Car Insurance Jargon Buster
Don’t know your telematics from your TPO? Check out our guide to car insurance terms and wrap your head around your policy.
The car insurance industry seems to use a language of its own with more acronyms than your group chat (TBH). It’s hard to understand insurance terms even for experienced drivers so we’re here with this car insurance jargon buster to help you with your search for car insurance.
A | B | C | D | E | F | G| H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Average annual mileage
Your average annual mileage is the number of miles you expect that you’ll drive over the calendar year. For new drivers with no history to base it on, annual mileage can be hard to calculate. Remember to include your daily commute, trips to the shops, family’s or friends’ houses and a bit extra for those ‘on a whim’ road trips.
A black box is a device that monitors your driving to let you know how well you drive, helping you to become safer on the roads. It usually measures how you accelerate, brake and take corners and can sometimes also have a nifty extra of being a security tracker. Your insurer will normally send an engineer to install the device for you, but some policies have special devices you can plug in yourself (since we’re all adults here).
Black box or telematics policies aim to reward safe drivers. You can usually get your insurance cheaper for driving well with a black box, so they might be a good choice for new drivers who can face high premiums and want to save a bit of cash.
See No claims bonus
A lot of people purchase breakdown cover separately to their car insurance, but most insurers offer it as an option for an extra fee.
With this breakdown cover, if your car breaks down, you’ll receive roadside assistance. A mechanic will either try and repair your vehicle at the roadside, tow you home or tow you to a nearby garage. There are usually different levels of breakdown cover that you can get so make sure you ask your insurer for details.
Fully comprehensive is the highest level of cover that most insurers offer and it covers your vehicle in addition to third parties.
There are common features exclusive to comprehensive cover like:
- Accidental damage to your own car
- Windscreen cover
- Courtesy car while your car is repaired
- Fire damage and theft
- Personal injury cover (limited)
The exact policy features will always vary between insurance companies so always check the details before you spend.
Driving other cars (DOC)
Driving other cars (DOC) allows the policyholder to drive (with the owner’s consent) a private car not belonging to them or their spouse/partner. You might be surprised to hear that DOC cover is not automatically included in all fully comprehensive policies. You’ll usually need to be at least 25 years old and meet other criteria which will depend on your insurance provider.
The excess is the amount of money that you pay if there is a claim. This is usually made up of two parts, the compulsory excess and the voluntary excess. We’ve got a whole article about car insurance excess which you can check out here.
The compulsory excess is set by your insurer. It can vary depending on your age, the car, and how long you have been driving. Some policies won’t have a compulsory excess.
Voluntary excess is the amount that you tell your insurer you‘re willing to pay towards a claim and is added to the compulsory excess to give you your total. Setting a higher voluntary excess can mean that you get a lower premium, but you’ll have to pay more if you’re involved in a claim so bear that in mind before you set your voluntary excess super high.
Fault or non-fault claim
Fault or non–fault claims don’t always depend on who’s actually to blame for the incident.
A non-fault claim is a claim where your insurer isn’t able to recover all the costs from the third party. This means that even if you didn’t cause the accident, if your insurer can’t recover the costs it will count as a fault claim. This can also happen when fault can’t be determined.
If an accident is not your fault and your insurer is able to recover all costs, the claim will be determined as non fault.
Fronting is where a more experienced driver, usually a parent or guardian, is named as the main user of a car when it’s actually mostly driven by a new driver. This is usually done to cut costs because it can be a lot more expensive to insure a new driver than a parent who has decades of driving experience. Fronting is actually illegal and could invalidate your insurance if you need to make a claim. You could also face prosecution for fraud and end up with a criminal conviction. You can still learn to drive on a budget without needing to get into fronting, so no need to worry.
Insurance Premium Tax (IPT)
Insurance Premium Tax (IPT) is a compulsory tax on insurance premiums levied by the government. It works similar to VAT and is included in the price you’re quoted. The IPT is currently 12% for most insurance products.
Material fact is anything that could influence an insurer’s decision about providing you with cover. The information can tell them how big of a risk you might be. In the UK you’re legally obliged to tell your insurer about anything that can be material fact and if you don’t, your insurance could be invalid. Not worth it.
Modifications are anything that changes the way your car looks, performs or behaves. You need to tell your insurer about any modifications that have been made to your car, like those windows you just got tinted and the lowered suspension. Most insurers will ask you to let them know before you make any changes if you want to modify your car during your policy term.
No claims bonus (NCB)
No claims bonus, sometimes called a no claims discount is a discount that your insurance company gives as a thank you to the policyholder for completing a full policy term without making a claim.
You can build up your NCB with each successive year of claim–free driving, with most insurers giving you a bigger discount for up to 5-12 years’ worth of NCB. Nice one.
When you make a claim it’s common for you to lose some NCB because of it.
Pass Plus is a course you can take to help you improve your skills and drive more safely. It’s most commonly taken by new drivers because it can help build confidence on the road but it can be taken at any time as a “top-up” course. Pass Plus covers driving:
- In town
- In all weathers
- On rural roads
- At night
- On dual carriageways
- On motorways
The insurance premium is the total amount of money you have to pay for your insurance policy – in simple words, it’s the price of your insurance. The premium can usually be paid in one lump sum or by direct debit throughout the policy term.
The registered keeper is the person who uses the car day to day and drives it the most. The registered keeper is different to the legal owner who is the person who paid for the car.
For example, if your dad buys you a car to use every day, you’re the registered keeper, but your dad would be the legal owner.
Before your insurance policy ends, you’ll usually get notified that it will renew soon. You’ll also get the price for that year. Also, if you don’t cancel your insurance, it’ll normally automatically renew. So keep an eye out if you’re not happy with your price or insurer before it’s too late.
Social, Domestic and Pleasure
See Black Box
Third part, fire and theft (TPFT)
Third party, fire and theft policy covers any third party and their property in the event of an accident that you’re liable for, but accidental damage to your own car is not covered and neither are any injuries you suffer. Your car is only covered in the case of fire damage, theft or attempted theft.
Third party only (TPO)
Third party only cover is offered by most insurers. This type of cover only provides protection for third parties involved in an incident that you’re liable for. Any damage to your property or injuries you suffer are not covered. Ouch.
Types of insurance uses
When you buy car insurance, the insurer will ask you what the car will be used for. These are probably the types you’ll come across:
Social, Domestic and Pleasure
Social, domestic and pleasure covers you for day to day social driving, like visiting friends, family or heading to the shops.
Social and Commuting
This type of use covers everything included in social, domestic and pleasure, as well as commuting. In this case, commuting means driving to and from a permanent place of work, and includes driving to a train or bus station where the car is parked, driving to school, college or uni.
Business use covers social, domestic, pleasure and commuting, as well as using your car in connection with your job. This includes anything that involves driving to different sites away from your main place of work e.g. an area manager who drives to different stores or someone who regularly drives to meetings in different offices.
This covers the same as business use but is better for people who have driving as a permanent part of their job e.g. door-to-door sales people, taxi drivers or driving instructors. You might need to find specialist insurance providers for this level of cover.
Uninsured losses protects you against situations where you might be hit by an uninsured driver and it’s not your fault. Sometimes it’s standard with your insurance, but some insurers will offer this as an extra.
And that’s it, you’re a car insurance jargon buster expert. Now when you’re checking out our temporary car insurance, you’ll know what everything means. Don’t worry, we don’t use too much jargon, and it’s pretty easy to get covered from 1 hour to 30 days. Borrowing a car or sharing a drive just got easier.