Insurance Terms Defined: We know the language used by the insurance industry can be confusing. That’s why we want to make sure that you clearly understand your options and know precisely what you’re paying for. Here are the terms we use for types of coverage. Other than coverage information, there are also a variety of terms that might be unfamiliar to you. We hope the below glossary helps make the world of insurance a little easier to comprehend.
Auto Liability Primary Auto Liability insurance is required by federal regulations. Every carrier must carry liability insurance on every tractor truck and leased units. This coverage provides protection against legal liability arising out of the ownership, maintenance, or use of any insured automobile. The insuring agreement agrees to pay damages for bodily injury or property damage for which the insured is legally responsible because of an automobile accident resulting from the ownership, maintenance, or use of covered auto. The agreement also states that in addition to payment of damages for which the insured is legally liable, the insurer also agrees to defend the insured for al legal defense cost. The defense cost is in addition to the policy limits. The trucking company having FHWA (ICC) Authority should carry this coverage.
Physical Damage This coverage provides protection against loss or damage to your covered vehicle resulting from the impact with another vehicle or object. Your premium is based on the value of your equipment; usually a percentage of the value. This coverage is not required by law, but if you finance your vehicle the lien holder will require it. Collision losses are paid regardless of fault. Comprehensive coverage provides protection against damage to a covered auto resulting from loss other than a collision or upset. This coverage also provides for supplemental payments for transportation expenses in the event of total theft of a covered auto. Commonly, indicating a Stated Value provides this coverage. Stated Value should be determined by the actual cost to replace the unit at the time you are insuring it. The owner of the equipment should carry this coverage.
Cargo Policy covers the motor truck carrier if it is legally liable for the damage, destruction, or other loss of the customer's property being shipped. This includes lost packages, broken contents, and stolen articles.
Refrigeration Breakdown Coverage Also known as "reefer breakdown insurance," this covers the cargo affected by a breakdown in the refrigeration unit. This includes mechanical breakdown or accident that causes the refigeration unit to fail.
General Liability General Liability insurance protects the business for any property damage or bodily injury that might occur which does not involve a tractor truck. This coverage pertains to claims arising out of the insured's liability for injuries or damages caused to ownership of property, manufacturing operations, contracting operations, sale or distribution of products and the operating of machines as well as professional services.
Workers Compensation Covers employees who experience work related injuries or illness. Provides wage replacement and medical benefits to employees injured in the course of employment.
Occupational Accident Occupational insurance is in many ways similar to Workers Compensation insurance and some states allow Occupational Accident insurance in lieu of work comp for Owner Operators. Occupational accident includes medical, disability, death, and dismemberment benefits.
Non Trucking Liability Commonly referred to as Bobtail Insurance, pays for an accident when the driver/truck is not under dispatch. The coverage is sometimes referred to as Deadhead coverage or Bobtail liability. An Owner/Operator permanently leased to a company having FHWA (ICC) Authority should carry this coverage.
Excess Liability Sometimes refered to as “umbrella,” excess liability refers to extended liability coverage. This coverage is meant to supplement your insurance coverage if the damages exceed your liability coverage. Be sure to talk to your agent about what your excess liability covers.
Umbrella Insurance Umbrella insurance is the coverage that may kick in when your losses under other insurance policies, such as homeowner’s and auto coverage, have exceeded policy limits.
Garage Liability This coverage insures the legal liability of automobile dealers, repairs shops, service stations, and garages for property damage during business operations.
Medical Coverage (Vehicle) Provides for your passenger and your medical expenses that are the result of an accident.
Personal Injury Protection (PIP) Protects injuries the driver sustained in a covered accident. Covers medical expenses, lost wages, and other damages. Be sure to talk with your agent to see what is specificly covered.
Uninsured/Underinsured Motorist Coverage Pays for damages associated with bodily injury or death from an accident caused by an uninsured, underinsured or hit-and-run driver, as defined by the law in the jurisdiction where the accident occurred, who is at fault.
Deductible When you get insurance, you agree to pay up to a certain amount out-of-pocket in case of a loss. This amount is called your “deductible.” The deductible you choose often affects how much you pay for your premium. For example, a higher deductible usually means a lower premium. In the case of a covered loss, you will only be required to pay your deductible, and the insurance company usually covers the excess, up to the applicable limit for that loss under your policy.
Premium The payment you make in exchange for one term of policy coverage.
Underwriter/Underwriting Underwriting is the process of assessing risks when deciding whether to issue a policy of insurance.
Note: This website provides a simplified description of coverage. Nothing stated herein creates a contract. All statements made are subject to the provisions, exclusions, conditions and limitations of the applicable insurance policy. Please refer to actual policy forms for complete details regarding the coverage discussed.
The Insurance Agency You Can Trust!
1st Patriot Insurance Services, LLC
P.O. Box 720473; McAllen, Tx 78504
101 E. Delta Street; Pharr, TX 78577
10410 Medical Loop, Suite B, Building 1, Laredo, Tx 78045 Office (956) 627-2521 - Fax (800) 453-9950