The Words That Come Up When You Ask Why

Asking why a price is what it is only works if you can follow the answer. These are the terms that come up most in a California rating conversation, defined the way we would explain them across a desk.

The California-specific ones

Proposition 103. The 1988 ballot measure that put personal auto rates under state approval and ordered the rating factors. Nearly everything distinctive about California pricing traces here.

For the rules across California, see the Auto World Insurance Services page on the auto insurance glossary.

Mandatory factors. The three that Insurance Code section 1861.02 requires be weighed first: driving safety record, annual miles driven, years of driving experience.

Optional factors. Additional permitted factors that must weigh less than the mandatory three. Location, vehicle and coverage choices sit here.

Good driver policy. A statutory entitlement, defined by section 1861.025, priced at least 20 percent below the rate you would otherwise be charged.

Prior approval. The requirement that the Department of Insurance approve a rate before it is used.

The mechanics

Class plan. The rules dividing a company's overall rate among individual drivers — the bands, tiers and territories.

Territory. The geographic unit used for rating, based on where the vehicle is garaged.

Band. A range treated as one unit — most visibly in mileage, which is why price moves in steps.

Tier. A placement within a company or group that carries its own rate level. Placement is a decision in itself.

Symbol or series. The vehicle's rating classification, derived from its build rather than its model name.

Events and their effects

Surcharge. A factor added because of a specific event, for a defined period.

Look-back or experience period. How far back a company's plan looks for those events. Set by the company, not the DMV.

Principally at fault. The fault standard the good driver criteria use — and worth insisting on precisely.

Loss history report. The record of claims connected to you and your vehicles, separate from the DMV record.

Policy structure

Named insured. The person the policy is issued to. Not the same as a listed driver.

Rated driver. A person whose characteristics are used in the rating.

Excluded driver. A person named out of the policy entirely, with no coverage under it.

Declarations page. The summary of who and what is covered, at what limits, for what premium.

Underwriting. The decision about whether to insure you at all — separate from rating.

Use these words on us and we will answer in the same vocabulary.