Car insurance glossary of terms

ABI Association of British Insurers – is a trade association made up of UK insurance companies.
Act of god An event which is not the fault of any person, such as lightning strike. These may or may not be insurable, depending on your policy.
Amendment A change to your original policy.
Annual business mileage Annual business mileage is the total number of miles you do in a year in connection with your business or employment.
Annual mileage Annual mileage is the total number of miles the vehicle will do in a year.
Annual premium The amount paid on an annual basis to cover the cost of the insurance policy.
Breakdown cover Breakdown cover offers vehicle assistance in event of a vehicle failure that leaves the driver stranded.
Broker An independent intermediary that arranges and sells insurance on behalf of different insurance companies.
Cancellation Ending your insurance policy. You might be charged if you cancel before your policy is due to end. Your policy documentation will have details of these charges.
Certificate of Motor Insurance An important document which provides legal evidence of your insurance and the period it is in force.
Claim Any report of an incident or losses incurred in which the policy holder requests a pay-out or indemnity from the insurer under the conditions of the policy.
Comprehensive cover Covers accidental damage to the driver’s vehicle in addition to third party fire and theft cover.
Consumer Intelligence A specialist market research agency that focuses on the insurance and banking sectors. Every year Consumer Intelligence survey tens of thousands of consumers about their existing motor and home insurance providers, asking them to mark them out of 10. An unbiased score is then calculated for each company and an award given to the top 10 highest scoring companies in each category.
Conviction code When someone commits a motoring offence and receives a motoring conviction, a four-digit conviction code, such as SP30, is put on their licence by the DVLA. In Northern Ireland, codes may be longer than four digits.
Cover note Temporary proof of cover for your car while the policy and certificate are being prepared by the insurer.
Cover type The type of cover taken out on the vehicle such as: Third Party Only, Third Party Fire and Theft, Comprehensive/Fully Comprehensive.
Defaqto Defaqto is an independent researcher of financial products, focused on providing intelligence to support better financial decision making for consumers. Their star ratings process helps consumers identify where a product or proposition sits in the market place in terms of features, quality and comprehensiveness.
Driving licence A permit to drive a motor vehicle gained after passing your driving test. Different licences are issued dependent on where you live and the vehicle you drive.
Duty of disclosure If you make any changes which affect your insurance policy, then you need to let your insurer know straight away. This can include changing address or name, changing your vehicle etc.
DVLA The Driver and Vehicle Licensing Agency is responsible for maintaining a database of drivers in Great Britain and a database of vehicles for the entire United Kingdom. The agency issues driving licences, organises collection of vehicle excise duty (also known as road tax and road fund licence) and sells private number plates.
Endorsement A change made to an existing insurance policy during the term of cover that adds to or restricts the original coverage terms e.g. change of vehicle.
Excess(es) The excess is the amount you must pay towards any claim, this can include both compulsory and voluntary excesses in which case the insurer will add them together.
Exclusions Insurance companies won't pay out for certain risks or types of loss or damage. These exclusions will be clearly set out in your policy terms and conditions.
Fault claim A fault claim is any claim for which an insurer is unable to recover their cost against a third party, irrespective of who caused the incident.
Financial Conduct Authority The UK's financial watchdog. The FCA regulates financial services companies, including insurance companies.
Green card A green card is required for driving in some countries outside the EU. It proves that your insurance covers the minimum cover in the country you're driving in. Confirmation of countries where one is required is available on Green cards are provided by your insurer.
Immobiliser An electronic security device to prevent thieves from stealing a car even if they gain entry. The immobiliser forms part of the engine control unit (ECU), and prevents the car from being started unless it recognises signals from a transponder in the key.
Import or imported vehicle Vehicles brought into the UK market which have been made outside of the UK and are not intended for sale in the UK.
Indemnity An indemnity is a sum paid by way of compensation for a particular loss suffered by a third party.  Forms of indemnity include cash payments, repairs, replacement, and reinstatement. 
Insurable interest To insure any vehicle you must have an insurable interest in the property, and as a result, would suffer a loss if it was damaged.
Insurance Premium Tax A government tax which is included in the price of your insurance.
Insured value The amount which a car is insured for. This amount also influences the annual premium paid to insure the vehicle.
Insurer A person or company that insures something or someone against loss or damage.
International Driving Permit You may need to obtain an IDP if you’re going to drive outside the EU. Whether you need one will depend on which country you’re visiting and for how long; you can check this information and find out where to get an IDP on the Government website. You will also need to hold a valid Great Britain or Northern Ireland driving license.
Kit car A car that you buy and assemble yourself from a kit.
Knock-for-knock An agreement between motor insurers to cover the costs of damage to their own policy holders car regardless of which driver is to blame.
Licence type A permit to drive a motor vehicle, gained after passing your driving test. Different licences are issued dependent on where you live and the vehicle you drive.
Main driver The person who drives the vehicle most frequently.
Market value The cost of replacing the car with another of the same make, specification, model, age, mileage and condition as the car immediately before the loss or damage happened.
MID The Motor Insurance Database is an independently operated database of all insured cars in the UK. Insurers are required by law to supply certain data to the MID within 14 days of cover inception.
Modifications Any changes made to your vehicle which are not classed as factory standard including engine modifications, alloys, spoilers etc.
No claims bonus/discount A reward for people who don't make a claim on their policy. The discount is applied to the premium at renewal.
Non-fault claim A non-fault claim is any claim for which the insurer has been able to recover all of their costs against a third party.
Non-UK specification A vehicle imported into the UK which differs from current UK specifications. In general, imports are more expensive and difficult to insure.
Optional Extras Additional policy benefits which can be purchased to run alongside the main policy.
Period of cover The period of time covered by the policy as shown in the policy schedule.
Points Should you be convicted of a motoring offence such as speeding, a number of points will be added to your licence. Your insurer must be made aware of any points on your licence as they usually lead to an increase in premium.
Policyholder The person who takes out the insurance policy.
Premium The amount you pay to insure yourself or your property
Quote The premium and terms offered by a potential insurance company to insure your car for the cover you require.
Q-plate A Q Plate is literally a vehicle registration mark (VRM) which starts with a Q prefix. Use of this plate indicates one of two things: a vehicle which was not originally registered in the UK and for which proof of age was unavailable at registration, or a vehicle which has been built using a large number of used parts.
Rating Insurance premiums are based on a number of factors such as age, postcode, driving history and occupation – this is commonly known as 'rating'.
Registered keeper The registered keeper is the person who is using / keeping the vehicle and this does not need to be the owner (person who paid for it).
Renewal The point at which you are invited to renew your insurance policy for another year.
Risk This is the method by which insurance underwriters decide how likely you are to make a claim and how costly this claim is likely to be. This enables the underwriters to calculate what premium you should pay.
Risk Address The address where the car is kept usually overnight.
Road Traffic Act In 1930 the Road Traffic Act came into force to guarantee that cover would compensate the innocent victims of accidents.
Schedule The document which identifies the policyholder and sets out details of the cover the policy provides.
SORN You are required to complete a Statutory Off Road Notification if you don't use or keep your vehicle on a public road, e.g. you keep it in a garage, on a drive or on private land.
Telematics Telematics use 'black box' technology to remotely monitor how a car is driven and when it’s driven. This information is sometimes used to calculate insurance premiums
Third Party A person involved in a claim who is neither the policyholder nor the insurer.
Third Party, Fire and Theft Covers fire and theft of the vehicle in addition to third party only cover.
Total loss In insurance, a total loss or write-off is when an insurer deems the repair cost of a damaged car exceeds the market value of the vehicle.
Tracker An electronic device installed in a vehicle enabling owners or third parties to track the location and movement of a vehicle.
UK specification A vehicle which has been manufactured for sale in the UK market.
Underwriter The company or person providing the insurance cover under your policy.
Uninsured Drivers Agreement If you are in an accident with an uninsured driver or the offending party refuses to give you their insurance details, and it was their fault, you are required to contact the police and then your insurer, who will try to trace the other driver. In the event that the other driver is not found, you can submit a claim to the Motor Insurers' Bureau to try and reclaim your losses.
Uninsured losses Uninsured losses are those items of expense which are not covered by your own insurance policy.
Untraced Drivers Agreement This is similar to the Uninsured Drivers Agreement but invoked when you are involved in a hit and run accident or when the driver refuses to share his insurance details with you. The Agreement states that:
  • You must report the incident to the police as soon as reasonably practical
  • Attempt to trace the driver yourself - you can do this by contacting the DVLA with as much information as possible
  • Contact your own insurers with as much information as possible
  • You must submit a claim to the MIB within 9 months of the accident date for property damage – a £300 excess applies. Personal injury claims must be made within 3 years of the date of the accident.
Use - Class of Use What you use your vehicle for. If you use your vehicle for social and business purposes you are considered a greater risk due to the extra mileage and goods you may carry.
Voluntary excess You can usually choose to pay more towards the cost of a claim. This generally reduces the price of your premium.
Write off A vehicle damaged beyond repair or so badly damaged that it would cost more to repair than the value of the vehicle.

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