering, accident prevention, or loss prevention.

Actual Cash Value (ACV)
"Actual Cash Value" is the replacement cost of property damaged or destroyed at the time of loss, with deduction for depreciation. Actual cash value cannot exceed the applicable limit of liability shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.

Additional Insured
An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured's policy provides a certain degree of protection. An endorsement is typically required to provide additional insured status. The named insured's impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., presence on one another’s property ) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured).

Additional Named Insured
1. An individual or entity, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations.
2. An individual or entity who is added to a policy with the status of named insured after the policy is written. Such an individual or entity would have the same rights and responsibilities as an individual or entity named as an insured in the policy declarations (other than those rights and responsibilities reserved to the first named insured). In this sense the term can be contrasted with additional insured, an individual or entity added to a policy as an insured but not as a named insured. The term additional named insured has not acquired a uniformly agreed-upon meaning within the insurance industry, and use of the term in the two different senses defined above often produces confusion in requests for additional insured status between contracting parties.

Admitted Carrier
An insurance company ( also known as a carrier ) licensed to write policies in a given state. It’s forms and rates are reviewed by the state’s relevant bureaucracy and in the even of insolvency the in most cases the state has guarantee fund from which to return the insured’s unearned premium.

Aggregate
A limit in an insurance policy stipulating the most it will pay for all covered losses sustained during a specified period of time, usually one year, over the policy term. Aggregate limits are commonly included in liability policies, particularly General, Excess, or Umbrella liability. While not often used in property insurance, aggregates are sometimes included with respect to certain catastrophic exposures, e.g., earthquake and flood.

Agreed Amount Endorsement
This endorsement is an agreement made by the insurance company wherein it waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.

All-Risk Insurance
An insurance policy that covers everything not specifically excluded. Associated with property coverages. An All-Risk policy is functionally the opposite of a Named Perils insurance policy.

Assigned Risk
A method to provide insurance to the uninsurable. In mandatory insurance states, everyone must have insurance regardless of their risk or record. These states require that each company writing insurance in their state contribute towards insuring those that they would not insure otherwise.

Automobile Coverage
Any insurance pertaining to the use or ownership of a vehicle. Common coverages are liability, physical damage, uninsured or underinsured motorists and personal injury.

Basic Limits
The minimum limits of liability as required by state or local law. These will in almost all cases be different than those required by the Federal Government or various shippers.

Blanket Coverage or Blanket Insurance
For property insurance, a blanket sets a single limit (maximum payout) for multiple buildings, locations, risks or combination of items.

Bobtail Coverage
Covers a trailer-less power unit returning from a drop-off when the Motor Carrriers auto liability insurance may not be in effect. Frequently used in conjunction with or as substitute for the terms Non-Trucking or Deadhead insurance. These are not the same coverages.

Bodily Injury
"Bodily injury" is defined as meaning bodily harm, injury, sickness, or disease, including required care, loss of services, or death that results to a person as opposed to a piece of property such as a truck, trailer, PPV, building.

Bond
A three part contract in which one party guarantees the performance, act or behavior of another party for a third party.

Business Auto Coverage
Designed to provide a standard method of insuring vehicles other than personal auto exposures.

Captive Insurance Company
A captive insurance company is an insurance company that has been set up to provide coverage at a lower cost than available by going through the general insurance market. The company's stock is controlled by one interest or a group of related interests so as to provide coverage for their business operations. A captive insurance company may be a nonadmitted, nonresident, or foreign insurer. Sometimes it may provide reinsurance to a self-insure or a domestic company.

Cargo Insurance aka Motor Truck Cargo Insurance or Coverage
Cargo insurance is another name for inland marine insurance which covers loss to the property of others while in transit. It is an outgrowth of ocean marine insurance. Historically, ocean marine insurance held the transporter responsible for property loss before, during, and after the completion of the voyage. The non-ocean transit exposure grew as cargoes were transferred from to barge, wagon, railroad, and eventually truck, and the term "inland marine" was coined. Inland marine policies became known as "floaters" since the property to which coverage was originally extended was essentially "floating."

Certificate of Insurance
An official document created by an insurance carrier or agent to prove insurance coverage to a third party at a specific point in time. Certificate of insurance conveys no rights to the Certificate Holder.

Collision Coverage
Covers loss to the insured person's own vehicle caused by its collision with another vehicle or object. A deductible normally applies.

Commercial General Liability
A broad type of insurance policy which covers an insured’s defense and/or loss due to liability exposures for locations, operations, and causes of loss except those specifically excluded in the policy. The covered exposures can include bodily injury, personal injury, and property damage under particular conditions.

Commercial Property Coverage
Protects against physical damage to buildings, their contents, stock, and equipment. The terms and conditions of coverage are determined by the limits and coverage forms of insurance chosen by the policyholder. The limit is based on the items that the policyholder wishes to insure; i.e., buildings, stock, machinery, valuable papers, etc. Business Interruption and Extra Expense coverages can also be provided under a Commercial Property policy. Business Interruption protects the policyholder against lost profits as a result of direct damage to the facility. Extra Expense provides payments for those extraordinary expenses necessary to continue operations after physical damage to the policyholder's facility.

Comprehensive Automobile Coverage
Pays for physical damage to or the loss of automobiles from perils other than collision. A deductible normally applies.

Consequential Loss or Damage
Consequential loss or damage -- as opposed to direct loss or damage -- is indirect loss or damage resulting from loss or damage caused by a covered peril, such as fire or windstorm. In the case of loss caused where windstorm is a covered peril, if a tree is blown down and cuts electricity used to power a freezer and the food in the freezer spoils, iIf the insurance policy extends coverage for consequential loss or damage then the food spoilage would be a covered loss. Business Interruption insurance, extends consequential loss or damage coverage for such items as extra expenses, rental value, profits and commissions, etc.

Contractual Liability Coverage
It is common in construction and other agreements (written or oral) for one party to "assume" the liability of another. This is sometimes referred to as a "hold harmless" agreement. The extent to which one holds another harmless varies from contract to contract, job to job, etc. To assume the liability of another, regardless of extent, is a voluntary undertaking which increases your exposure to loss. A standard Commercial General Liability policy does cover this additional exposure subject to certain exclusions.

Debris Removal Clause
Pays for the insured's expenses to remove debris of covered property, such a debris from Cargo lost in an accident or from a damaged building, caused by a Covered Cause of loss. This does not include "pollutants" and must occur during the policy period and reported within the policy’s specified conditions.

Deductible
An excluded amount or threshold for payment on an insurance policy. A $1,000 deductible would mean the insurance policy will start paying after they have deducted the first $1,000 owed to the policyholder. A Combined Deductible is when two or more deductible resulting from the same loss occurrence are combined into joint amount, typically lower than the induvial totals.

Earned Premium
The amount of the policy premium used at the time of a cancellation or expiration relative to the policy term. For example, if the policy term is one year then the earned premium at the six month point is 50% of the total premium. This is not necessarily an indicator of how much an insured would receive due to shorts rate penalties, minimum earned clauses, etc.

Endorsement
A document which changes or alters the basic insurance policy. A common cause of endorsements is adding or deleting equipment.

Excess Liability Coverage
A type of insurance which covers all or a portion of a loss which exceeds an agreed amount on an underlying, primary policy. Excess policies usually do not come in to effect until the primary insurance limit has been exhausted or otherwise reached. Excess policies provide higher limits and offer increased protection against large losses. Most commonly seen in conjunction with Auto or General Liability underlying policies.

First Dollar Coverage
An insurance policy that doesn't have a deductible and begins paying on the first dollar of loss.

Gap Coverage
Insurance purchased to cover the "gap" between primary insurance and an excess policy. Also commonly refers to policies covering the difference between the actual market value of a totaled auto and the amount owed on it’s loan or lease.

Garage Liability
Provides coverage to owners of repair garages for liability incurred as a result of the work on a customers’ autos left for service and in their care, custody, or control.

Garagekeepers Legal Liability
Provides coverage to owners of repair garages, storage garages, parking lots, etc. for liability as bailees with respect to damage to automobiles left in their care, custody, or control. Coverage is typically contingent upon establishing liability on the part of the insured.

General Aggregate Limit
The total amount that will ever be paid by an insurance policy regardless of the number of claims made against it. Most common in Liability policies.

Glass Coverage
Covers the replacement of broken glass in autos such as windshields, doors and windows. Usually includes temporary measures to secure a property in the event of glass breakage.

Indemnification
When insurance policies are written on an "indemnification" basis, the insurance company will reimburse the insured for claim costs already paid. Technically, the insured must not only suffer a loss, but must also pay the loss before being reimbursed (indemnified) by the company.

Indemnify
To reimburse or otherwise pay for an incurred loss.

Indemnity
Making whole. The act of reimbursing or otherwise paying an injured party for an incurred loss. In life insurance, the amount paid to the beneficiary is referred to as indemnity.

Inflation Guard Coverage
This coverage extension automatically increases the building amounts of Property insurance by an agreed % per quarter. This is done as an attempt to keep pace with inflation.

Inland Marine Coverage
Inland marine insurance indemnifies loss to moving or moveable property and is an outgrowth of ocean marine insurance. Historically, ocean marine insurance held the transporter responsible for property loss before, during, and after the completion of the voyage. Inland marine policies became known as "floaters" since the property to which coverage was originally extended was essentially "floating”. Cargo, portable tools, contractors, construction, or bulk moving equipment are commonly covered under these policies.

Insurance
A contract by which one undertakes to indemnify another or to pay a specified amount upon determinable contingencies.

Insurance Audit
Sometimes factors that enter into determining appropriate premiums for insurance coverage can't be known in advance; therefore, accurate premiums for the coverage provided can't be billed by the insurance carrier. This often is true in the case of Worker's Compensation and Product Liability insurance, where such things as payroll and sales can't be determined ahead of time. An audit serves as an examination of the insured's records after the fact to adjust the initial premium billed to reflect the actual coverage.

Layering
A technique to obtain very high limits of insurance or to insure high risk items for reasonable prices by purchasing layers of insurance. The first or primary layer picks up all normal losses with secondary layers coming in to play when the limits of the first layer are exceeded. Successive Secondary layers are typically less expensive that buying the needed limit from the primary layer’s insurer.

Liability Coverage
Insurance for your screw ups. A liability insurance policy will pay up to a stated limit for events resulting from the insured's negligence. A liability policy will also usually pay for property damage and medical expenses incurred by the injured party.

Loss Control
Inspection and engineering work done to help remove potential causes of loss. Loss prevention is also referred to as safety engineering, accident prevention, accident control, or loss prevention.

Machinery Breakdown Coverage
This form of insurance provides mechanical breakdown coverage generally not available under any other insurance policy. A Boiler and Machinery policy can protect an insured against the effects of catastrophic property loss, such as steam boiler explosion or an expensive breakdown of machinery and equipment.

Medical Payments
A general liability coverage in which the insurer reimburses without regard to the insured's liability, the insured and others (as specifically provided in the policy) for medical and funeral expenses incurred by such persons as a result of bodily injury or death sustained by accident under the conditions specified in the policy.

Named Insured
The person or persons designated as the insured in an insurance policy. If there are more than one Named Insured listed the predominant among them is the first one listed, known as the First Named Insured.

Named Perils Insurance
An insurance policy which covers only defined perils or causes of loss. This is the opposite of an All-Risk policy which covers all perils except those specifically excluded.

No-Fault Insurance
A government regulated type of automobile insurance in which each party's own insurance pays for their damage and injury regardless of who is at fault.

Non-Admitted or Surplus Lines Carrier
An insurer not licensed to write insurance in a specific state. Required to pay certain taxes and fees to the given state as a condition of writing policies. These insurance carriers’ coverage forms and pricing are not regulated by the state and can vary widely from those of a regulated Admitted Carrier. In event of the insurance carrier becoming insolvent an insured’s premiums are not covered by a state’s guarantee fund when placed with a surplus lines or non-admitted insurer.

Non-Owned and Hired Auto Coverage
Provides coverage for rental or borrowed autos on a temporary basis dependent upon the individual policy limits and coverages.

Non-Trucking Liability
Provides coverage for the non-hauling use of a covered power unit when not under dispatch and therefore under the Auto Liability coverage of a Motor Carrier. Typically carried only by independent contractor owner-operators.

Nonrenewal
When an insurance company decides it will not provide insurance any longer to a policyholder. Often accompanied by notice prior to policy expiration.

Occurrence (CGL)
This term means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

Occurrence Policy
A type of liability policy in which a insurance provider is liable for any claim which occurred during the policy period regardless of how far in to the past it occurred. This is the traditional type of liability policy but has lost favor because of lawsuits being brought years after the fact. Large liability risks are typically covered by Claims-Made policies which are responsible only for claims submitted during the actual relevant policy period.

Peril
The cause of a loss. Examples of perils are fire, wind, accidents and acts of vandalism.

Physical Damage Coverage
Insurance against damage to tangible property. Automobile physical damage covers damage to an insured’s scheduled or otherwise noted for coverage vehicle. Commonly consists of Collision and Specified Perils or Comprehensive coverages

Pollutants Cleanup and Removal Coverage
This is an aggregate first party coverage that applies to the expense in extracting "pollutants" from land or water at a given location, if the release of the pollutants is caused by or results from a covered loss.

Pollution Legal Liability Coverage
Pays all sums the insured is legally obligated to pay as a result of emission, discharge, release, or escape of any contaminants, irritants, or pollutants into or on land, the atmosphere, or any water course or body of water, provided this results in "environmental damage." Additionally pays to reimburse your expense for reasonable and necessary cleanup costs incurred in the discharge of a legal obligation validly imposed through governmental action, provided such expense is incurred because of "environmental damage." Pays for defense of any claim or suit that is the subject of this insurance. "Claims made" coverage response (i.e., responds only to claims first made during the policy period and only for incidents that have occurred after the effective date of this coverage). Pollution "Environmental damage" is defined in the policy as "the injurious presence in or on land, the atmosphere, or any water course or body of water of solid, liquid, gaseous, or thermal contaminants, irritants, or pollutants."

Premium
The amount paid for an insurance policy.

Property Coverage
Protects against loss of or damage to buildings and personal property.

Protection Class
A scale of 1 to 10 used to measure the fire protection of every area in the United States. Ten is the worst and one is the best. The rating is based on such items as the water supply (including the presence or absence of fire hydrants), the fire department (and distance to), and climate.

Punitive Damages
Punitive damages are awarded in civil lawsuits to discourage intentional wrongdoing, wanton and reckless misconduct and outrageous behavior. The majority of courts in the United States hold that punitive damages are not compensation for injury, but, instead, are private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence, consequently they are NOT covered by insurance.

Reinstatement
1. The restoration or continuation of an insurance policy that was cancelled or suspended for a portion of the policy period or, 2. The restarting of a policy limit after a claim. This is normally associated with fire coverage which commonly restarts the limit after it has paid out.

Renewal
A new policy which replaces one that is expiring or cancelled.

Replacement Cost Coverage
Provides coverage on the basis of full replacement cost without deduction for depreciation on any loss sustained, subject to the terms of the co-insurance clause. This coverage applies to both building and contents items as specified on the face of the policy. No deduction is taken for depreciation in arriving at the proper amount of insurance needed to comply with the co-insurance clause.

Retroactive Date
For a claims-made policy, the retroactive date is the earliest date for which a loss will be considered. It is typically the effective date of the first year the policy was provided by an insurance carrier but can often be modified by additional premium payment.

Risk
Another name for an insured.

Schedule
A list attached to a policy. A property schedule is a list of property you own that is covered by an insurance policy. A vehicle schedule is a list of vehicles attached to and covered by an insurance policy, commonly including their agreed limits for physical damage coverage. A driver schedule is a list of the insured drivers.

Specified Perils
An insurance policy which only covers causes of loss or perils specified in the policy.

Stated Amount
When the value of a property is stated within the policy and is not dependent on valuation methods applied at the time of a loss.

Subrogation
Most commonly refers to an insurer negotiating for reimbursement of monies it previously paid out on a covered loss where the other party was at-fault. Often carried out with the other party’s insurer.

Surety Bond
Insures a third party against non-performance by a contracted party or organization. Most common in Trucking for Brokerage operations. Used to compel good faith in the payment of a trucker’s hauling fees by the broker who arranged the hauling transaction between shipper and trucker. Required by the FMCSA.

Surplus Lines Insurance
Insurance placed with carriers not licensed in the same state as the risk. Surplus lines laws differ in each state but generally require that the insured attempt to place the insurance with a licensed carrier before using a surplus lines carrier. Proof of this placement attempt is also typically required. Surplus Lines carriers typically provide different coverage forms and offer different pricing structures from Admitted Insurers. In event of the insurance carrier becoming insolvent an insured’s premiums are not covered by a state’s guarantee fund when placed with a surplus lines or non-admitted insurer.

Surplus Lines tax
A tax paid by the insured on insurance placed with surplus lines carriers. It is collected by the agent and paid to the state.

Tort
A tort is an unintentional violation of another person's rights, usually due to negligence. It is different than a crime, which generally is an intentional violation of another's rights. A tort is subject to civil action and subsequent judgement for damages payable to the wronged party, whereas a crime is subject to criminal action and subsequent penalty.

Truckers Liability Coverage
Auto liability coverage for owners and operators of businesses which transport the goods of others by land for a fee. This coverage is regulated by the Department of Transportation.

Umbrella Liability Coverage
Provides excess liability protection. Your business needs this coverage for the following three reasons: It provides excess coverage over the "underlying" liability insurance you carry. It can provide coverage for other liability exposures, excepting a specifically excluded exposures, that may not be covered by the underlying policy or policies. Typically subject to a large deductible of $10,000. It provides automatic replacement coverage for underlying policies whose Aggregate limits have been reduced or exhausted by loss.

Uninsured or Underinsured Motorist Coverage
Provides coverage when the auto liability of a negligent party either lack insurance coverage or sufficient coverage limits to cover a loss they caused.

Unearned Premium
The amount of the unused policy premium at the time of a cancellation or expiration relative to the policy term. For example, if the policy term is one year, then the unearned premium at the six month point is 50% of the total premium. This is not a precise indicator of how much the policy holder my receive back.

Workers' Compensation Coverage
A system of financial compensation for work-related injuries or death, paid for by employer compensation insurance contributions. In almost all states employers are required to provide worker’s compensation coverage for their employees. Failure to maintain a policy does not absolve the employer of responsibility to pay benefits in the event of an injury or death.

Insurance Glossary

What We Offer

Contact Us

Partner Carriers