The Car Insurance Jargon Buster

When you set out to buy car insurance, you will realize that’s it’s not as easy as it’s made out to be especially considering the ton of jargon or technical terms used. It’s extremely easy to confuse FCA with the ABI and IPT with TPFT so to help you make sense of it all, here at The Insurance Factory we have come up with the following that lists 20 of the most common insurance jargons that you’re bound to find in insurance documents.

1. Annual Mileage and Annual Business Mileage –If you use your car for work or business purposes, most insurers in the UK will be eager to know the number of miles you drive in a year. The more miles you drive, the riskier you are considered to be hence higher insurance premiums. If you don’t use your vehicle for business or work purposes, your annual business mileage will be zero.
2. Broker – Many insurance syndicates and companies sell their services through intermediaries or insurance brokers. Insurance brokers solicit, sell and negotiate insurance cover on behalf of a handful of larger companies hence are able to get you the best deal.
3. Certificate of Insurance – After you choose the right car insurance policy online and successfully pay for it, the insured will issue you proof of coverage and validity of the policy also known as certificate of insurance.
4. Cover Note – Contrary to a certificate of insurance, if you have promised to pay, not yet paid or granted a temporary extension of insurance coverage, the insurer will provide you with a temporary certificate and some may also allow you to print a cover note if you’re buying a car online.
5. Cover Types – There are several different types of vehicle insurance cover that offer specific levels of coverage so it is important to buy the right one. The three most common types are TPO (Third Party Cover), THFT (Third Party Fire and Theft) and COMP (Comprehensive Cover).
6. Driving Other Car (DOC) – DOC is designed for emergency use only and permits policy holders to drive cars that they do not own. It is best to check your certificate of insurance to see if you are eligible for this level of cover.
7. DLVA Code – These conviction codes are usually highlighted on your driver’s license and generally remain there between 4 and 11 years depending on the offence. For example, code AC30 is for undefined driving offenses and code CD10 is for driving without due care and attention.
8. Excess – When you make a claim, you generally have to pay a specified upfront amount also known as excess. While the amount of excess varies across insurers, it is a good idea to opt to pay a higher excess when completing a car insurance quote in order to lower your insurance premiums.
9. Fault/Non-Fault Claim – Simply put, if your insurer recovers all their costs from a third party, it is regarded as a non-fault claim. Contrariwise, if they partially recover or do not recover any amount from the third party at all, it is considered as a fault claim, even if the claim wasn’t cause by the insured party. Theft is the best example of a fault claim because even though it’s not your fault there is no other party to pay the costs.
10. Green Card – Although a Green Card is not required when you drive in EU countries because each country in the European Union complies with the First Directive on Motor Insurance. This law states that all insurance policies issued in the UK and other EU countries must provide the bare minimum insurance cover required by law to drive in all countries of the European Union.

However, this cover does not extend to insured UK drivers driving in countries outside of the EU hence they would need to be in possession of a Green Card to prove that they are covered for the bare minimum. If you travel and drive in foreign countries, it is important to check with your insurer on if they offer a Green Card and the process and additional costs if any of getting one.

1. Hazard – With regards to UK insurance terminology, Hazards are the aspects that are likely to affect any injury, loss or damage. For example, a high performance sports car is a greater hazard than a four door family sedan, and a provisional driver is a greater hazard than an experienced one. The greater the hazard, the higher your car insurance premiums.
2. Import – Finding insurance for grey import vehicles may be challenging, where some companies may impose a surcharge or won’t provide insurance cover at all.
3. Immobilizer – Fitting an immobilizer in your vehicle is a great way to reduce your insurance premiums. This electronic device prevents your vehicle from being started until it is deactivated. However, an immobilizer will not prevent your vehicle from being broken into, but will from being driven away, which is why it is important to avoid keeping valuables in your vehicle.
4. Indemnity – The sole purpose of insurance cover is to replace things that have been lost or damaged. An indemnity does just that and helps the insured party recover after a loss to as they were before the incident.
5. Insurable Interest – This applies to ownership of the insured property For example, you may still have a lien from a finance company if they’ve party or fully paid for your vehicle.
6. Institute of Advanced Motoring (IAM) – This institute offers advanced courses and respective exams for drivers, and passing them may entitle you to discounted car insurance premiums.
7. Main Driver – A Main Driver is classified as one that primarily drives the vehicle. Although the definition is straightforward, there are several individuals who in an effort to get low insurance premiums claim to be the main drive, when the person using the car permanently is a provisional driver, son or daughter. It is important that you refrain from such dodgy practices as it may result in invalidation of your claim.
8. No-Claims Bonus – This bonus is awarded drivers that have maintained a great driving record with their previous insurer. This accumulated bonus can be used to receive discounts on new car insurance policies.
9. Protected No-Claims Bonus – Some insurers will allow you make a certain number of claims over a specified period of time without affecting your no-claims bonus. This additional layer of caution is known as protected no-claims bonus.
10. Voluntary Excess - This is the amount to choose to pay over and above your agreed excess amount. Going this route may greatly reduce your insurance premiums or sometimes may even safeguard your no-claims bonus.