Glossary of Commercial Auto Insurance Terms And Definitions
Understanding insurance starts with knowing the language. This glossary provides short and clear definitions of key terms frequently used in the industry, empowering you to make informed decisions and navigate your commercial auto insurance needs with confidence.
A
Accident
An unexpected event or mishap involving a commercial vehicle, resulting in damage or injury. This can include collisions, rollovers, or other unforeseen incidents that impact the safety and operation of the vehicle.
Accident Report Form
A document used to record details and circumstances of an accident involving a commercial vehicle, including involved parties, damages, and any injuries.
Active Participant
A person or entity actively engaged in the operation or management of a commercial vehicle or fleet, potentially affecting insurance terms and conditions.
Actual Cash Value
The market value of a commercial vehicle at the time of a loss, considering depreciation and wear and tear, used for determining claim payments.
Actuary
A specialist who evaluates financial risks by applying mathematical, statistical, and economic principles, playing a key role in determining insurance premiums and reserves for commercial auto coverage.
Adjuster
An insurance professional who investigates and evaluates claims to determine the extent of the insurer's liability and appropriate compensation for damages or losses.
Aggregate Limit
The maximum amount an insurer will pay for all claims during a policy period for a commercial auto insurance policy.
Assigned Risk
A classification for commercial vehicles that cannot obtain insurance in the regular market due to high risk, often placed in a state-sponsored pool to ensure coverage.
At fault
A determination of responsibility in an accident, indicating that the commercial vehicle driver or operator is responsible for causing the incident.
Automobile Liability Insurance
A mandatory coverage that protects commercial vehicle operators against financial loss from legal liability for bodily injury or property damage to others caused by an accident.
B
Binder
A temporary agreement that offers immediate insurance coverage until the official policy is finalized. It acts as proof of insurance and outlines essential terms and conditions.
Bodily Injury
Physical harm, sickness, or disease sustained by a person as a result of an accident involving a commercial vehicle. This can include injuries ranging from minor cuts to severe trauma or death.
Bodily Injury Liability Coverage
Part of a commercial auto insurance policy that covers legal expenses, medical costs, and compensation for injuries or death caused to others by the insured vehicle.
Business Experience Discount
A reduction in insurance premiums that STAR Mutual RRG offers to businesses with a proven track record of safe and efficient commercial vehicle operation, reflecting their lower risk. It applies to companies with a minimum of two continuous years of favorable loss history.
C
Cancellation of a Policy
The termination of a commercial auto insurance policy before its expiration date by either the insurer or the policyholder, often due to non-payment or a change in risk factors.
Certificate of Insurance
A document provided by an insurance company as proof of coverage, outlining the details of the commercial auto insurance policy, including coverage limits and effective dates.
Claim
A formal request made by the policyholder or claimant to an insurance company for compensation due to a covered loss involving a commercial vehicle. Learn more about our claims administration partner here.
Claimant
An individual or entity who makes a claim against an insurance policy, seeking compensation for damages or injuries sustained in an incident involving a commercial vehicle.
Claims Adjuster
An insurance professional responsible for investigating and assessing claims to determine the extent of the insurer's liability and appropriate compensation for losses.
Collision
An incident involving the impact of a commercial vehicle with another vehicle, object, or person, resulting in damage or injury.
Commercial Auto Insurance
A temporary agreement that offers immediate insurance coverage until the official policy is finalized. It acts as proof of insurance and outlines essential terms and conditions.
Commercial Class
Categories of commercial vehicles based on their primary use or industry, such as general freight transportation, towing services, or waste management. Click here to check the full list of business classes we cover.
Commercial Driver's License (CDL)
A specialized license required for operators of commercial vehicles, ensuring they have the necessary skills and knowledge to safely and legally drive these vehicles.
Commercial Lines
Insurance products designed for businesses and organizations, covering various risks related to commercial operations, including property, liability, and commercial auto insurance.
Commercial Vehicle
A vehicle used primarily for business purposes, such as transportation of goods, passengers, or services, typically subject to specific insurance requirements and regulations. STAR Mutual RRG provides coverage for a wide range of vehicles that you can find here.
Commission
A fee paid to insurance agents or brokers for selling and servicing insurance policies, often calculated as a percentage of the premium.
Cover Start Date
The date on which an insurance policy begins to provide coverage, as specified in the commercial auto insurance policy documents.
Coverage
The protection and benefits provided by an insurance policy, detailing the types and limits of risks covered for commercial vehicles.
Covered Loss
An event or incident that falls within the scope of coverage outlined in a commercial auto insurance policy, qualifying the policyholder for compensation.
D
Damage
Harm or destruction caused to a commercial vehicle, property, or individuals resulting from accidents, collisions, or other covered incidents, leading to potential insurance claims.
Declarations Page
The section of a commercial auto insurance policy that summarizes key information, including the policyholder's details, vehicle information, coverage types, limits, deductibles, and premium amounts.
Decline
The decision by an insurance company to refuse to provide coverage for a commercial auto insurance policy, typically due to high-risk factors or failure to meet underwriting criteria.
Deductible
The amount that the policyholder is required to pay out-of-pocket for covered losses before the insurance company pays the remaining claim amount. It applies to each claim filed under a commercial auto insurance policy.
Defensive Driving
A driving approach focused on safety and accident prevention by anticipating potential hazards and making informed decisions. Insurance companies often offer discounts to drivers with defensive driving training, recognizing their reduced risk.
E
Effective Date
The date when a commercial auto insurance policy becomes active and coverage begins, as specified in the policy documents.
Endorsement
An amendment or addition to a commercial auto insurance policy that modifies the terms, coverage, or conditions, typically documented in a rider attached to the original policy.
Exclusion
Specific conditions or circumstances listed in a commercial auto insurance policy that are not covered by the insurance, such as certain types of damage or losses.
Expiration Date
The date when a commercial auto insurance policy's coverage ends, after which the policyholder must renew or obtain new insurance to maintain coverage.
F
Financial Stability
The ability of an insurance company to meet its financial obligations, pay claims, and maintain operations. It reflects the insurance carrier's financial health, influenced by factors such as reserves, investment performance, and overall financial management. At STAR Mutual RRG, financial stability is crucial for ensuring reliable and consistent coverage for our policyholders. We have earned "A" (Exceptional) Financial Stability Rating from Demotech, Inc. and a “B+” (Good) Rating from A.M. Best.
H
Hazard
Any potential source of danger that can affect the safety of a commercial vehicle or its occupants. This can include physical obstacles, adverse weather conditions, poor road surfaces, other vehicles, pedestrians, and unexpected events that may lead to accidents or damage.
I
In Force
A term used to describe an insurance policy that is currently active and providing coverage, as opposed to being expired, canceled, or lapsed.
Indemnification
The process by which an insurance company compensates the insured for losses or damages covered under the policy, restoring them to the financial position they were in before the loss occurred.
Insurance Agent
A licensed professional who sells and services insurance policies on behalf of one or more insurance companies, providing advice and assistance to clients.
Insurance Broker
A certified expert who serves as a go-between for customers and insurance providers, assisting clients in finding and purchasing insurance products that best suit their requirements.
Insurance Carrier
A company that underwrites and issues insurance policies, assuming the risk and providing coverage for policyholders.
Insurance Fraud
Illegal activities conducted to obtain financial benefits from insurance policies through deceit, misrepresentation, or other dishonest practices. To find out more on how we fight insurance fraud, please refer to our fraud statement.
Insurance ID Card
A document issued by an insurance company that serves as proof of coverage, typically carried by the insured in their vehicle to show evidence of insurance.
Insurance License
A certification required by individuals or entities to legally sell, solicit, or negotiate insurance policies, ensuring they meet regulatory and educational standards. You can find more information on states where we are licensed to write on our licensing information page.
Insurance Market
The collective environment in which insurance products are sold, involving insurers, brokers, agents, and policyholders.
Insurance Premium
The amount of money a policyholder pays to an insurance company for coverage over a specified period, typically monthly or annually.
Insured
The individual or entity covered by an insurance policy, entitled to receive benefits and compensation in the event of a covered loss.
Insurtech
A combination of "insurance" and "technology," referring to innovative technology-driven solutions aimed at improving the efficiency, accessibility, and customer experience within the insurance industry. At STAR Mutual RRG, we're revolutionizing the traditional insurance process. Backed by years of expertise and cutting-edge technology, we provide fast, bindable quotes and dependable commercial auto liability coverage for safety-focused operators. Read more about us here.
L
Liability
The legal responsibility for damages or injuries caused to another party. In the context of commercial auto insurance, it refers to the obligation to pay for harm or damages caused by the insured vehicle.
Liable
Being legally responsible for causing damage or injury. If a commercial vehicle operator is deemed liable in an accident, they or their insurance may be required to compensate affected parties.
Limit
The maximum amount an insurance policy will pay for a covered loss. Policies typically have different limits for various types of coverage, such as bodily injury or property damage.
Loss Control
Strategies and measures implemented by businesses to reduce the frequency and severity of losses. This can include safety training, vehicle maintenance, and risk management practices to minimize claims.
Loss Run Report
A document that details the history of claims made against a commercial auto insurance policy. It includes information on the types of claims, their frequency, and financial amounts paid out, helping insurers assess risk.
M
Military Discount
A special reduction in insurance premiums that STAR Mutual RRG offers to veterans, recognizing their service and extraordinary commitment to protecting our nation. Eligibility may require proof of military status at the time of application.
Motor Carrier
A company or individual that provides transportation services for goods or passengers using commercial vehicles. Motor carriers are subject to specific regulations and insurance requirements to ensure safety and compliance.
Motor Vehicle Report (MVR)
A record of an individual's driving history maintained by the motor vehicle department, including information on traffic violations, accidents, and license status. Insurance companies use MVRs to assess the risk of insuring commercial drivers.
Mutual Insurance Company
An insurance company owned by its policyholders, who share in the company's profits through dividends or reduced premiums. These companies operate for the benefit of their members rather than for shareholders.
N
Non-Renewal
The decision by an insurance company not to renew a commercial auto insurance policy at the end of its term. This can occur due to various reasons, such as changes in risk assessment, claims history, or regulatory requirements. The policyholder is usually notified in advance, allowing them to seek new coverage.
O
Occurrence
An event or series of events resulting in damage or injury that is covered under a commercial auto insurance policy. It refers to incidents happening within the policy period, regardless of when the claim is made.
Owner-Operator
An individual who owns and operates their own commercial vehicle, often as an independent contractor. They are responsible for maintaining their vehicle, securing insurance, and managing operational expenses.
Owner-Operator Discount
A discount that STAR Mutual RRG offers to independent truck drivers who own and operate their vehicles, reflecting their vested interest in maintaining their equipment and driving safely. Eligibility may depend on a clean driving record and consistent business operations.
P
Peril
A specific risk or cause of loss covered by an insurance policy, such as theft, fire, collision, or natural disasters. Perils define the events that can trigger coverage under the policy.
Personal Injury Protection (PIP)
A type of auto insurance coverage that pays for medical expenses, lost wages, and other related costs regardless of who is at fault in an accident. PIP is designed to quickly cover the policyholder's personal injuries.
Policy
A contract between an insurance company and the policyholder that outlines the terms, coverage, exclusions, and conditions of the insurance protection provided.
Policy Change
An amendment or modification to an existing insurance policy, which can include changes to coverage limits, adding or removing vehicles, or updating personal information.
Policyholder
The individual or entity that owns an insurance policy and is entitled to its benefits and coverage.
Pre-Accident Condition
The state of a vehicle before it was involved in an accident, used as a benchmark for repairs and claims settlements to restore the vehicle to its original state.
Pre-Existing Condition
Any injury, illness, or damage that existed before the inception of an insurance policy, which may not be covered depending on the policy terms.
Principal Risks
The main risks or hazards that an insurance policy is designed to cover, specific to the type of insurance and the insured activities or assets.
Proof of Loss
A formal statement provided by the policyholder to the insurance company documenting the details and extent of a claim, required for processing and validating the claim.
Property Damage
Physical damage to or destruction of tangible property resulting from an accident or other covered peril, which can include vehicles, buildings, and other structures.
Property & Casualty Insurance
A broad category of insurance that covers property loss or damage (property insurance) and legal liability for injuries or damages to others (casualty insurance), including commercial auto insurance.
Proximate Cause
The primary cause of a loss in a chain of events, directly resulting in damage or injury, which determines the insurer's liability under the policy.
Q
Quote
An estimate of the premium amount for a commercial auto insurance policy, based on information provided by the potential policyholder. The quote outlines the coverage options, limits, and costs before the policy is formally issued.
R
Reinstatement
The process of restoring a lapsed or canceled commercial auto insurance policy to active status, typically after the payment of any overdue premiums or the resolution of other conditions.
Reinsurance
An arrangement where an insurance company transfers portions of its risk portfolio to other insurance companies to reduce its potential losses. This helps insurers manage large claims and maintain financial stability. To maintain financial stability, STAR Mutual RRG is reinsured by “A+” (Superior) rated reinsurance carriers.
Renewal Date
The date on which a commercial auto insurance policy is scheduled to renew, continuing coverage for another term if the policyholder pays the premium and meets any other renewal conditions.
Retroactive Date
A specific date set in a claims-made insurance policy from which claims will be covered. Any claims arising from incidents occurring before this date are not covered, helping define the scope of coverage.
Risk
The potential for loss, damage, or liability that an insurance policy is designed to protect against. In commercial auto insurance, risks can include accidents, theft, and other perils associated with vehicle operation.
Risk Class
A categorization of policyholders or vehicles based on shared characteristics that influence the likelihood of a claim. Factors may include vehicle type, usage, driver history, and location, affecting premium rates.
Risk Management
The process of identifying, assessing, and implementing measures to minimize and control risks associated with operating commercial vehicles. This can include safety programs, driver training, and regular maintenance.
Risk Retention
The strategy of a business to self-insure by setting aside funds to cover potential losses rather than purchasing full insurance coverage. This approach is often used for predictable, manageable risks.
Risk Retention Group
A group self-insurance arrangement where businesses with similar risks pool their resources to provide liability coverage for their members. These groups are often formed to address specific industry risks and reduce insurance costs.
S
Special Investigation Units (SIUs)
Departments within insurance companies dedicated to detecting, investigating, and combating insurance fraud. SIUs work to identify suspicious claims, gather evidence, and collaborate with law enforcement to prevent fraudulent activities.
Sublimit
A specific limit within an insurance policy that sets a maximum payout for a particular type of loss or claim, separate from the overall policy limit. For example, a commercial auto insurance policy may have a sublimit for towing expenses.
Successive Periods
Continuous or sequential time frames within an insurance policy during which coverage is provided without interruption. Policyholders may renew their commercial auto insurance for successive periods to maintain ongoing protection.
T
Total Loss
A situation where the cost of repairing a damaged commercial vehicle exceeds its actual cash value, or the vehicle is deemed irreparable. In such cases, the insurance company typically pays the policyholder the vehicle's market value, minus any deductible, instead of covering the repair costs.
U
Underinsured Motorist Coverage
A type of coverage in a commercial auto insurance policy that protects the insured vehicle and driver when an accident occurs with a driver who has insufficient insurance to cover the damages or injuries. It helps bridge the gap between the at-fault driver's coverage and the actual costs.
Underwriting
The process by which an insurance company evaluates the risks associated with insuring a person, vehicle, or business. This process determines the terms, coverage, and premium rates for a commercial auto insurance policy based on the risk assessment.
Underwriting Guidelines
The criteria and rules set by an insurance company to evaluate and decide whether to accept or reject insurance applications. These guidelines help ensure consistency and manage the risk portfolio of the insurer.
Uninsured Motorist Coverage
A type of coverage in a commercial auto insurance policy that provides protection when the insured vehicle is involved in an accident with a driver who does not have insurance. It covers medical expenses, lost wages, and other damages that the at-fault driver would have been responsible for.
V
Vehicle Identification Number (VIN)
A unique alphanumeric code assigned to every motor vehicle when it's manufactured. The VIN serves as the vehicle's fingerprint, providing vital information such as the manufacturer, model, year of production, and other identifying details. This number is essential for registering the vehicle, tracking recalls, and verifying ownership and insurance details.
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