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
- A financial-strength rating issued by A.M. Best Co. that indicates a carrier's ability to pay claims. Ratings run from A++ to D. We default to writing carriers rated A or higher.
B
- Bodily injury liability
- Coverage for injury you cause to other people. The first number in Pennsylvania's 15/30/5 minimum.
- BOP (Business Owners Policy)
- A package that bundles general liability and commercial property at a discount. The most 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.
G
- 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.
- 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
- Motor truck cargo
- Insurance on the freight a commercial truck hauls. Covers theft, collision, fire, and other loss to cargo in transit.
- 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
- Premium
- What the policyholder pays for the insurance. Annual or monthly.
- Primary liability
- The main bodily-injury and property-damage coverage on a commercial truck policy. Federally required for any vehicle running interstate or intrastate freight.
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 form a carrier files with the state to prove a driver carries the legally required liability insurance. Usually required after a serious driving violation.
- 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
- Coverage that pays your medical and lost-wages bills when the at-fault driver has insurance but not enough.
W
- Workers' compensation
- Coverage required of almost all Pennsylvania employers. Pays medical bills and lost wages when an employee is injured on the job.