Don’t be left confused by complicated terminology – read our car insurance jargon buster
If you have ever done a car insurance comparison or attempted to get a car insurance quote, it’s likely you’ll have been confused by a few of the terms.
The car insurance industry has several specific terms, which out of context, would fail to register as intelligibly or coherently as the car insurance providers would like them to.
Read our A to Z glossary of car insurance terms, so that when it’s time to compare car insurance, you have a better idea of what you’re getting and what you need for you and your car.
What is black box insurance?
This entails having a small device fitted to your car to allow insurers to factor in your acceleration, mileage and other areas of your driving into the cost of your premiums. This type of insurance is often popular among young drivers as it’s a relatively simpler way of getting cheaper car insurance.
As many aspects of your driving are monitored it means the insurer can also offer you a cheaper package if you agree to, say, drive fewer miles per month. See also: telematics insurance and pay as you go car insurance.
For more information head over to our guide on black box insurance.
What is a certificate of insurance?
The certificate of insurance is a document issued by your insurer that proves you have valid car insurance. It also includes information such as who can drive the car and under what circumstances it can be used for.
You’ll need to have this available should you be involved in an accident, or should the police ask to see it, or for when the vehicle needs to be taxed.
The certificate of motor insurance is one of the first documents you’ll receive when you buy car insurance, so make sure that the facts are all correct so you can amend any inaccuracies as soon as possible.
What is comprehensive car insurance?
Comprehensive car insurance, or ‘fully-comprehensive’ insurance, is the highest level of cover available and insures you against the cost of repairing or replacing your car if it’s involved in an accident, regardless of blame.
Essentially, even if the car accident was your fault, you’ll still be covered under a comprehensive car insurance policy, but this could increase the cost of your premiums, so drive carefully. If you’d like to learn more about comprehensive insurance policies then head over to our guide on the different types of car insurance.
What is a car insurance claim?
A car insurance claim is the formal application you make to your insurer for payment for a loss that’s covered by your policy, for example if you’re involved in an accident.
What is insurance cover?
Another term for insurance, e.g. “Your cover will start on 21 March”.
What is a cover note?
When you take out car insurance your insurer will issue a cover note as temporary evidence that your car is covered by the insurance policy.
What is car insurance excess?
The excess is the amount you’ll have to pay towards the cost of any insurance claim. There are two types of excess – voluntary, which means you can decide whether to include one and its amount, and compulsory, which is set by the insurer. Increasing your voluntary excess is likely to decrease the cost of your annual or monthly insurance premiums.
What is an exclusion?
An event or circumstance in which the insurance company does not have to pay out, e.g. “This policy does not insure…”
What is an immobiliser?
An electronic anti-theft device that’s activated when the ignition key is removed.
What is an insurance schedule?
The document that describes the details of the cover your insurer provides, as well as the information that you’ve given to your insurer.
What does the term ‘insured’ mean?
The person who is insured, or whose car is insured – they are often referred to as the policyholder or proposer.
What does the term ‘insurer’ mean?
The company that issues the insurance policy and pays out for any claims.
What does market value mean?
This relates to the cost of replacing your car with another of the same make and model and of a similar age and condition.
What is a no-claims bonus?
For each year you have car insurance and don’t make a claim you’ll build up a ‘no-claims bonus’, which can get you a discount on the following year’s premium. Some insurers will protect your no-claims bonus when you need to make a claim for an accident that wasn’t your fault, but generally the no-claims bonus build up requires no claims whatsoever.
What is pay as you go car insurance?
Also known as pas you drive insurance or telematics insurance. See black box insurance.
What is a protected no-claims bonus or no-claims discount?
If you have four or more years no-claims bonus you may be able to pay an extra amount to ‘protect’ it, allowing you to make an insurance claim without it affecting your no-claims bonus.
What is a car insurance policy?
The document setting out the legal rights and obligations of you and your insurer.
Who is the policyholder?
The person that holds the insurance policy.
What is a car insurance premium?
The amount you pay for your insurance – this can be paid monthly or as a full upfront payment.
What is a renewal notice?
When your current insurer lets you know that your cover is coming to an end and invites you to renew your policy.
What does the term ‘sum insured’ mean?
The maximum amount of money your insurer will have to pay out when you make a claim.
What is telematics car insurance?
Also known as pay as you go car insurance or pay as you drive insurance. See black box insurance
What is third party car insurance?
Normally the lowest type of insurance cover required by law. It insures you if you’re involved in an accident and injure someone and also covers the cost of repairing or replacing the other person’s car – it doesn’t cover damage to your own car.
What is third party, fire and theft car insurance?
The same as third party car insurance but provides additional cover if your car is stolen or damaged in a fire.
What does the term ‘underwriter’ mean?
The underwriter works for the insurer and uses data to assess the risk of potential car insurance policyholders. They decide whether or not to accept the potential policyholder’s risk and provide them with insurance cover.
What does voluntary excess mean?