Insurance Glossary

Every insurance term you'll meet, in plain English

41 terms across personal auto, commercial trucking, and insurance industry basics. Each definition links to the matching service page where relevant.

Personal Auto

Bodily Injury Liability(also: BI, BI liability): Bodily injury (BI) liability pays the medical bills, lost wages, and pain-and-suffering damages of people injured in an accident you cause. It's the most important coverage on any auto policy. Illinois requires 25/50 minimum ($25,000 per person / $50,000 per accident); Texas requires 30/60. Both are inadequate for real-world liability exposure — most agents recommend 100/300 or higher. BI does not cover your own medical bills (that's MedPay or PIP).
Collision Coverage: Collision pays to repair or replace your own vehicle when you crash into another vehicle, a tree, a guardrail, a building, or roll the vehicle. Optional unless required by a lienholder. Like comprehensive, it has a deductible. The carrier pays the actual cash value (ACV) of the vehicle, not the replacement cost — which is why gap insurance often pairs with it on financed vehicles.
Comprehensive Coverage(also: other-than-collision, comp): Comprehensive (sometimes called 'other-than-collision') covers damage to your own vehicle from non-collision events: theft, fire, vandalism, hail, falling objects, animal strikes, flooding, glass breakage. It's optional unless required by a lender. Deductibles typically range from $250 to $2,500 — higher deductibles meaningfully lower the premium.
Continuous Coverage: Insurance carriers reward continuous coverage with progressively better rates. Even a single day's lapse in coverage can move you from a 'preferred' tier to 'standard' or 'non-standard' at renewal, costing hundreds of dollars more per year. If you're switching carriers, bind the new policy first, then cancel the old one — never the other way around. For drivers under SR-22, a coverage lapse can also restart the state's required filing period.
Coverage Lapse: Any gap between policies — even a single day — is a coverage lapse. Insurance carriers track this and raise renewal premiums for it. For drivers under SR-22, a lapse can trigger an SR-26 cancellation and a license suspension. The fix is auto-pay on a card that doesn't expire mid-policy, plus keeping your current address on file with the carrier so renewal notices reach you.
Deductible: If you have a $500 deductible on collision coverage and you total your car in a $20,000 collision, the carrier pays $19,500 and you absorb the $500. Higher deductibles lower your premium (because you're absorbing more risk); lower deductibles raise your premium. Each coverage line (collision, comprehensive, etc.) has its own deductible.
Gap Insurance(also: loan/lease gap): When you finance or lease a vehicle, you owe the lender the loan balance. If the vehicle is totaled in the first few years, the insurance company pays the actual cash value — which is often less than the loan balance because cars depreciate fast. Gap insurance pays the difference. Strongly recommended for any financed vehicle in the first 2–3 years of the loan.
Liability Limits(also: 25/50/20, 100/300/100, split limits): Liability limits are written as three numbers: bodily injury per person / bodily injury per accident / property damage. '25/50/20' means $25,000 max per injured person, $50,000 max total for all injuries in one accident, $20,000 max for property damage. Illinois minimum is 25/50/20; Texas minimum is 30/60/25. Both are dangerously low — most agents recommend 100/300/100 or higher, since a single bad accident can blow through state minimums in minutes.
Medical Payments (MedPay)(also: MedPay): MedPay pays medical and funeral expenses for you and your passengers after an auto accident, regardless of who's at fault. It's optional in both Illinois and Texas. Limits typically range from $1,000 to $25,000. It can fill gaps in health insurance (deductibles, copays) and pays even if you were on foot when hit by a vehicle.
Non-Owner Policy(also: non-owner SR-22, named non-owner policy): A non-owner policy covers your liability when driving someone else's vehicle (rental cars, borrowed cars). It's most commonly bought by drivers who don't own a vehicle but still need SR-22 financial responsibility on file with the state. Premiums are dramatically cheaper than a full owner policy — typically $400–$800 a year — because there's no specific vehicle to insure.
Personal Injury Protection (PIP)(also: PIP, no-fault coverage): PIP is broader than MedPay — in addition to medical bills, it covers lost wages, replacement services, and rehabilitation costs for you and your passengers regardless of fault. Texas auto policies include PIP by default at $2,500; drivers can reject in writing or buy higher limits. Illinois doesn't sell PIP (Illinois drivers use MedPay instead).
Property Damage Liability(also: PD, PD liability): Property damage (PD) liability pays to repair or replace the other driver's vehicle, plus any other property damaged in the accident — guardrails, fences, mailboxes, structures. Illinois requires $20,000 PD minimum; Texas requires $25,000. Both are inadequate when you total a late-model truck or SUV; most policies should carry $50,000 to $100,000 PD.
SR-22(also: SR22, financial responsibility filing, SR-22 certificate): An SR-22 is not insurance — it's a certificate your auto insurance carrier files with the state on your behalf, confirming you carry at least the minimum legally required liability coverage. Drivers are typically ordered to carry one by a court or DMV after a DUI, driving without insurance, reckless driving, or multiple moving violations. Illinois requires 3 years of continuous SR-22; Texas requires 2 years. If the underlying policy lapses, the carrier files an SR-26 and the state suspends the license.
SR-26: An SR-26 is the cancellation counterpart to the SR-22. When the state's mandated filing period ends (3 years in Illinois, 2 years in Texas) or the policy is canceled, the carrier files an SR-26 to formally release the driver from the financial responsibility obligation. Some carriers file SR-26 automatically once the date passes; others wait for instruction. Always confirm with the agent before assuming the filing has been released.
Uninsured / Underinsured Motorist (UM/UIM)(also: uninsured motorist, UM, UIM): Uninsured motorist (UM) and underinsured motorist (UIM) coverage protects you when the at-fault driver has no insurance or carries less coverage than your damages. Illinois requires 25/50 UM minimum; Texas requires drivers to be offered UM and PD-UM coverage but allows rejection in writing. UM and UIM are among the highest-value coverages on a personal auto policy because 12–25% of drivers in any state are uninsured.

Commercial Auto & Trucking

BOC-3 Filing(also: BOC-3, process agent designation): BOC-3 is the form motor carriers and brokers file with FMCSA designating a process agent in each state where they conduct operations. The process agent accepts legal documents on the carrier's behalf in that state. Required to activate FMCSA authority. Most carriers use commercial process-agent services that provide nationwide coverage via a single filing.
CSA Score(also: CSA, compliance safety accountability): Compliance, Safety, Accountability (CSA) is FMCSA's program that scores motor carriers on safety performance using roadside inspection data and crash reports. Scores are organized into seven BASICs (Behavior Analysis and Safety Improvement Categories): unsafe driving, crash indicator, hours-of-service compliance, vehicle maintenance, controlled substances/alcohol, hazmat compliance, and driver fitness. High CSA scores trigger FMCSA interventions and raise insurance premiums substantially.
Excess / Umbrella Liability(also: excess liability, umbrella policy): Excess and umbrella policies provide additional liability limits above the primary commercial auto, general liability, and employer's liability policies. They're commonly required by shipper or contractor agreements that demand $5,000,000 or $10,000,000 of liability — which the primary policies can't reach alone. Umbrella policies typically drop down to fill gaps in primary coverage; excess policies are layer-only and don't drop down.
Fleet Schedule: The fleet schedule is the foundational data sheet for a commercial auto policy. Each unit gets a row with identifying details (VIN, year, make, model, GVW), stated value, garaging location, and use class (long-haul, regional, local, intermodal). Adding or dropping units mid-term is handled through a fleet schedule update. Larger fleets often use composite rating, where rate is per unit rather than scheduled individually.
FMCSA(also: Federal Motor Carrier Safety Administration): The Federal Motor Carrier Safety Administration (FMCSA) is the DOT branch responsible for safety regulations governing interstate commercial motor vehicles. FMCSA issues USDOT numbers, MC operating authority, and enforces hours-of-service rules, drug-and-alcohol testing requirements, vehicle inspections, and minimum insurance levels. The agency's Licensing & Insurance (L&I) system tracks active filings and authority status.
General Liability(also: GL, commercial general liability, CGL): Commercial general liability (CGL) covers liability arising from business operations that aren't tied to a vehicle — slips and falls on your property, products you sell, completed-operations injuries on a contractor's job site. For a trucking operation, GL covers things like a customer slipping in your office or an unrelated injury at your terminal. Often bundled with commercial auto into a business owners policy (BOP) or written stand-alone.
Hired & Non-Owned Auto(also: HNO, HNOA): Hired auto covers vehicles rented or leased temporarily for business use. Non-owned auto covers employees' personal vehicles when used for company business. Together they're sold as a single endorsement on a commercial auto policy. Critical for businesses with employees who run errands in their own cars, even occasionally — without HNOA, a fender-bender by an employee 'on the clock' can trigger a company lawsuit with no coverage.
Loss Runs(also: loss run, loss history): Loss runs are the trucking industry's underwriting credit report. Any new commercial auto or trucking policy quote requires 3–5 years of loss runs on the prior carrier's letterhead. Underwriters use them to price the risk. Clean loss runs (no major claims, no at-fault accidents) lower premium; loss runs with frequent or severe losses raise it or disqualify the risk entirely.
MC Number (Operating Authority)(also: MC, operating authority, motor carrier number): An MC (motor carrier) number is operating authority issued by FMCSA. Required for any motor carrier hauling for-hire interstate, freight broker, or freight forwarder. Different MC types exist: common-carrier (general public), contract-carrier (specific shippers), broker, and forwarder. Activating an MC requires proof of insurance (BMC-91 for carriers, BMC-84 for brokers) and a BOC-3 process agent designation.
MCS-90 Endorsement(also: MCS-90, federal endorsement): The MCS-90 is a federal endorsement required by FMCSA on interstate motor carriers' primary liability policies. It guarantees that if the carrier's normal liability coverage somehow fails to respond, the insurer will still pay claims up to the federal minimum to protect the public. It does not replace primary liability — it's a safety net mandated by federal law. Carriers are typically allowed to seek reimbursement from the insured under the endorsement's terms.
Motor Truck Cargo(also: MTC, cargo coverage): Motor truck cargo covers the goods you're transporting, not the truck itself. Limits typically run $100,000 for general freight up to $250,000+ for high-value commodities. Shippers and brokers frequently require minimum cargo limits as a condition of booking loads. The policy specifies covered perils (typically fire, theft, collision, and overturn) and excludes certain commodities unless specifically endorsed (jewelry, fine art, electronics, pharmaceuticals).
Non-Trucking Liability (Bobtail)(also: bobtail, bobtail liability, deadhead, NTL): Non-trucking liability (NTL), commonly called bobtail, applies to owner-operators leased to a motor carrier. When the driver is under dispatch (hauling for the motor carrier), the carrier's policy responds. When the driver is off-dispatch — driving home, running personal errands, picking up dinner — that's where NTL kicks in. Premium is dramatically cheaper than full primary liability because the exposure is much narrower.
Owner-Operator(also: O/O): Owner-operators are single-truck (occasionally multi-truck) businesses where the driver owns the equipment. Two operating models: leased to a motor carrier (the carrier's authority and primary liability cover dispatch loads; the O/O carries non-trucking liability for personal use) or operating under their own MC authority (the O/O carries primary liability themselves). Owner-operators are the backbone of the trucking industry.
Physical Damage (Commercial): Physical damage on a commercial auto policy bundles comprehensive and collision into one line item for each unit scheduled. The coverage pays the actual cash value (or stated value) of the unit if it's totaled, minus the deductible. For trucking fleets, physical damage is rated per unit and per stated value — older trucks with high stated values often have higher rates than newer trucks at lower stated values because of risk-of-total-loss math.
Primary Liability(also: primary auto liability): Primary liability is the foundation of any commercial auto policy. FMCSA requires a minimum of $750,000 in primary liability for for-hire motor carriers hauling general freight, $1,000,000 for oil haulers, and $5,000,000 for most hazmat carriers. Most brokers and shippers contractually require $1,000,000 regardless. Limits up to $2,000,000 are commonly written; higher limits stack via excess and umbrella layers.
Reefer Breakdown(also: refrigeration breakdown): Standard motor truck cargo coverage typically excludes spoilage caused by refrigeration equipment failure. Reefer breakdown is an endorsement that adds this protection — covering produce, meat, frozen goods, and pharmaceuticals that spoil because the reefer unit broke down en route. Coverage often requires maintenance records and continuous-running for high-value loads.
Trailer Interchange: Trailer interchange is liability coverage for trailers in your possession that you don't own. It's required by many drop-and-hook trailer interchange agreements between motor carriers — if you pick up another carrier's trailer at a yard and damage it, this coverage pays. Commonly written for long-haul motor carriers that swap trailers with brokerages or other carriers.
USDOT Number(also: DOT number): Every commercial motor vehicle operating interstate (and in many states, intrastate) must have a USDOT number registered with FMCSA. It tracks the carrier's safety record, inspections, audits, and crash data. Most states also require intrastate USDOT registration for vehicles above certain weight thresholds. The number is the primary identifier linking insurance, safety filings, and authority.

Insurance Basics

A-Rated Carrier(also: AM Best A, admitted carrier): AM Best rates insurance companies on financial strength — the ability to pay claims. Ratings run from A++ (superior) down through A+, A, A-, B++, B+, B (fair), C (weak), to D (poor). 'A-rated' generally means A- or better. Most lenders, contracts, and FMCSA approvals require coverage from A-rated carriers because the rating predicts the carrier's ability to make claim payments. Riskara writes only A-rated carriers.
Additional Insured(also: AI): An additional insured is someone the policy covers in addition to the named insured. Commonly required by contracts — landlords on tenant policies, project owners on contractor policies, motor carriers on owner-operator policies. Adding an additional insured doesn't change the limit; it shares the existing limit with the named insured. Adding additional insureds is usually free for the policyholder; the certificate is issued and emailed by the agent.
Captive Agent: Captive agents work for a single insurance company — Allstate, State Farm, Farmers, etc. — and can only sell that company's products. Their advantage is deep product knowledge for one carrier; the disadvantage is they can't shop your profile across multiple carriers if their carrier's appetite or pricing is wrong for you. Independent agents and brokers, by contrast, represent multiple carriers.
Certificate of Insurance (COI)(also: COI, ACORD 25, ACORD certificate): A certificate of insurance is the standardized form (ACORD 25 for commercial general liability; ACORD 27 or 28 for property; specific forms for auto) that proves you have coverage. Landlords, shippers, brokers, and contractors require COIs as a condition of doing business. The COI lists the carrier, policy number, limits, and effective dates — but is NOT the policy itself. Certificates can usually be issued same-day by the agent and emailed to the requesting party.
Declaration Page (Dec Page)(also: dec page, policy declarations): The declaration page (universally 'dec page' in the industry) is the at-a-glance summary of an insurance policy. It identifies the named insured, the policy period (effective and expiration dates), the specific vehicles or property covered, each coverage line with its limit and deductible, and the premium. When a client switches carriers, the new carrier almost always asks for the current dec page to understand what's being replaced.
Independent Agent / Broker(also: independent broker): Independent agents (sometimes called brokers in commercial contexts) represent multiple insurance carriers and compare quotes across them for each client. This is the opposite of a captive agent, who works for one company (Allstate, State Farm, etc.) and can only sell that company's products. Riskara is independent — we shop across dozens of A-rated carriers to find the best fit for each client.
Named Insured: The named insured is the legal party on the policy — the person, LLC, or corporation listed by name on the dec page. Only the named insured can make policy changes, cancel, or file a claim. For business policies with multiple related entities (a parent LLC and its subsidiaries), all relevant entities can be listed as named insureds via a named-insured schedule.
Underwriting: Underwriting is the analytical engine of an insurance carrier. An underwriter reviews your application — driving record, vehicle, business operation, loss runs, financials — against the carrier's appetite guidelines and pricing models, then decides whether to accept the risk and at what premium. Each carrier has different appetites: one might write new trucking authorities aggressively while another won't touch them at any price. A good independent agent knows the appetites and routes each risk to the right carrier first try.

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