In insurance, rebating is any form of discount or incentive offered to policyholders in order to encourage them to purchase a policy or renew their coverage. Rebates can take the form of cash back, premium discounts, freebies, or other perks. While rebating is technically legal in most states, it is generally frowned upon by insurers and regulators because it can create an unlevel playing field among companies and lead to policyholders being overcharged.