Home : Car Insurance Quotes : Insurance News : Add to Favourites : Contact : About Us : Terms / Disclaimer

Car Insurance Glossary
Need help? For the cheapest quote call 0800 3698592 freephone!

Car Insurance Glossary

• Accident: It refers to unexpected event like injury or fatality.

• ABI: Association of British Insurers. It is a forum that decides on insurance industry standards and code of practice.

• Accidental Damage Cover: It is an insurance that protects against damage to goods not loss or theft but that get damaged due to unforeseeable factors. It usually covers vehicle contents that are stolen or damaged.

• Act of God: It refers to the accident that happens in extraordinary circumstances that could not have been foreseen. For example, damage caused by a storm would fall under the 'Act of God' umbrella. Hence, it is advisable not to drive in rough weather.

• Advance Payment: It refers to up-front payment.

• Agent: A person who acts on behalf of another person. For example insurance salesman is an agent of an insurance company.
  
• Annual Policy: It is an insurance policy that is applied throughout the year round and not limited to any specific period.

• Any Driver: It refers to any driver that drives the given vehicle not necessarily the owner so long as he has permission to use the car.

• Approved Repairer: It refers to a repairer recommended by the insurance company to repair insured car.

• Applicant: A person who applies for a credit or a financial service.

• Actuary: A professional trained in the technical aspects of insurance and use complex computerised mathematical methods to provide analysis of claims, data and other statistics.

• Applied or nominal Interest rate: It is a rate used to calculate interest due.

• Arbitration: It is a term used when two disputing parties come to a consensual conclusion.

• Arrears: It refers to late payment or payment after the event.

• Arrears Fee: It refers to charges for any late payment.

• Bilateral Contract: It is also referred as "reciprocal" contract. Here, the parties involved give mutual promises to each other like abiding by certain sets of terms and conditions.

• Bona Fide: It refers to actions or persons that are honest and in good faith.

• Breach of Contract: It refers to failure to perform provisions of a contract without a legal excuse.

• Breakdown Cover: It refers to a policy that provides recovery and repair services for motorists.

• Beneficiary: A person who is a recipient of a benefit.

• Benefits: It refers to money paid out to a claimant by insurance company.

• Broker: It refers to an agent that brings together two parties for a contract and in turn receives a fee.

• Capacity: It refers to the largest amount of insurance or reinsurance available from a company or that is available in marketplace.

• Cash surrender value: It refers to an amount of money received by a policyholder when he surrenders an insurance policy. For most car insurance policies this is zero, though some insurers refund some of the premium if a policy is cancelled early.

• Cancellation Clause: It refers to a condition of the contract whereby the insurer or the insured can cancel a policy before its expiration date.

• Collision Damage Waiver: It is an extra insurance premium. It removes the liability to pay any insurance excess in the event of a collision or damage to a vehicle such as a hire car.

• Comprehensive Cover: It is a form of car insurance that offers the most comprehensive cover. It covers damage to others' cars and to policyholders car as well as losses incurred by fire and theft.

• Conditional insurance: It is an insurance policy to which mortgage borrowers sign up with the lender in order to take out a specific mortgage.

• Consequential loss: It is also known as indirect loss. It is a financial loss occurring as the result of some other loss.

• Coveats: It refers to conditions of an insurance quote.

• CII: Chartered Insurance Institute. It is a governing body for the Insurance Industry in UK.

• Claim: It is a notification to the insurance company that payment is due.

• Co-insurance: It refers to a group of insurers that cover a risk together.

• Conditional Insurance: It refers to insurance policy based on certain condition.

• Conditions: It refers to the details of rights and duties of insurer and insured.

• Contract: It refers to a legal agreement between two parties.

• Cooling off Period: It refers to that time period in which a personal can cancel the agreement without incurring any penalty.

• Cover: It refers to the risk that the insurance policy protects policyholder against.

• Car Insurance:It refers to a 'legal contract' between the insurer and insured that provides a legal protection to car against loss due to theft or traffic accidents. The 'insurer' is usually an insurance company and the 'insured' is often the owner of the car.

• Declination: It is the rejection of an insurance application by an insurance company.

• Default: It refers to a condition where the insurance premium or a series of premiums are missed by a policyholder.

• Deposit Premium: It refers to the premium deposit paid when an application is made for an insurance policy.

• Disclosure: It refers to the duty of a person applying for an insurance policy to tell the insurer all relevant information affecting the risk, such as prior claims and history.

• Excess: It applies to an insurance claim. Simply put, it is the first part any claim that must be covered by policyholder.

• Exclusions: It refers to Instances and possessions that are not covered by insurance policy.

• Financial adviser: It is a person who advises individuals on their financial situation.

• Grace Period: It refers to the period that commences after last date of premium payment. In this period, the policyholder can make late payment as well as continues to enjoy the protection of the policy.

• Green Card: It is a document issued to those motoring abroad as evidence that they have the legal minimum insurance cover required.

• Gross Premium: It refers to the actual premium paid by the policyholder before any tax relief or discount is taken into account.

• High-Risk Occupation: It refers to those occupations that are high risked and makes a person more likely to have an accident. Car insurance companies exclude people with these jobs or charge higher premiums during insurance.

• Income Protection Insurance: It provides protection to policyholder if he is unable to make payments on an outstanding agreement.

• Insurance Group: It is a method used by insurers to assess the risk of a particular vehicle. This number ranges from 1-20 with the higher risk vehicles such as Ferrari belonging to Group 20.

• Premium: It is a payment that policyholder makes to keep his policy in place.

• Indemnity: It refers to a principle whereby insurance policyholders are put in the same financial position after a loss as they were immediately before it.

• Insurance: It is an agreement under which individuals, businesses, and other organisations, in exchange for payment of a sum of money (a premium), are guaranteed indemnity for losses resulting from certain events or conditions specified in a contract (policy).

• Insured car: A car is insured is specified by its registration mark on the certificate of motor insurance. Some motor insurance policies insure the vehicle, and some insure the driver.

• Insurer: It is a party to the insurance contract that promises to pay losses or benefits. It is usually an insurance company.

• Lapse: It refers to the termination of an insurance policy due to non-payment of the premium.

• Legal Expenses Insurance: It refers to those insurance companies that cover the costs of private legal action of the 'insured'.

• Loading: It is a term applied for denoting the extent to which an individual is charged more than the "standard" or "average" rate for their insurance. This can be due to a bad claims history, age and gender.

• Loss: In insurance industry this term is used for being robbed, burgled, injured or in a car accident. A loss gives rise to a claim.

• Loss Adjuster: It is an independent third party that may be used by an insurance company to assess the value of a claim when there is a disagreement between the insurer and the insured.

• Main Driver: It is the person who drives the vehicle the most.

• Market Value: It refers to a cost of replacing the car with one of a similar make, model, year, mileage and condition, based on market prices at the time of the loss.

• Material Fact: It refers to information that affects an insurance company's willingness to accept a policy and the premium it would charge. Failure to disclose a material fact could invalidate a policy.

• MBI: Mechanical Breakdown Insurance policies are known as extended warranties for cars. This insurance policy provides with compensation if certain faults arise with a car.

• MIB: Motor Insurers' Bureau. It is a body that deals with claims for injury compensation when the driver at fault is not insured, or cannot be traced.

• Motor Schedule: It refers to a document that shows details of insurance policy, excesses, endorsements and premium that is specific to one's insurance and should be read in conjunction with the insurer's policy wording.

• Named driver: It refers to a driver specified on an insurance policy who is not the vehicle's owner.

• NCB: No Claims Bonus. It is a discount that one earns on a previous insurance policy. Insurers give discounts determined by the number of years where insured did not have claims.

• Ordinarily resident: If one is a resident of UK year since many years then he is termed as "ordinarily resident". Most UK insurance policies require 'ordinarily resident' as a criterion for issuing insurance.

• Period of insurance: It refers to the time covered by insurance.

• Policy: It refers to a legal document issued by the insurance company to the policyholder that states the terms and conditions of the insurance. It is also called as policy contract or the contract.

• Policy excess: It refers to a policy where an amount imposed by the insurance company is to be paid by policyholder. The policy excess is frequently increased for younger drivers for accidental damage claims.

• Policy exclusions: It refers to all those events or instances that are not covered by insurance policy.

• Policyholder: It is a person to whom the insurer issues the policy.

• Premium: The single or regular periodic payment made to an insurance company in respect of an insurance policy.

• Quotation: It contains details of the conditions, benefits, caveats and premiums for the policy. Quotations are provided to show the costs of insurance cover and the quotation document forms the basis of a new contract. Borrowers are advised to shop around find the most suitable insurance rate.

• Quote: It refers to amount service provider estimates to be the cost of providing a service based on the available information.

• Rate: It is the pricing factor upon which an insurance premium is based.

• Registered Keeper: A person who looks after a vehicle, not necessarily the owner. For example, you may use a car that is owned by someone else in which case you would be the registered keeper.

• Settlement: It is a term referred to describe a situation when an insurer pays a claim to the insured.

• Third party: It is a form of insurance that covers basic form of motor insurance. It covers damage to others' cars but not to policyholders own car, nor does it provide cover against fire or theft.

• Third party, fire and theft: It is a form of insurance like third party coverage but covers against fire or theft.

• Total loss: A condition where the insurance company decides it is uneconomical to repair policyholder car following an accident, theft, or when the car is stolen and recovered and either it is impossible to repair.

• Tracker: It is an electronic device that is normally fitted as an accessory after purchase of the vehicle. It emits a signal enabling law enforcement agencies to locate the car anywhere in the UK if it has been stolen.

• ULR: Uninsured Loss Recovery. It is additional insurance protection that helps policyholder to recover the uninsured losses including repair costs, policy excess, loss of use, hire costs of alternative vehicle and transport costs etc.

• Under-insurance: It refers to a condition where policyholder insures his car at much lower rate than the original price of the car.

• Voluntary excess: It is a amount that policyholder choose to bear in addition to the policy excess that has to be paid in the event of a claim. Policyholder can usually select the amount of voluntary excess he is prepared to bear. If he decide to bear additional (voluntary) excess it may mean that his premium would be reduced.

View the UK Car Insurance Guide