Car Insurance Terms Explained
When you’re looking for vehicle cover, it can feel like there’s a labyrinth of car insurance jargon to navigate. We dissect some of the most common terms you’ll come across when you compare car insurance quotes.
In This Guide:
Car Insurance Glossary
- Any driver policy – a type of policy where any person is insured to drive the vehicle. It tends to be of greater benefit to businesses than for personal use.
- Breakdown cover – a popular add-on to insurance policies. You’ll get professional roadside assistance if you break down, but to what extent will depend on your package.
- Claim – if you’re involved in an incident, you can choose to make a formal request from your insurance provider for cover or compensation.
- Class of use – refers to what you use your vehicle for. Typically, this’ll be either: purely social, social and commuting, or business use. You must have the correct car insurance class of use for your policy to be valid.
- Comprehensive cover – the most-encompassing level of car insurance. You’re covered for damages to both your vehicle and that of any involved party, whether you were at fault or not.
- Courtesy car cover – a car insurance add-on in which you’ll be given a replacement car for the duration yours is being repaired. This will usually be through an approved supplier.
- Excess – compulsory excess is a non-negotiable sum you must pay in order to make a claim. Voluntary excess is the sum the policyholder agrees to pay towards a claim, which is typically determined when they take out the policy. Having a higher voluntary excess can bring down your premiums.
- Fault/non-fault claim – a non-fault claim is when your insurer can recover the cost from another party. A fault claim is when they can’t.
- Fronting – dishonestly listing a (typically low-risk) person as the main driver in order to bring down a premium. It is considered fraud and as such has legal consequences.
- Green card – a document that proves you have a basic level of insurance when driving throughout Europe.
- Main driver – the person who drives the car most. Often mentioned in relation to other car insurance terms like policyholder, named driver and fronting.
- Material fact – any piece of information that will influence an insurer’s decision to cover you. Insurers need an accurate profile of you to assess your risk, so being dishonest about material facts is illegal. Also see non-disclosure.
- Named driver – an additional driver that’s added to a policy. They shouldn’t use the car more than the main driver.
- No Claims Bonus/Discount - a bonus for every year you haven’t claimed on your insurance. It proves you are of a lower-risk to insurers and as such this discount helps you get cheap car insurance by reducing your premium.
- No Claims Bonus protection – usually an optional extra to your policy. You can pay to protect your No Claims Bonus, so that if you have to make a claim you don’t lose the benefit of it. You’ll be able to claim a certain number of times over a given period.
- Non-disclosure – is either knowingly or unknowingly failing to disclose important information to insurance companies. Non-disclosure can carry legal consequences depending on the severity.
- Optional extra – car insurance add-ons that you can take out on top of your main policy for additional cover. Some can be really useful, others not worth the money.
- Owner – who paid for the car. If you drive a company car, your employer is the owner while you are the registered keeper.
- Policy term – how long your insurance policy is valid for. Almost all policies have a 12-month term.
- Policyholder – the person who takes out the insurance policy.
- Premium – how much you’ll pay for your car insurance. A quick car insurance comparison will show if you’re overpaying.
- Risk – this is what shapes the price you pay for your premium. Insurers build up a picture of you based on statistics to assess what level of risk you pose and how likely they’ll have to pay out against a claim for you.
- Telematics – also known as Black Box Insurance. Telematics insurance involves installing a device that records your driving habits. If you’re a responsible, low-risk driver this can be a great way to get cheaper car insurance.
- Third Party cover – is the minimum legal requirement of insurance. It covers any damages to other vehicles and passengers in your car, but not any damage to yourself or your vehicle if you were at fault.
- Third Party, Fire and Theft cover – gives you the same level of cover as a Third Party policy but also insures you in the event your vehicle is damaged by fire or gets stolen.
As well as this car insurance glossary, here at Money Expert we have numerous guides and advice on all aspects of car insurance. Why not give them a read? With just a little know-how you’ll be equipped to get the best car insurance deal on the market an save yourself money overall.