A Plain Glossary for Lowering a Bill

Most of the confusion in this subject is vocabulary. Here are the terms that turn up when you are trying to reduce a premium, defined the way we would explain them on the phone.

On the policy itself

Declarations page. The summary document listing drivers, vehicles, coverages, limits, deductibles and line items. It is the authoritative record of what you actually have.

Premium. What you pay for the policy term. Not the same as what you pay monthly, which is the premium divided up plus any fees.

Endorsement. A change to the policy mid-term. Adding a car, removing a driver and correcting mileage are all endorsements.

Term. The period the policy runs for — commonly six or twelve months. Renewal is the point at which it is re-rated.

On the money side

Instalment fee. A flat administrative charge for paying in parts rather than at once. It is not part of your rate.

Down payment. The initial amount required to start the policy, which is not always one month's worth.

Pro rata. A refund calculated strictly by the unused days.

Short rate. A refund calculated with a deduction for canceling early. Ask which method applies before you cancel anything.

On rating

Rating factor. An input the carrier's filed plan uses to calculate your premium. California's rules point to driving record, miles driven and years of driving experience as the primary ones.

Filed rate plan. The rating structure a carrier has on file with the state. It is why the same information produces different numbers at different companies.

Surcharge. An increase applied after an incident, on the carrier's own schedule.

Good Driver Discount policy. A specific category defined in Insurance Code section 1861.025, with criteria set in statute rather than by the carrier.

On coverage

Deductible. What you pay before the carrier pays on a covered loss. Raising it lowers premium and raises what you owe at claim time.

Liability limits. The most the policy will pay for harm you cause others. Expressed as three numbers.

Comprehensive and collision. The coverages for your own vehicle. Optional under the law; required by lenders.

Lapse. A period without coverage. It is a rating problem later as well as a legal one now.

Ask us to walk through your own declarations page line by line if any of these are still unclear.