We realise words like ‘due diligence’ don’t crop up every day. So here we’ve translated all the jargon into good, plain English to make sure you understand the details of the insurance you're interested in.

Please Select : A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z  

A

Association of British Insurers Group (ABI)

The ABI represents the combined interests of the UK’s insurance operations, and promotes high standards of customer service in the insurance industry. One of the ABI’s roles is to rank cars into groups, depending on how much risk insurers will have to face when providing car insurance. Usually faster and more powerful cars will be more risky for the provider to insure.

Act of God

The clause ‘Act of God’ includes events like lightning strikes or earthquakes, which are out of human control and can’t be predicted. These events can sometimes be excluded from your insurance policy, meaning you can’t claim from insurance when you are affected by one.

Annual mileage and annual business mileage

Annual Mileage for your vehicle is the distance in miles you will travel in the car over a year. Most car insurance providers will also need to know whether you use your car for work, and how many miles you clock up when using it for work purposes, as a sales or delivery person might. This figure is known as the annual business mileage, and is included in your annual mileage. Commuting to and from work is not considered business mileage. Generally the higher your annual mileage, the greater the risk of a claim and the more expensive your policy will be.

Approved Repairer

This is the vehicle repairer or mechanic that car insurance providers trust to provide good service and parts for your car after an accident or break down. Some providers will only pay for repairs made by an approved repairer.

B

Bonus (also 'no claims discount')

A bonus or no claims bonus comes as a discount on your car insurance premium. The discount gets bigger every year you don't claim on your policy, so the less you claim the more you save. Once you reach a certain number of years without claiming the bonus no longer increases - this number is dependent on the individual providers’ policy. If you claim after building up several years of no claims discount your accumulated years of claiming will often be reduced. For details on protecting your no claims discount please see ‘Protected No claims Bonus’ further down.

Breakdown cover

This policy offers you recovery and repair services if you have car problems at home or while out travelling. Check your policy to see if your provider offers services like mechanics and tow trucks, as different policies will offer various levels of cover.

C

Certificate of Insurance

After you have bought your car insurance, the company you get it from will send you a Certificate of Insurance. It’s the law in the UK that you have this certificate to prove you are insured.

Claim

This is when you are involved in an accident or event and you ask the insurer to pay out for something that has happened to the motor cars or people involved. If the accident or event is your fault, it should be covered by your policy to claim, and you will usually have to fill out the insurers standard claim form so that they have all the information they need. If the accident is not your fault the claim might be made against the other party's insurer.

Comprehensive Insurance

This is usually the widest cover available to you, and includes theft or damage to the car. No matter what the level of any damage caused to a third party (e.g. to someone else’s vehicle or property) will generally be covered.

Compulsory excess (see also ‘voluntary excess’)

An excess is the amount of money you will need to pay when making a claim on your insurance policy. The same excess is not necessarily needed by the different insurers you can choose from, but most insurers will require that you have a minimum excess on your policy. The amount may depend on the make and model of the car, the type of claim that is made, the age of the driver, the area in which he or she lives and possibly several other individual factors. Excesses will only apply to own damage claims, and not to any claim that is made by a third party.

Compulsory Insurance

The law says that you have to insure some types of risk – third party only is an example of compulsory insurance for motorists.

Conditions

These are the rules written into your insurance policy that both you and your insurer must follow.

Conviction Codes (DVLA Codes)

You can look for these codes on a driving licence, which will also list the other details of the convictions including the date, length of ban (if any), amount of fine and penalty points. The code is normally about four figures long, and made up of letters and numbers. Some examples of conviction codes are:

• IN10 - the code for using a vehicle uninsured against third party risks.
• MS50 - for motor racing on the highway.
• SP30 - exceeding statutory speed limit on a public road
• SP50 – exceeding speed limit on a motorway

Cover

This part of your car insurance contract carefully describes what events you are insuring your car against, and explains when your cover should pay out when you claim.

Cover note

This is a temporary version of the certificate of insurance for when you have been given an extension of your cover. If you buy your car insurance online, some car insurers will allow you to print off a copy of a cover note to use until you get your certificate of insurance.

Cover types

There are quite a few different types of cover offered by insurers. The three most common types of cover in the UK are Third Party Only (TPO), Third Party Fire and Theft (TPFT) and Comprehensive (Comp).

D

Driving Other Cars (DOC)

This kind of car insurance cover will insure you when you need to drive a car which you don’t actually own, but have the permission of the owner to use it. Don’t forget that this cover is usually Third Party Only in the UK, can't be used overseas and doesn’t cover vans, lorries, rentals, leases or cars owned by you. This kind of car insurance is meant to cover emergency use of other cars, and not all policies include it. You can check your certificate of insurance to see if it's been included for you.

Due Diligence

This is the care that a reasonable person takes to avoid harming themselves, other people and their property. This means that you need to take care to try to prevent any harm from coming to you and the things you own. An example of lack of due diligence is if you had left your keys in the car while it was unattended, and the vehicle was stolen. You also need to try not to cause harm to other people and their possessions. If it appears that you have not tried to avoid this kind of damage, you may not receive full payment for your insurance claim.

Duty to Minimise Loss

If something happens to your motor vehicle and you want to claim on your insurance, you need to make sure that you do everything you can to stop the car from being damaged any further.

E

Excess

An excess is the amount of money you will need to pay when making a claim on your insurance policy, and is made of a voluntary excess which you choose, and possibly a compulsory excess which you have to take. The same excess is not necessarily needed by the different insurers you can choose from, and the amount may depend on the make and model of the car, the type of claim, the age of the driver and the area in which the he or she lives.

Exclusions

An exclusion is something which is not covered by your car insurance policy. So if you were running a taxi service with your car and had an accident, you probably wouldn't receive payment when you claimed, as taxi services are often excluded from policies.

F

Fault and non-fault claims

Even though it sounds like it, deciding whether a claim is fault or non-fault does not always depend on who is to blame. If your insurer can get back all their costs from someone else, it is called a non fault claim. If they cannot get these costs back, it is a fault claim, even if you were not the cause for the claim. So if a driver dents your car and your insurers recover all the cost from that driver and his insurers, it is a non fault claim. But if a thief were to steal your car it would be a fault claim, not because you are to blame but because your insurer can't get the costs back from the thief.

Foreign extension

See Green Card

Fronting (see also ‘Main Driver’)

If someone claims they are the main driver to get a lower priced policy when in fact another person drives the vehicle most of the time it’s known as ‘Fronting’. This often occurs when a policyholder is trying to save money by insuring a vehicle for a young driver who is really the main driver. Insurers could judge a claim where ‘Fronting’ has taken place Null and Void or redirect the claim to policyholder.

Fully Comprehensive

This is a commonly used name which is actually incorrect, but is generally taken to have the same meaning as Comprehensive cover, described further up the page.

G

Green Card

A green card is a document you would use when driving overseas as proof that you have at least the minimum level of insurance cover for your car. You won’t need a green card in most European countries, because the minimum level of cover is already part of your U.K. car insurance policy. It is best to contact your insurer before going abroad, and see what options they offer for extending your cover.

H

Hazard (see also ‘Risk’)

When talking insurance a risk refers to something that may have an effect on how serious the damage, injury or loss you are claiming for is. This helps insurers decide on the amount your car insurance premium should be set at. This means a teenage driver of a sports car would usually be judged a greater hazard than an older driver in a low powered hatchback.

High-Risk Occupation

This is a job that insurers judge will make someone more likely to make a claim. If your job means you spend more time out on the road driving, it’s likely you will have a higher car insurance premium.

I

Immobiliser

An immobiliser is an electronic device which won’t let your car be started unless the correct key or code is used. Most cars built after 1997 come with an alarm and immobiliser fitted, and if your car did not come with an immobiliser one may have been added later on. Insurers put all models of immobilisers into categories, and you may save money on your motor insurance premium depending on which type of system is fitted. The documentation that came with your car or with the immobiliser when you bought it will tell you which model is fitted in your car.

Import

Imported cars are those that have been brought into the U.K. from another country. It can sometimes be more difficult finding car insurance for imported vehicles because some insurers won’t cover them or charge more if they do. There are two kinds of imported cars when it comes to car insurance: U.K. specification cars are those vehicles brought into the country that match normal U.K. motor specifications. As you might guess, non U.K. specification cars from abroad don't match these U.K. specifications and will be more difficult and expensive to insure because of the lack of local parts.

Insurable Interest

You need to have insurable interest in something before taking out insurance for it. This means you have to own or have a stake in the car that you are insuring.

Insurance Premium Tax (IPT)

This is a tax taken by the government, and comes as a percentage of the insurance premium. It’s good to remember that the amount of Insurance Premium Tax charged is shown as a separate item on any insurance paper work. IPT does not apply to policyholders who live on the Isle of Man or the Channel Islands.

Insurer

This is the insurance company who offers you your car insurance cover.

L

Licence Types

Even if you only hold a provisional licence you can still buy car insurance. Once you do pass and obtain your full licence make sure you contact your insurer so that your policy stays valid and up to date, as your premiums will typically be reduced.

Loss

A loss is the event which causes you to seek payment from your insurance company by claiming. Examples could be a car accident or vehicle theft.

Loss Adjuster

This is an insurance specialist who works for insurance companies. Loss adjusters investigate claims to make sure they are valid and that the person claiming is telling the truth. Loss adjusters also work out how much you’ll get paid out in the event of a claim.

M

Main Driver

The main driver is the person who uses the car most of the time. If someone claims they are the main driver to get a lower priced policy when in fact another person drives the vehicle most of the time it's known as ‘Fronting’. This often occurs when a policyholder is trying to save money by insuring a vehicle for a young driver who is really the main driver. Insurers could judge a claim where ‘Fronting’ has taken place Null and Void or redirect the claim to policyholder.

Material Fact

This is a piece of information that would change the way an insurance company judged your request for a policy. Some material facts would cause a company to refuse you insurance or charge a higher premium. If someone were to mislead their insurer and not give them the full facts, their insurer could refuse to pay out on some or the entire claim. Some examples of material facts would be previous driving convictions or refusal by other companies to insure you.

Modifications

Modifications are features added to your car after it was built, even if the manufacturer has made the changes for you. These can include spoilers, air scoops, alloy wheels and others. It's worth knowing that modifications will most likely increase your insurance premium.

N

No Claims Discount (See also ‘Bonus’)

A discount or no claims discount comes as a discount on your car insurance premium. The discount gets bigger every year you don’t claim on your policy, so the less you claim the more you save. Once you reach a certain number of years without claiming the bonus no longer increases – this number is dependent on the individual providers’ policy.

O

Owner and Registered keeper

The owner and the registered keeper of a vehicle are not always the same person. If a parent buys a car in their own name so that their teenager can drive it, the parent would be the owner and the teenager the registered keeper. The registered keeper is responsible for licensing the vehicle and declaring it off the road; and any enquiries from the police and other enforcement agencies regarding motoring and parking offences will be directed to them. Some companies might not be willing to provide car insurance for a vehicle whose owner is not the registered keeper.

Obligation to Notify

You have to give the insurer all the information they require to work out the risk of insuring you. If it turns out you didn’t give them all the information truthfully you may not receive payment on your claim.

P

Peril

A peril is something you would insure your car against, like theft.

Points

If you are convicted of breaking the rules of the road you will have points added to your licence, with the number of points added depending on the severity of the law broken. The more points you have on your licence the harder it is to get car insurance, and you can be banned from driving if the total exceeds twelve. Points are only removed from your licence three to five years after they are added.

Policy

This is a document which gives all the details of the car insurance cover that the insurer is contracted to provide you with.

Policyholder

This is the person who takes out a car insurance policy with an insurer.

Premium

This is the amount you will have to pay insurers, either every month or every year for your car insurance.

Protected No Claims Discount

Some companies will allow protection of your No Claims Discount. This means you can make a number of claims over a specific period of time without your discount being reduced.
If you protect your no claims discount, this does not prevent your premium from rising if you make a claim. When giving car insurance quotes, most companies rate on claim history as a separate factor.
Protecting the bonus only protects your bonus discount. If there has been a claim, the protected discount is applied but against a higher premium, and it's possible that your excess could increase.
Some insurers offer a ‘Guaranteed No Claims Discount’ which means the policyholder’s no claims discount is guaranteed for the life of the policy.

R

Rating Factors

Factors are details about you and your car that insurers use to decide how much your car insurance premiums will be.

Registered keeper

The owner and the registered keeper of a vehicle are not always the same person. If a parent buys a car in their own name so that their teenager can drive it, the parent would be the owner and the teenager the registered keeper. The registered keeper is responsible for licensing the vehicle and declaring it off the road; and any enquiries from the police and other enforcement agencies regarding motoring and parking offences will be directed to them. Some companies might not be willing to provide car insurance for a vehicle whose owner is not the registered keeper – please see ‘Fronting’ above.

Risk (see also ‘Hazard’)

When talking insurance a risk refers to something that may have an effect on how serious the damage, injury or loss you are claiming for is. This helps insurers decide on the amount your car insurance premium should be set at. This means a teenage driver of a sports car would usually be judged a greater risk than an older driver in a low powered hatchback.

T

Third Party Fire & Theft (TPFT)

This is almost the same level of cover as TPO car insurance, but with added cover in case your car is stolen or damaged by fire.

Third Party Only (TPO)

This is a very basic level of insurance which covers damage to other people's cars and property but not to your own.

Tracking Device

A tracking device is an electronic system that uses GPS (Global Positioning Systems) and satellites to pinpoint the location of your car if it is stolen. This increases the chances of your car being recovered and may lower your car insurance premiums. Tracking systems do not normally come fitted when you buy the car, and need to be added later

U

Underwriter

Underwriters work for insurance companies. Their job is to work out whether to insure someone or not, and calculate how much their premium should be, based on how high the chances of the person claiming are.

Uninsured Loss Recovery (ULR)

Also known as Legal Expenses Cover this part of your insurance policy covers you for the recovery of legal costs when the other person involved in a claim is at fault.

Use types

It is important that when you compare car insurance policies you tell the insurer what you use your car for from day to day.

There are four types of use that insurers use to decide on how much of a risk insuring your car is:

The first is Social, Domestic and Pleasure. This is casual use of the car to get around, like driving to a movie or fetching the kids from school. This covers drivers for normal day-to-day driving, such as driving to visit family and friends or shopping.

Commuting is when you use your car to get to and from work. If you drive your car partway to work and then take another route, in a lift club or by train or bike you will still need commuting cover.

Business use is driving to different locations or offices where you work, like a doctor doing house calls or an architect visiting building sites.

Commercial insurance would cover travelling salespeople, or cars used to deliver packages and mail.

V

Voluntary excess (see also ‘compulsory excess’)

You can choose the amount of voluntary excess that you pay on top of your usual excess when making a claim. If you choose a higher voluntary excess while searching for insurance you may find you are offered lower car insurance premiums to pay. Excesses will only apply to own damage claims, and not to any claim that is made by a third party.

W

Warranty Insurance

Warranty is a car insurance policy or option that covers some of the faults which may affect the car after you buy it.

Write Off

A car is usually judged to be a write off when it is so badly damaged that it either can’t be repaired, or would cost 50% or more of its pre-damage market value to repair.