The Words Nobody Explains

The quoting process has its own vocabulary, and most of it is never defined out loud because everyone using it forgot it needed defining. Here is the set you will actually encounter, in the order you tend to meet them.

Before you buy

• Quote. A price calculated from the information you provided, subject to verification. Not a reservation and not coverage.
• Rating factor. Something an insurer is permitted to use in setting your price. California Insurance Code section 1861.02 puts driving safety record, annual mileage and years of driving experience first.
• Underwriting. The carrier deciding whether to insure you at all, and on what terms. Separate from rating, which is the price.
• Appetite. Industry shorthand for the kinds of business a carrier currently wants. It changes, which is why a decline is not permanent.
• Appointment. The arrangement letting an agent place business with a particular carrier. No agent has all of them.

At the point of purchase

• Bind. The carrier agreeing to cover you. The moment a quote becomes insurance.
• Binder. Temporary written evidence of that coverage, issued before the policy documents exist.
• Effective date and time. When coverage actually starts. A time, not just a day.
• Application. Your signed statement of the facts the price was built on.
• Down payment. The first payment, usually required to bind.

After it issues

• Declarations page. The summary of what you bought — drivers, vehicles, limits, deductibles, premium. The most useful page you own.
• Endorsement. A change made to a policy mid-term. Adding a car, removing a driver, changing a deductible.
• Premium. The price of the policy for its term. Not the same as what you pay on day one.
• Unearned premium. The portion covering time that has not happened yet — the part refundable if the policy ends early.
• Pro-rata. A refund calculated strictly in proportion to time remaining.
• Short-rate. The same, minus a cancellation penalty. Whether either applies to you is a policy and carrier question.

Other parties

• Lienholder. A lender with a financial interest in the vehicle.
• Loss payee. A party entitled to be paid, or paid jointly, on a physical damage claim.
• Excluded driver. Someone named on the policy as not covered while driving. A serious signature.
• Named insured. The person the policy belongs to, as distinct from a listed driver.

If a word on your paperwork isn't here, ask us — nobody should be signing something they are guessing at.