Car insurance jargon buster

The world of car insurance can be a confusing one, full of terms and abbreviations that can be difficult to understand. Luckily, we have put together a car insurance jargon buster to help you, so whether you are selling a car and replacing it with a new model, or simply renewing your policy, we have outlined the terms and what they mean to your policy!

Follow our car insurance jargon buster to help avoid confusion

Association of British Insurers (ABI)

Many insurance companies are members of the ABI, although this membership is not compulsory and the ABI are not a regulatory body. Members sit on a Group Rating Panel which recommends the car insurance group rating for each new model built to a UK specification.

Comprehensive cover

This is the highest level of car insurance cover you can get, which usually covers you for:

  • Accidents caused by your passengers or a named driver on your insurance policy

  • Accidental damage to your own car

  • Damage to other people’s property

  • Fire damage

  • Injuries to other people

  • Loss or damage to personal belongings in the car, up to a certain limit

  • Medical expenses up to a certain limit

  • Theft of the vehicle

  • The use of a trailer whilst attached to your car


These policy features will vary between insurers, so make sure you check them thoroughly before you buy.

Driving other cars (DOC)

Many people believe that having comprehensive cover means you can drive another car, which isn’t the case. Driving other cars isn’t a standard policy feature for many insurers, so make sure you are covered before getting behind the wheel of another car.

It is also worth remembering that when DOC is included in your policy, you usually only get third party cover.

Fault claim

This is an accident or loss where you are considered to be the party to blame, or where you or your insurance company cannot recuperate the costs from someone else. It is worth noting that if your car is hit whilst parked and the person who hits the car cannot be traced, it is counted as a fault claim.

The opposite of this is a non-fault claim, which is where your insurer can recuperate the cost of the claim from someone else.

Indemnity

As the policy holder, you will find yourself in the same financial position following a loss as you were before it. This means if your insurance company pays the repair bill of your car following an accident, you will be in the same position financially as you were before the car was damaged.

Insured value

If your car is damaged beyond repair, the insured value is the amount the insurance company will pay out for your car. This will either be the amount you stated your vehicle was worth when applying for the policy, or the market value of the car at the time of the claim, whichever figure is lower.

Material fact

This is any information that may impact an insurer’s decision to offer you cover or the premium they will charge for it. If you leave out such information that could impact a decision to offer cover, your policy could become invalid.

No claims bonus (NCB)

For every year you drive without claiming on your insurance, you get a year’s no claims bonus, up to a maximum which can vary depending on insurers. This bonus will usually lower the cost of your car insurance for the following year.

Third party only (TPO)

Third party cover is the minimum level of insurance required by law, and does not contain any cover for damage to your vehicle. It usually covers legal liability for:

  • Accidents caused by your passengers or a named driver on your policy

  • Damage to other people’s property

  • Injuries to other people


Third party, fire and theft (TPFT)

This includes the same level of cover as third party, but also protects you from damage to your vehicle from fire, or if your vehicle has been stolen. This is only as long as you are not at fault for the incident.

Uninsured losses

These are any losses that are not covered by your policy, such as the policy excess, any out of pocket expenses following an accident (such as loss of earnings) or compensation for an injury sustained in an accident.

Uninsured loss recovery (ULR cover)

This is help to recover your uninsured losses discussed above from a third party, where the accident was the third party’s fault.

Underwriter

This is who decides whether to accept you as an insurance risk, and will then work out the cost of your car insurance premium.

 

 

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