Vocabulary
Glossary
Definitions written for drivers trying to understand and reduce a high or rising car insurance premium. Each term links back to the guides where it matters.
- Adverse action notice
- A notice insurers must send when credit information results in a higher rate or denial, explaining the main reasons.
- Age band
- An age grouping with its own factor. Highest for teens, lowest in the fifties, rising again after 70.
- At-fault accident
- A crash the insurer determines you caused. Surcharged; not-at-fault accidents usually are not.
- Base rate
- The starting premium for a coverage in a territory before individual factors and discounts.
- Bundling (multi-policy discount)
- A discount for holding auto and home or renters insurance with one insurer, typically 10–25%.
- Collision coverage
- Pays to repair your car after a crash, minus the deductible.
- Comprehensive coverage
- Pays for theft, weather, vandalism, fire, animal strikes and glass.
- Continuous coverage
- An unbroken insurance history. Lapses are surcharged; continuity earns discounts.
- Credit-based insurance score
- A score built from credit-report data and weighted to predict insurance losses. Used in most states; banned in California, Hawaii, Massachusetts and Michigan.
- Declarations page
- The summary page of a policy: insureds, vehicles, coverages, limits, deductibles, discounts and premium.
- Deductible
- What you pay before collision or comprehensive pays. Higher deductibles lower premiums.
- Garaging address
- Where the vehicle is normally kept overnight; determines the rating territory.
- Inexperienced operator
- A driver licensed fewer than about three years, rated with an additional factor at any age.
- Lookback period
- How many years of record an insurer rates—three and five are common.
- Loss trend
- The rate at which claim costs are rising over time—repairs, vehicle values, medical, litigation. The main driver of base-rate increases.
- Non-owner policy
- Liability coverage for a driver without a car; keeps insurance history continuous.
- Prior insurance
- Whether you were insured immediately before the new policy. No prior insurance is rated like a lapse by many insurers.
- Pro-rata refund
- A refund of unused premium when you cancel mid-term, proportional to the days remaining.
- Rate filing
- An insurer's submission to a state regulator to change its rates. Approved filings apply to all policyholders in the affected territories.
- Rating factor
- Any characteristic used to set a premium: record, age, years licensed, territory, vehicle, credit-based score, mileage, coverage.
- Rating territory
- A geographic area with its own base rates, set from local claims experience.
- Rating tier
- A grouping (preferred, standard, non-standard) with its own base rates. Record, credit and history determine your tier.
- Surcharge
- A percentage added to the premium for an at-fault accident or violation, typically for three years.
- Telematics (usage-based insurance)
- Pricing partly on measured driving behaviour via an app or device.
- Vehicle rating symbol
- A number assigned to each make/model/year from its claims experience, driving collision and comprehensive premiums.