Car Insurance Jargon Buster
Purchasing insurance can be stressful; it’s sometimes hard to know what cover you need and what the majority of it even means.
We’ve put together a handy car insurance jargon buster to help you get to grips with everything from a no-claims bonus to an uninsured loss.
Association of British Insurers (ABI)
The main trade association for British insurers, the ABI includes most leading providers. However, there is no obligation for insurers to be members and the ABI performs no regulatory function.
Insurers may recommend a certain garage for repairs. This is known as an approved repairer.
Premiums paid annually or monthly to an insurer. In return, the company will pay most or all of the costs or losses resulting from events such as collisions, fire, vandalism and theft.
Sometimes called “fully comp “, comprehensive cover means that the insured party is covered both for third-party claims and for damage to their own vehicle. Despite offering the best coverage, comprehensive cover can actually be cheaper than third-party only. Comprehensive cover policies differ between providers.
The insurance excess is the contribution that a policyholder with comprehensive cover is required to make towards the cost of an insurance claim. The amount can vary between insurers and even on different policies, depending on the risk, but is set out at the start of the policy term.
For example, if the total cost of repairing the insured’s vehicle after an accident is £1,000, and the excess is £150, the insurance company pays £850 and the car owner pays £150.
It’s sometimes possible to reduce an insurance quote by volunteering to pay a higher amount than the compulsory excess stipulated by the insurance company.
A claim where the individual making the claim is to blame for the event that led to the claim. It may also cover the situation where the insurer cannot recover the costs from anyone else.
Financial Conduct Authority
The regulatory body for financial services firms, including motor insurers.
The sum that a vehicle is deemed to be worth if it is written off. This will be the lower of the amount the insured party stated it was worth when the policy was taken out and its market value at the time of the claim.
A fact that may affect an insurer’s decision to provide cover. There is an obligation to declare material facts. Failure to do so may lead to cover being withdrawn or a policy invalidated.
Also referred to as a no-claims discount, it accumulates for each year a person drives without making a claim on their policy. It reduces the total premium cost for the following year. It is often possible to pay to protect a no-claims bonus, which allows the insured person to claim for a maximum number of fault claims without affecting their no-claims bonus. Different providers calculate no-claims bonuses in different ways.
A claim where the individual making the claim is not to blame for the event that led to the claim. This means that the provider can recover the cost of the claim from another party.
The minimum legal level of cover for a car. It usually covers damage to other vehicles or property, injuries to other people and accidents caused by anyone named on the policy or a passenger.
Third-Party Fire and Theft Cover
This provides the same cover as a third-party policy, with the addition of protection against damage caused by fire, or the theft of the car, provided that the policyholder (or anyone named on the policy) is not to blame for the fire or theft.
Losses excluded by the policy. This includes any stipulated excess and compensation for injury resulting from an accident.
An insurer may write off a car if the cost of repairing it outweighs its value, or it has been so damaged that it cannot be made roadworthy. A written-off car will not be repaired. Instead, the policyholder will receive a cash sum.
For more information and help on insurance and motors, check out our blog.