Auto Repair Insurance Glossary

A B C D E F G H I L M N O P Q R S T U V W

Actual cash value: The replacement cost of property minus depreciation.
Actual loss sustained: A basis for paying business-income claims equal to the real loss incurred.
Additional insured: A person or entity added to a policy who gets certain coverage under it.
Admitted carrier: An insurer licensed by a state and backed by that state’s guaranty fund.
Aggregate limit: The most a policy will pay for all covered losses in a policy period.
Audit: A review of payroll or receipts used to set final premium.

Bailee: A person or business holding another’s property (like a customer’s car) in trust.
Bailee coverage: Insurance for a customer’s property in the shop’s temporary care.
Bay: A service station in a repair shop where a vehicle is worked on.
Betterment: An increase in a vehicle’s value from a repair, sometimes deducted in a claim.
Blanket coverage: A single limit covering multiple items or locations rather than each separately.
Bodily injury: Physical harm to a person, a core trigger for liability coverage.
Broker: A licensed intermediary who places coverage for a client with insurers.
Business auto: An auto policy for vehicles owned or used by a business.
Business income: Coverage for lost earnings when a covered event interrupts operations.
Business owners policy: A packaged policy combining property and liability for small businesses; a BOP.

Care, custody, or control: The condition under which a customer’s vehicle triggers garagekeepers.
Certificate holder: The party a certificate of insurance is issued to as evidence of coverage.
Certificate of insurance: A document evidencing that coverage is in force.
Claim: A request to an insurer for payment under a policy.
Claims-made: A policy that covers claims first made during the policy period.
Coinsurance: A clause requiring the insured to carry a stated percentage of value.
Commercial auto: Liability and physical-damage coverage for business vehicles.
Commercial general liability: Broad liability coverage for business operations.
Completed operations: Liability for a shop’s work after the vehicle has been returned to the customer.
Completed operations: Liability for work after it’s finished and the vehicle has left.
Comprehensive: Physical-damage coverage for non-collision losses like theft or fire.
Conditions: The rules in a policy that must be met for coverage to apply.

Deductible: The amount the insured pays before coverage responds.
Diagnostic equipment: Scan tools and testing gear used to diagnose vehicle faults; often insured as equipment.
Direct excess: A garagekeepers form that pays above the customer’s own insurance.
Direct primary: A garagekeepers form that can cover a customer’s vehicle regardless of the shop’s legal liability, up to the limit.

EPLI: Employment practices liability insurance, covering employment-related claims.
Endorsement: A written change that adds, removes, or modifies coverage.
Exclusion: A provision that removes certain losses from coverage.
Experience modifier: A factor adjusting workers’ comp premium based on claims history.

Faulty workmanship: A claim that repair work was done improperly; a key garage liability exposure.
Financial responsibility: State rules requiring proof of ability to pay for certain losses.
Fire legal liability: Coverage for damage by fire to premises the insured rents.
Fleet: A group of vehicles insured together.

Garage: A facility where vehicles are repaired, serviced, stored, or sold.
Garage liability: Liability coverage for injury and damage from garage operations.
Garage liability: Liability coverage for injury and property damage arising from garage operations.
Garagekeepers: Coverage for physical damage to customers’ vehicles in the shop’s care, custody, or control.
Garagekeepers: Coverage for physical damage to customers’ vehicles in the shop’s care.
General aggregate: The overall cap on liability payments in a policy period.
Guaranty fund: A state fund that pays certain claims if an admitted insurer fails.

Hazard: A condition that increases the chance or size of a loss.
Hired auto: Coverage for vehicles a business rents or borrows.

Indemnity: Restoring the insured to their pre-loss financial position.
Inland marine: Coverage for movable property such as tools and equipment.
Insured: The person or entity covered by a policy.

Liability: Legal responsibility for injury or damage to others.
Lift: A hydraulic hoist that raises vehicles for undercarriage work; a shop equipment and liability factor.
Limit: The maximum an insurer will pay for a covered loss.
Loaner vehicle: A car a shop lends a customer; may need specific coverage.
Loss: Injury or damage for which a claim may be made.
Loss run: A report of an insured’s past claims.

MGU: Managing general underwriter; an entity with delegated underwriting authority.
Mechanic’s lien: A legal claim a shop can place on a vehicle for unpaid repair charges.

Named insured: The primary party listed on the policy.
Named perils: A policy that covers only the causes of loss it specifically lists.
Non-admitted carrier: A surplus-lines insurer not backed by the state guaranty fund.

Occurrence: An event that causes covered injury or damage.
Occurrence policy: A policy covering events that happen during the policy period.
On-hook coverage: Coverage for a vehicle being towed while attached to a tow truck.
Operations: The activities a business performs, relevant to liability rating.

Package policy: Several coverages combined in one policy.
Peril: A cause of loss, such as fire or theft.
Physical damage: Coverage for damage to a covered vehicle or property.
Policy period: The time during which a policy is in effect.
Pollution liability: Coverage for certain pollution-related claims, often by endorsement.
Premises: The location where a business operates.
Premium: The price paid for insurance coverage.
Pro rata: A proportional calculation, such as a refund for unused coverage.
Products liability: Liability for harm caused by a product or part.
Program administrator: An entity that manages an insurance program for carriers.
Property damage: Physical injury to or loss of use of tangible property.

Quote: An estimate of premium for requested coverage.

Rating: The process of calculating premium from risk factors.
Reinsurance: Insurance purchased by insurers to spread risk.
Renewal: Continuation of a policy for a new period.
Replacement cost: The cost to replace property without depreciation.
Retail broker: A licensed broker who works directly with the insured client.
Retroactive date: The earliest date a claims-made policy will cover.
Rider: Another word for an endorsement.
Rideshare exposure: Risk from servicing or operating vehicles used for rideshare work.
Risk: The chance of loss, or the thing insured against loss.
Road testing: Driving a customer’s vehicle to verify a repair; a garage auto exposure.

Schedule: A list of specific insured items, such as tools.
Shop supplies: Consumables used in repairs; may factor into property coverage.
Storage exposure: Risk from vehicles stored on shop premises overnight or long-term.
Subrogation: An insurer’s right to recover a paid claim from a responsible party.
Surplus lines: Coverage placed with a non-admitted insurer for hard-to-place risk.

Tools and equipment: Coverage for a shop’s owned business equipment.
Tow truck: A vehicle used to move disabled cars; carries its own auto and on-hook exposures.

Umbrella: Excess liability coverage above underlying policy limits.
Underwriting: The assessment of risk used to decide coverage and price.

Vandalism: Willful damage to property, a covered peril in many policies.

Waiver of subrogation: An agreement giving up the right to subrogate.
Wholesaler: An intermediary between a retail broker and certain insurers.
Workers’ compensation: Coverage for employee job-related injury and illness.
Wrecker: Another term for a tow truck used in recovery and towing.