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Commercial Vehicle Insurance Glossary

Illustration of a Commercial Vehicle Insurance Glossary

A

Accident

An unexpected and unplanned event in which there are injuries and/or property damage.

Actual Cash Value (ACV)

Actual Cash Value (ACV)
The true market value of the specific vehicle; the amount you’d pay to buy the very same vehicle.

Additional Insured

Someone who is added as an insured person to a policy, who was not automatically covered under the policy.

Agent

Someone licensed to sell insurance who is contracted to represent an insurance company.

Aggregate Limits

The limit of the insurance company’s liability for a specified period of time, stated in the policy contract.

Anti-Theft Device

A device intended to prevent theft of a vehicle, such as an alarm or steering wheel lock.

Any Auto Coverage

Liability insurance coverage that extends to any vehicle driven by the insured. This coverage maintains the same limits that are stated for vehicles specified in the policy.

Arbitration

A method of resolving disputes outside of the judicial system. An impartial party is selected by those involved in the dispute, to act as an arbitrator. The arbitrator resolves the dispute and the arbitrator’s decision is binding.

B

Bailee

Someone other than the vehicle owner who has legal possession of a vehicle. This could be an individual or a business, such as a repair shop.

Betterment

When equipment or parts on a vehicle are replaced with new parts after an accident, this can result in the vehicle’s condition being improved. Depending on the policy, an insurance company may ask the vehicle owner to contribute to the cost of repairs when new parts are used.

Bind

To put an insurance policy into effect, typically after an application has been completed but prior to the policy being issued.

Binder

A legal agreement that insurance coverage is in effect prior to the policy being issued. Temporary insurance coverage until a policy is formally issued.

Binder Date

The effective date of an insurance binder.

Bobtail Coverage

Liability insurance covering a truck tractor that is being operated without a trailer.

Bodily Injury Liability Coverage (BI)

If you are at-fault in an accident, BI covers expenses related to injuries or death of others involved in the accident.

Broker

A person licensed to sell insurance who typically works with multiple insurers, helping clients to find the right insurance products for their needs.

Broker Fee

A fee charged by a broker, separate from commission. Most states do not allow charging broker fees when a commission is being paid.

Business Auto Coverage Form (BACF)

A form provided to business owners as a part of the insurance contract, consisting of five sections that define the types of vehicles being covered, the types of damage covered, the causes of damage that will be covered, the obligations of the insurer, and the obligations of the business owner.

C

Cancel

Ending a contract before it expires. Either party may cancel the contract.

Cancellation Request

A request by the insured, usually written, to cancel an insurance policy.

Collision coverage

Insurance coverage that pays for damage to the insured’s vehicle when it is damaged in a covered accident.

Collision Deductible Waiver (CDW)

This insurance coverage waives the collision coverage deductible in the event of an accident that is the fault of an uninsured motorist.

Combined Single Limit (CSL)

Commercial auto insurance policies often have a single limit for any combination of damages in a single accident. This differs from typical individual policies that include separate maximums per person, per incident for injuries, and per incident for property damage.

Commercial Driver's License (CDL)

A license to operate certain large or heavy vehicles such as tractor-trailors. There are three classes of CDL that are based on the size, weight, and/or passenger limit of the vehicles to be driven.

Commercial Vehicle

Any vehicle that is used to carry commercial goods or passengers for pay.

Comprehensive Coverage

Insurance coverage that pays for damages to a covered vehicle, other than from a collision.

Comprehensive Coverage With Full Glass Protection

Insurance coverage available in some states that pays to replace windows or windshields that are damaged in an incident other than a collision.

Conditions

The rules of an insurance policy, including the rights and requirements of both the insurer and the insured.

Continuously Insured

Insurance coverage is maintained in effect with no lapses in coverage.

Corporation

An individual or group of individuals recognized legally as a separate and distinct entity that has most of the same legal rights as an individual person.

Coverage

The protection specified in an insurance policy. This can refer to dollar amounts or to the specific hazards that the policy protects against.

Coverage Territory

The geographic region within which an insurance policy is effective. Most commercial auto policies specify a coverage territory of the U.S., its territories and possessions, and Canada.

D

Deadhead

Coverage for a truck tractor when operated without a trailer; also known as bobtail coverage.

Declarations Page (Dec Page)

Often the first page of an insurance policy, the Dec Page summarizes the coverage provided by the policy. It specifies who and what is insured, what type of coverage is provided, the policy limits, and the dates the policy is effective.

Deductible

The dollar amount that you’ll pay out-of-pocket for damages to your own vehicle in a covered incident.

Diplomatic Driver's License

A driver’s license issued by the Diplomatic Motor Vehicle Office of the Department of State, to foreign consuls and their family members.

Discount

A reduction in insurance premium that may be given for completing certain requirements, such as completing a defensive driving course.

Doing Business As (DBA) Name

The name that a business is known as, but is not the business’s legal name.

E

Effective Date

The date and time that a policy becomes effective.

Employer's Non-Owned Coverage

Liability insurance coverage for employee-owned vehicles that are used to conduct business on behalf of the employer.

Endorsement

Sometimes referred to as riders, endorsements are amendments to a policy that add, remove, or modify insurance coverage in some way.

Excess

Excess coverage is insurance coverage over and above the coverage provided by another policy. It is a separate policy that only applies after the original policy has paid out its maximum.

Exclusion

Circumstances or people specifically listed in an insurance policy that will not be covered.

F

Federal Highway Administration (FHWA)

Federal Highway Administration (FHWA)
A division of the United States Department of Transportation that is responsible for federal funds intended for maintenance and construction of the National Highway System.

Filing

A document used as proof that a commercial driver has at least the minimum liability insurance required federally and by the state.

Fire and Theft with Combined Additional Coverages (CAC)

A type of comprehensive insurance coverage intended specifically for heavy trucks. It provides coverage for specific incidents: earthquakes, fire, explosion, lightning, windstorms, flood, hail, theft, vandalism, collision with an animal, or transportation of the vehicle.

Fleet

A fleet of vehicles usually consists of at least three vehicles, though the exact number will vary by state and by insurance company.

For-Hire Trucker

A truck driver who transports goods for pay.

G

Garagekeepers Legal Liability Insurance

Insurance intended to protect businesses, such as towing companies, who store vehicles in a covered location. This insurance covers damage to customers’ vehicles resulting from theft, vandalism, fire, or collision.

Garaging Location

The primary parking location of a vehicle; typically the business address.

Gross Vehicle Weight (GVW)

The total weight of a fully loaded vehicle. The sum of the vehicle’s weight and its maximum load capacity.

H

Hired Auto Coverage

Liability coverage for a rented, leased, or borrowed vehicle not owned by the insured.

I

Individual Named Insured Endorsement

Extends liability and physical damage coverage for the named insured only, when driving a vehicle for personal use that is listed on a commercial auto policy.

Interstate

Travel from one state to one or more other states.

L

Lease

A contract granting use of a vehicle or equipment for a specified period of time and for a specified price.

Liability

Legal responsibility for another person’s injuries or for damage to another’s property.

Liability Coverage

Insurance coverage that protects you in case you or a covered employee causes an accident in which someone else is hurt or other property is damaged. It covers repair and medical costs for the other involved parties, and can also cover your legal fees in the event of a lawsuit.

Limited Liability Company (LLC)

A business structure that combines many of the characteristics of a corporation with those of a sole proprietorship or partnership. An LLC has the limited liability of a corporation but maintains the pass-through income taxation of a partnership or sole proprietorship.

Limits

The maximum amount payable by an insurance company under a given policy. Your state will probably have a minimum required limit, though insurance companies give the option of higher limits.

M

Medical Payments (MedPay) Coverage

Insurance coverage that pays medical and/or funeral expenses for covered persons, when the expenses are due to an auto accident.

Minimum Limit

The minimum state-required insurance coverage.

N

Named Insured

The person or legal entity named on the Declarations page as the policy owner.

Non-Owned Vehicle Insurance

Extends the coverage of your company’s commercial auto insurance to your employees’ personal vehicles, or other vehicles that are not owned by your business, when driven for business purposes.

Non-Trucking Liability Coverage

Liability insurance that covers driving your truck for personal, non-business purposes.

O

Occasional Driver

A person who drives an insured vehicle but is not the vehicle’s primary driver.

On-Hook Towing Coverage

Liability insurance that covers customers’ vehicles while they are being towed by you or your employees.

Operator

The person sitting in the vehicle’s driver seat.

Owner Operator

An independent truck driver who carries goods for pay on a contract or freelance basis, rather than as an employee.

P

Partnership

A business that is owned by two or more individuals. It differs from a corporation in that a corporation is a distinct legal entity from its owners.

Permanently Attached Equipment (PAE)

Any equipment that is bolted, welded, or otherwise permanently attached to an insured vehicle or trailer. This does not include equipment that defines the type of vehicle, such as a dump bed.

Permissive User

A person not specifically covered under an insurance policy who drives a covered vehicle with permission.

Personal Injury Protection (PIP) Coverage

Insurance coverage that pays medical expenses and sometimes lost wages for the insured and passengers if they are injured in a vehicle accident. Often called “no-fault insurance,” it pays regardless of who is at fault in the accident.

Policy Expiration Date

The date, found in the policy documents, when the policy ends and is no longer effective. This date is independent of the payment due dates.

Policy Term

An insurance policy’s period of coverage; the duration of time that the policy provides coverage.

Premium

Periodic payments for an insurance policy.

Primary Address

The address where you will receive any written communications; usually the business’s mailing address.

Primary Liability Insurance

Truck insurance that covers damage caused by your equipment in an accident where you or a covered employee is at fault.

Primary Use

The main intended use of a vehicle, such as business use only or personal use only.

Principal Driver

The vehicle’s most frequent driver.

Proof of Non-Fault/ No B/I

Documentation provided to your insurance company showing that you should not be charged for an accident.

Property Damage Liability Coverage (PD)

Liability insurance coverage that pays for damage to the property of others when that property is damaged in an accident for which the insured is at fault.

R

Radius of Operation

The distance measured in a straight line from the garaging location to the delivery location; the area in which a vehicle is covered under a commercial vehicle insurance policy.

Repair Plates

License plates issued to vehicle repair shops that allow driving unregistered vehicles for testing purposes.

Repossession

Taking back possession of a vehicle or other item, most commonly for failure to make payments. Towing companies who repossess vehicles for pay should look for insurance that will cover this specific use.

S

Single Deductible Endorsement

In an accident where there is physical damage, multiple deductibles could be required – for example, a deductible for the tractor, one for the trailer, and one for cargo. With this endorsement, only the highest deductible would need to be paid.

Sole Proprietorship

A business owned by a single individual that is not incorporated or registered as an LLC.

Split Limits

With many auto insurance policies, there are different limits that apply in an accident claim – a per person limit, which specifies the maximum payment to each injured person; a per occurrence limit, which is the maximum that will be paid in total to all injured parties; and a per occurrence limit for property damages, which is the maximum that will be paid for all property damage. The alternative to this arrangement would be a Combined Single Limit.

Stated Amount

When the value of an insured vehicle is difficult to assess, some insurance companies will give the option to insure the vehicle for physical damage on a stated amount basis, wherein the vehicle owner assigns a value to the vehicle. A Stated Amount Endorsement is then issued with a limit of that owner-assigned value.

T

Temporary Substitute Auto

Any vehicle used with the owner’s permission as a substitute for a normally-used insured vehicle when that vehicle is unavailable.

Third Party

Anyone who is not covered under the insurance policy who is involved in an accident.

Trailer Interchange Agreement

A contract to transfer a trailer to another truck driver for delivery, or to be transferred to another driver. Under such a contract, the driver hauling the trailer is responsible for damage to the trailer. Often, each driver will be required to have trailer interchange insurance.

Trailer Interchange Coverage

Insurance that covers physical damage to a trailer that is not owned by the driver, while it is in the care of that driver.

U

Underinsured Motorist Coverage (UIM)

Insurance that covers injuries from an accident in which another party is liable but does not have enough insurance. May be included as a part of Uninsured Motorist Coverage.

Underwriting

The process used by insurance companies to assess the level of risk and determine premiums.

Uninsured Motorist Coverage (UM)

Insurance that covers injuries from an accident in which another party is liable but does not have insurance or flees the scene of the accident.

Uninsured/Underinsured Motorist Property Damage Coverage (UMPD)

Similar to UIM and UM, this covers property damage in an accident when another person is at fault who has no insurance or inadequate insurance.

V

Vehicle Identification Number (VIN)

A unique identifier composed of 17 alphanumeric characters that identifies the vehicle’s make, model, and year. It is found on the registration, the title, and is usually also on the driver’s-side dashboard.