Insurance glossary
Plain-English definitions for the terms that show up on Pennsylvania policies. Sized for a quick read, not a textbook.
A
- Actual cash value
- The depreciated value of an item at the time of loss. A claim paid at actual cash value pays less than what it would cost to buy the item new. The opposite of replacement cost.
- Additional insured
- A person or entity added to a policy by endorsement so that the policy covers them in addition to the named insured. Common when a contractor adds a property owner to a GL policy.
- A.M. Best rating
- AM Best's opinion of an insurer's financial strength, meaning its ability to meet its ongoing policy obligations. The scale runs from A++ and A+ (Superior) and A and A- (Excellent) down to D (Poor). It rates the insurer's finances, not any single policy or how claims are handled. Ask us for the current rating of any insurer we quote.
B
- Bodily injury liability
- Coverage for injury you cause to other people. The first two numbers in Pennsylvania's 15/30/5 minimum: $15,000 per person and $30,000 per accident.
- BMC-91 / BMC-91X
- The certificate an insurer files with the FMCSA to show that a motor carrier has the public-liability coverage its federal operating authority requires. The insurer files it, not the carrier. If the policy is cancelled, the insurer must give FMCSA written notice first, and the authority is at risk unless replacement coverage is filed before the cancellation takes effect. See: new authority trucking insurance.
- BOP (Business Owners Policy)
- A package that bundles general liability and commercial property, usually for less than buying the two separately. A common starting point for a small business.
C
- Cargo coverage
- Insurance on the freight a truck is hauling. Covers theft, fire, collision damage, and other loss to the goods being transported. Limits and exclusions matter — read the per-load and per-vehicle caps.
- Comprehensive coverage
- Auto coverage for non-collision loss: theft, fire, vandalism, hail, falling trees, and animal strikes.
- Collision coverage
- Auto coverage for damage to your own vehicle in a wreck, regardless of fault.
- COI (Certificate of Insurance)
- A one-page summary of an active policy issued to satisfy a contract, lease, or licensing requirement. Doesn't change coverage — just confirms it exists.
D
- Declarations page
- The summary page at the front of an insurance policy. Lists the named insured, policy period, coverages, limits, deductibles, and premium.
- Deductible
- What the policyholder pays out of pocket before the carrier starts paying. Higher deductibles lower the premium.
E
- Endorsement
- An amendment to a policy that adds, changes, or removes coverage. Often used to add an additional insured, schedule a high-value item, or change a deductible mid-term.
- E&O (Errors and Omissions)
- Professional liability coverage for service businesses — covers financial harm from a mistake or oversight in the work.
F
- Full tort
- A Pennsylvania auto-policy option that preserves your right to sue for pain and suffering. Costs more than limited tort.
- First-party medical benefits
- Pennsylvania-specific auto coverage that pays your medical bills and your passengers' bills regardless of fault. The state minimum is $5,000. One catch worth knowing: FPB does not extend to motorcycles, so medical coverage has to be added separately on a bike policy.
G
- Garage keepers coverage
- Covers damage to customers' vehicles while they are in your care, custody, or control: parked on your lot, stored, or being worked on. Used by repair shops, dealers, and auto haulers that hold vehicles between loads. It is separate from cargo and on-hook coverage.
- General liability
- Coverage for third-party bodily injury and property damage from your operations. The foundation policy for almost every business.
H
- HICPA
- The Pennsylvania Home Improvement Consumer Protection Act. Sets registration and insurance requirements for residential home-improvement contractors.
L
- Limited tort
- A Pennsylvania auto-policy option that lowers premium in exchange for waiving most of your right to sue for pain and suffering after a wreck. See: full tort vs limited tort.
- Liability
- Coverage for harm you cause to others — bodily injury or property damage. Required on auto policies and the most important coverage on most personal and commercial policies.
M
- MCS-90 endorsement
- The federal endorsement (Form MCS-90) an insurer attaches to a motor carrier's liability policy as proof of the financial responsibility the FMCSA requires (49 CFR 387.7 and 387.15). It is a public-liability endorsement written to protect the public, and it stays in effect until it is terminated.
- Motor truck cargo
- Insurance on the freight a commercial truck hauls. Covers theft, collision, fire, and other loss to cargo in transit. See: motor truck cargo coverage.
- Monoline policy
- A policy that writes only one line of coverage (only GL, only property, only auto). The opposite of a packaged BOP.
N
- Named insured
- The person or business listed on the declarations page as the policyholder.
- Non-trucking liability
- Coverage for an owner-operator when they're using the truck for personal use, not under dispatch. Fills the gap when the leased carrier's policy doesn't apply.
O
- On-hook coverage
- Tow truck and auto-hauler coverage for vehicles being towed that are wrecked, non-running, or otherwise impaired. Standard cargo policies typically exclude these.
P
- What the policyholder pays for the insurance. Annual or monthly.
- Primary liability
- The main bodily-injury and property-damage liability coverage on a commercial truck policy. For-hire carriers in interstate commerce must meet federal minimums (49 CFR Part 387). Pennsylvania intrastate common and contract carriers must meet PA PUC minimums instead: $300,000 per accident for a vehicle rated 10,000 pounds GVWR or less, and $750,000 for a vehicle rated over 10,000 pounds (52 Pa. Code § 32.12).
R
- Replacement cost
- A claim-payment basis that pays what it would cost to replace an item new, without depreciation. Almost always preferable to actual cash value.
S
- SR-22
- A certificate a carrier files with a state DMV to prove a driver carries required liability insurance, typically after a serious violation — in states that use them. Pennsylvania does not: PA drivers only need one when another state demands it. See: SR-22 in Pennsylvania.
- Stacked uninsured motorist
- A Pennsylvania option that multiplies the uninsured-motorist limit by the number of vehicles on the policy. Higher premium, much higher coverage.
U
- Umbrella policy
- Excess liability coverage that sits above the GL, auto, and employer's liability limits. Cheap per million of coverage relative to the protection.
- Underinsured motorist
- Pays the bodily-injury damages you are legally entitled to recover from an at-fault driver whose liability limits are too low to cover them: medical bills, lost wages and, subject to your full- or limited-tort election, pain and suffering. It covers you, relatives in your household, and your passengers, not property damage. Pennsylvania insurers must offer it; you can reject it only on a signed form.
- Uninsured motorist
- Pays the bodily-injury damages you are legally entitled to recover from an at-fault driver who has no insurance, or from a hit-and-run driver. It covers you, relatives in your household, and your passengers, not property damage. Pennsylvania insurers must offer it; you can reject it only on a signed form.
W
- Workers' compensation
- Coverage required of almost all Pennsylvania employers. Pays medical bills and lost wages when an employee is injured on the job.
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