Motorcycle Insurance Terminology

Accident – an unexpected and unintentional event

Actual Cash Value (ACV) – is the lessor of (1) the replacement cost of the motorcycle or the property less the depreciation and/or betterment and (2) the purchase price

Additional Operator – someone other than the named insured who is authorized to operator the covered motorcycle either because they have a motorcycle license and no motorcycle of their own or they ride the covered motorcycle without a motorcycle license 

Betterment – is improvement of the motorcycle or property to a greater value than its pre-loss condition

Bodily Injury –bodily harm.  It also includes sickness, disease, or death but which results from bodily harm

Cancellation – is when a policy is terminated before the expiration date either by the insured or the insurer 

Claim – a request for payment by an insured for a loss associated with a covered vehicle

Claimant – the person making the claim

Collision –the upset of your insured motorcycle or its impact with another vehicle or object 

Comprehensive – Also known as “other than collision” is when damage is caused by any of the following: breakage of glass; contact with bird or animal; explosion or earthquake; fire, hail, water, flood or wind; lightning; malicious mischief or vandalism; missiles or falling objects; riot or civil commotion; smoke; or theft

Deductible – the amount the named insured is responsible for in a comprehensive or collision claim and in some cases a medical expense or uninsured motorist claim.  In other words, it is the amount that will be deducted off the total payout for the covered motorcycle

Depreciation – a decrease or loss in value to the motorcycle or property because of use, disuse, physical wear and tear, age, outdatedness or other causes

Diminution of Value –the actual or perceived loss in market or resale value which results from a direct and accidental loss

Effective Date – the date and time the insurance coverage becomes active

Endorsement – A change or update made to an insurance policy 

Exclusion – Specific instances where coverage will not be provided under the insurance contract

Expiration Date – the date and time the insurance coverage becomes inactive

Fraud – a deliberate misrepresentation of any important fact in an effort to gain coverage or have a claim paid.


Fee – a fixed amount for a service

Grace Period – an amount of time which a company allows an insured to avoid a penalty

Indemnify – to protect or reimburse against loss

Insured – the person(s) covered under the insurance contract

Insurer – the person or company in the insurance contract that indemnifies the other party for losses

Liability – is what an insurance company will pay out to a third party if the insured were deemed at-fault for an accident for bodily injury or property damage caused

Limit – the maximum amount that will be paid per occurrence, and sometimes per person per occurrence

Loss – tangible direct and accidental damage to your insured motorcycle, including its equipment when permanently attached, resulting immediately and proximately from the occurrence.  Loss does not include loss that occurs as a consequence of physical damage to your insured motorcycle, including diminution in value.

Material Misrepresentation – the intentional act of providing misinformation or false statements on important facts

Minimum Written Premium – the lowest amount of premium at which a policy will be issued

Minimum Earned Premium - If a policy is cancelled by an insured, it is the least amount the insurer will be entitled to keep for the cost of writing the policy

Occurrence – an event that results in a loss that triggers a claim.

Passenger – any person other than the operator of the insured motorcycle.

Peril – exposure to risk or harm

Policy – a contract between an insurer and insured

Policy Limit – the maximum dollar amount or benefit provided to an insured per occurrence (and sometimes per person per occurrence) during a policy period

Premium – the amount paid by the insured to the insurer for coverage being provided

Pro-Rate Cancellation – the amount of time the policy was in force is compared to the full term and that proportion is multiplied against the premium.

Property Damage – means physical injury to, destruction of, or loss of use of, tangible property.  Property damage does not include diminution in value.

Quote – when an insurance company provides benefits and costs of specific insurance policy options before entering into an insurance contract or policy

Replacement Cost – the amount of money that would be needed to replace the property at current market value

Reinstatement – the process of returning policy status to good standing

Short-Rate Cancellation – when an insured cancels the insurance policy prior to the expiration date and a penalty is applied to the refund amount based on the time remaining on the policy

Surcharge – an additional amount of money that is applied over and above the cost associated with an insurance policy based on the actions of the insured such as accidents or moving violations

Theft – means the unlawful taking of your insured motorcycle

Underwriting – the process used to evaluate the insurability and the risk associated with a customer and the property they are seeking coverage for

Uninsured Motorist Bodily Injury – coverage which is provided for bodily harm caused by a party who is at fault and is not insured

Uninsured Motorist Property Damage – coverage which is provided for property damage caused  by a party who is at fault and is not insured (Not offered in some states)

Underinsured Motorist Bodily Injury – coverage which is provided for bodily harm caused by a party who is at fault and not sufficiently insured 

Underinsured Property Damage - coverage which is provided for property damage caused by a party who is at fault and not sufficiently insured (Not offered in some states)