The Words on Your Policy, Your DMV Mail and Your Claim, Explained

On this page:

• Buying a policy
• Inside the policy
• DMV paperwork
• Claims

Insurance language is hard mostly because ordinary words carry special meanings. Each entry below gives the meaning you need in a sentence or two, and points to the law or to a longer guide where one exists.

Buying a policy

• Admitted insurer: a company licensed by the California Department of Insurance to sell a line of insurance here. Our guide to admitted and non-admitted carriers explains why it matters.
• Agent and broker: licensed people who place insurance. A captive agent represents one company; a broker works with several. Anyone selling insurance in California must hold a license from the Insurance Commissioner.
• Adverse underwriting decision: a decline, cancellation or higher price based on information about you. You can ask for the specific reasons in writing (Insurance Code 791.10).
• Binder: temporary evidence of coverage issued before the policy documents. Vehicle Code 16020 accepts it as evidence of insurance.
• Garaging address: where the car is kept overnight; one of the inputs a rating plan may use.
• Good Driver Discount: a legally required discount of at least 20 percent for drivers who meet the criteria in Insurance Code 1861.025.
• Mileage estimate: your estimate of miles for the next 12 months, the second most important rating factor in California.
• Named insured: the person or people named on the declarations page who control the policy.
• Persistency credit: a loyalty credit from your current company or an affiliate; it cannot be based on coverage from an unaffiliated insurer.
• Rating factors: the facts that set your price. Your driving record, annual mileage and years of experience must come first (Insurance Code 1861.02).
• Underwriting: a company's decision about whether to offer you a policy, separate from how it is priced.

Inside the policy

• 30/60/15: California's minimum liability limits: $30,000 per injured person, $60,000 per accident, $15,000 for property damage (Vehicle Code 16430).
• Actual cash value: what your car was worth just before a loss, the usual measure for a total loss.
• Bodily injury and property damage liability: the parts of a policy that pay for harm you cause to other people and their property.
• Collision: pays for damage to your car when it hits, or is hit by, another object or vehicle.
• Comprehensive: pays for most other damage to your car, such as theft, fire, flood, vandalism and falling objects.
• Declarations page: the summary of who and what is covered, the limits, deductibles and premium.
• Deductible: the part of a covered loss you pay before the insurer pays the rest.
• Endorsement: a written change or addition to the policy.
• Excluded driver: a person named in a signed exclusion; they have no coverage under the policy (Insurance Code 11580.1).
• Exclusion: something the policy says it will not cover.
• Medical payments: optional coverage for medical bills of people in your car, regardless of fault, up to a limit.
• Permissive user: someone driving your car with your permission.
• Primary and excess: when two policies apply, the primary pays first and the excess pays after it; Insurance Code 11580.9 sets the order. See whose policy pays first.
• Uninsured and underinsured motorist coverage: pays you when the at-fault driver has no insurance or not enough. It is included unless you reject it in writing (Insurance Code 11580.2).

DMV paperwork

• Financial responsibility: the legal requirement to be able to pay for harm you cause, normally met with an insurance policy; a $75,000 deposit, a $75,000 bond or self-insurance are the alternatives.
• Evidence of financial responsibility: the proof you must carry when you drive, such as an insurance card or binder; a phone display is allowed (Vehicle Code 16028).
• Electronic insurance reporting: how insurers tell the DMV a car is insured; no record means a suspended registration.
• NRL: the Notice of Transfer and Release of Liability, due within 5 calendar days of selling a car.
• Planned non-operation: a DMV status for a car that will stay entirely off public roads for the registration year.
• Principally at fault: an insurer's finding that you were at least 51 percent responsible for an accident causing injury, death or more than $1,000 of property damage (10 CCR 2632.13).
• SR-1: the accident report each driver must file with the DMV within 10 days when anyone is hurt or property damage exceeds $1,000 (Vehicle Code 16000).
• SR-22: a certificate an insurer files with the DMV as proof of insurance after certain suspensions, commonly kept for three years.

Claims

• Adjuster: the person who investigates and values a claim for the insurer.
• Claimant: anyone making a claim, whether on their own policy or someone else's.
• First-party and third-party claims: a claim on your own policy, versus a claim against someone else's.
• Proof of claim: the documents that support a claim; the insurer must accept or deny within 40 calendar days of receiving it, with exceptions (10 CCR 2695.7).
• Release: a document you sign that ends your claim in exchange for payment. Read it before signing.
• Reservation of rights: a letter saying the insurer is handling a claim while reserving the right to deny coverage later.
• Subrogation: your insurer recovering what it paid you from the party at fault, which can return your deductible.
• Total loss: when repairing the car would cost more than it makes sense to pay, so the insurer pays its value instead.

If you meet a term on your own paperwork that is not here, ask. A licensed broker can explain it in the context of your policy, and you can start that conversation here.