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The ultimate car insurance jargon buster

Getting a new car, particularly for new drivers, can be a tremendously exciting time, as can preparing for a one-off road trip. Getting car insurance is essential but as with most professions, there are a number of very specific words and phrases that mean something to those in the profession but little to those outside. To help you in your quest to obtain vehicle cover or perhaps when you are next securing some short term car insurance, we have put together this guide, busting open car insurance jargon so you can understand what is what in plain English.

We have included an infographic that you can share with others who might benefit from our translation services. From ‘approved repairer’ to ‘no claims discount’, we’ve translated some of the most important car insurance terms to help get you on the road as quickly as possible!

The Ultimate Car Insurance Jargon Buster

Car insurance jargon explained

ABI group

The insurance industry categorises all cars, makes and models into a list from 1 to 50 that reflects the risk they present, with 1 being the lowest and cheapest to insure and 50 the most expensive.

Algorithm

This is the mathematical and statistical means by which the insurer calculates the premium for a car/driver and a table is drawn up with complex formulas to calculate the price.

Approved repairer

Repairers approved by an insurer, operating at a lower cost to keep claim costs down but have SLA’s with the insurer to deliver quality repair work for the customer.

Business use

For non-personal driving at work, you must have business cover. This applies if you run an errand for your boss, drop the post off or undertake more formal business travelling.

Comprehensive

The best motor insurance available that covers damage to third party vehicles, other property/people, as well as your own vehicle, subject to the relevant excess.

Driving Other Cars (DOC) cover

A policy that covers you to drive other cars than your own, but you would only be covered third party so any damage to the borrowed vehicle would not be covered.

Excess

The amount that you must pay towards any claim for repair to your vehicle.

Fault claim

Where your driving caused the accident and you are to blame, therefore your insurance policy will pay the third-party damages.

No-fault claim

The opposite of a fault claim where you are not to blame for the accident.

Insurance premium Tax (IPT)

Tax the government impose on the sale of an insurance policy, which is currently 12% for most insurance products. It is similar to VAT on the purchase of goods.

Loss adjuster

The representative of the insurance company who assesses the value of a claim to make sure it is reasonable and often negotiates the settlement.

Confident driver

Material fact

A fact you must disclose to the insurer when you apply for a policy which could affect whether they would be prepared to insure you.

Motor Insurer Database (MID)

The database holding all car insurance policies that the police and other insurers check against to see if there is a policy of insurance for a vehicle.

No Claims Discount (NCD)

The discount applied by insurers against the base premium to reduce the cost and relates to the number of years of claim-free driving.

Premium

This is the amount you will pay for an insurance policy with your insurer.

RAC Motor Legal Expenses

The separate insurance cover provided free of charge to help you recover your uninsured losses.

Settlement

This is the amount that the insurer pays out to settle a completed claim on your insurance policy.

Social domestic & Pleasure (SD&P)

Cover for social domestic and pleasure uses of a motor vehicle. It does not cover driving at work (known as business cover).

Third Party Fire & Theft (TPFT)

This is cover only for third party damage, fire or theft of your vehicle – not for damage to your own vehicle.

Third Party Only (TPO)

This means you are only covered for damages to third parties so if your car is stolen or sets on fire you have no cover.

Underwriter

The insurance company that pays out under a claim on your car insurance policy.

Uninsured losses

Damages not covered under your insurance policy if you are the ‘no fault party’. Can include your excess, damage to property, personal injuries, and replacement car costs.

How to get temporary car insurance

Woman driving

Now that you are more familiar with the terms involved with car insurance, you can start thinking about securing some for your vehicle! If you are planning a one-off trip or only need car insurance for a short period, picking up some temporary car insurance or one day car insurance will be a shrewd move indeed.

How do you get temporary car cover? It’s simple! Just follow these three simple steps:

  • Fill in our quote form with your name, address, date of birth, occupation, and the registration number of your vehicle.
  • We will give you a price depending on the duration you need to be covered for and when you want the policy to begin.
  • Buy your insurance! All you will need is your driving license number and payment details.

It really is that simple. Some short-term car insurance can be yours by utilising the above simple steps. Then you are ready to hit the road with complete peace of mind.

Car insurance tips

When searching around for car insurance advice, many might be hoping for sneaky, money saving tips, but it’s always important to stay honest when buying your insurance. This is a top tip from Paul Hadley of Motor Verso – a motoring website that provides the latest car news, reviews, road tests and more. Paul spoke to us about what his top piece of advice would be for those new to the world of car insurance:

“For me, I think the most important thing for new drivers when getting car insurance is to be honest. Of course, new drivers are keen on getting there premiums down as it is very expensive for new drivers but if you don’t tell the entire truth on your policy then your insurance is void anyway.”

The Money Advice Service – who offer free and impartial money advice – has some excellent tips for how to get the best deal on car insurance. One of their top pieces of advice is to make your car more secure, which in turn, lowers your risk. To do so they suggest: “[1] Fit an approved alarm or immobiliser. [2] Park in a garage or driveway if possible. [3] Make sure security devices are Thatcham approved.”

Car driving through the country

AA has a great tip about having a black box fitted to your vehicle. A black box is a small device that the insurer fits to your car, collecting information about how you drive, such as the time of day, whether you drive too fast, brake too sharply, and your total mileage: “Agreeing to have a black box could mean an upfront discount, plus a more accurate premium based on your recorded driving behaviour when you come to renew.”

Including and further to the above, we have detailed a list of some top tips for how you can save a little on your car insurance the right way:

  • Limit your mileage
  • Improved vehicle security
  • Pay annually rather than monthly
  • Choose a higher voluntary excess
  • Pass an advanced driving course
  • Park your car in a secure environment
  • Add a second driver
  • Don’t modify your car

Understanding car insurance terms and how it works

We hope that this guide has been useful for helping you to understand the various car insurance terms. There is a lot of jargon to take on board but by utilising the above and following our 3-step guide for temporary cover, you can be insured for the roads in no time. And don’t forget to share our jargon-busting infographic with friends and family!

Utilise your newfound knowledge and secure yourself day insurance for your future road trip.