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AXA
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Equity RedstarJargon Buster (Motor)
At The Policy Shop, we understand that some insurance terms can be confusing. That’s why we’ve created this insurance jargon buster that explains what some of the most confusing terms mean:
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A
ABI Group
Association of British Insurers (ABI) members sit on what’s called a Group Rating Panel. This Panel recommends Car Insurance Group Ratings for each new car built in the UK. You can search the ABI database to find the Insurance Group for a car you want to buy or insure.
Act of God
An Act of God is an event that is not the fault of any person, for example, when lightning strikes and causes damage. Acts of God may or may not be insurable (you’ll need to check your policy documents or with your insurer).
Advanced Driving Qualification
An advanced driving qualification improves your road skills and therefore helps prevent accidents. In short, it helps you be a better driver. Having and advanced driving qualification can lead to cheaper insurance premiums as a result.
Additional Drivers
Additional drivers are drivers you name on your car insurance policy in addition to you the policy holder.
After Market Security
This is a security device fitted to your car after you’ve bought it. While most cars are sold with security features, if you install an additional security system it can help to lower the price of your car insurance, though you should check with your insurer.
Annual Mileage and Annual Business Mileage
Before you get a quote for your car insurance, your car insurer will need to know how many miles you drive each year – this is your annual mileage. You will also need to state whether you use your car for work – this is your annual business mileage.
Annual Premium
Your annual premium is the price of your car insurance for the year. It will include Insurance Premium Tax.
Can I purchase car insurance on your website?
You can get yourself a quote and purchase your policy entirely online. Alternatively, you can purchase over the phone on 0844 249 5941.Any Driver
If your car insurance covers ‘any driver’, this allows anyone to drive your vehicle and still be covered by your insurance, not just you the owner. The driver must have your permission to use the car and have a valid licence. The policyholder also has a duty however to name anyone who may regularly drive your vehicle and has accidents or convictions that they are aware of. Care also needs to be made with driver ages, as often these policies are issued on the basis of Any Driver over 21, 25 or 30 with drivers under that age excluded unless specifically named.
Approved Repairer
Many insurers have a network of approved repairers who they’ll recommend you take your vehicle to in the event of an accident.
B
Breakdown Assistance/Breakdown Cover
If you take out this cover and your car breaks down, you have a number to call to get someone to come out to fix your car. If they can’t, depending on the type of cover you have, they’ll tow you to the nearest repairer. To keep you and your car on the road, The Policy Shop offers a range of breakdown covers to suit your needs.
Broker
Some insurance companies sell their products through intermediaries or brokers. A broker has access to a number of insurance companies and can give you insurance quotes from a variety of those insurers on various classes of general Insurance including Car, Motorcycle, Vans and Commercial Vehicles and Household.
C
Car Insurance
A car insurance policy protects you if you’re involved in an accident or your car is stolen, and is a legal requirement in the UK. You pay a premium and the insurance company agrees to provide benefits that cover you financially. Cover varies according to the cover type you choose and the policy offered by your insurance company.
Car Insurance Group Ratings
Every UK car is given a Car Insurance Group Rating. This rates the car for risk. The lower the group rating, the less you generally pay for your car insurance.
Cash or Carry
Our reward scheme for recommending your friends and family.
CC of Car
The CC of your car is the cubic capacity of the engine. The engine is measured in cubic centimetres and this information is shown in your Certificate of Registration (V5). You may be asked for this information when you apply for car insurance.
Certificate of Insurance
This Certificate is proof that you’re insured and you need to keep it somewhere safe, though you should not leave important documents in your car as this could make it easier for thieves to sell your car should it be stolen. The Certificate is valid for the duration of your insurance policy.
Certificate of Registration
The Certificate of Registration (or V5 document) certifies that a vehicle is registered in your name, and it proves you’re the legal owner. Any change to your details, for example your address, must be amended on your Certificate by sending it to the Driver and Vehicle Licensing Agency (DVLA). If you sell your vehicle the DVLA must also be notified. The procedure you need to follow is described on the Certificate.
Claim
This describes the process where you notify your insurance company of an event, such as an accident or theft/ attempted theft, where you wish to claim against your insurance policy. A claim may also be made against your policy by a third party, such as another motorist that you have been involved in an accident with, a pedestrian or the owner of property damaged by your car.
Class of Use
Although they will vary by insurer there are generally 4 main types of Class of Use:
S D & P – use for Social, Domestic and Pleasure purposes only.
Class 1 – use for Social Domestic and Pleasure and by the policyholder in person in connection with their business.
Class 2 – use for SD&P and by anyone in connection with the policyholder’s business or profession.
Class 3 – use for SD&P and by anyone in connection with the policyholder’s business or profession (includes commercial travelling).
All exclude use in connection with the motor trade or carriage of passengers for hire or reward.
Compliance
All authorised insurance companies must comply with Financial Services Authority (FSA) regulations. This means they are bound by certain rules and principles, which are in place to protect consumers and ensure they are treated fairly.
The Policy Shop is authorised and regulated by the FSA.
Comprehensive Cover
Covers your car against accidental damage, loss or damage caused by fire or theft and provides third party liability cover for injury or damage you may cause to others or their property.
Compulsory Excess
A compulsory excess is the amount of any claim that you are required to pay yourself, and any payment from a claim will be reduced by this amount.
Conviction Code
Convictions codes (also know as Endorsement Codes or DVLA Codes) are unique codes given to driving offences. They’re usually four-figure codes made up of letters and numbers. Each conviction carries a number of Penalty Points and if you have 12 points or more on your Driving Licence you will be disqualified from driving.
Courtesy Car
A courtesy car is a car that is lent or rented to you to use while your car is being repaired.
Cover Note
This is a temporary Certificate of Insurance which is supplied by some insurers before your full policy is issued to you, or when you’ve been given temporary extensions of cover.
Cover Type
The three most common types of car insurance, or cover types, in the UK are:
Comprehensive (Comp), Third Party Fire and Theft (TPFT) and Third Party Only (TPO)
D
Driver and Vehicle Licensing Agency (DVLA)
The Driver and Vehicle Licensing Agency is part of the Department for Transport (DfT). Its main aim is to assist road safety and general law enforcement. They keep a register of all drivers and vehicles.
Driving Disqualifications
If you’re convicted of a number of driving offences, or a single serious driving offence, you may be disqualified from driving.
If you or one of your drivers is or has been disqualified from driving you need to let us know.
Driving Licence
In the UK, you have to have a driving licence to drive most vehicles on a public road.
A driving licence is either a ‘provisional’ licence or a ‘full’ licence. A provisional licence has certain restrictions on its use. You are entitled to apply for a full driving licence if you have passed a driving test in the UK within the previous two years.
Driving Other Cars (DOC)
This allows you to drive a car you don’t own, but only for third party risks, and provides the minimum cover required by the law. Your Insurance Certificate will advise if this extension is available under your policy.
Driving Standards Agency (DSA)
The Driving Standards Agency (DSA) is part of the UK Department for Transport (DfT). Its motto is ‘Safe Driving for Life’ and it sets the standards for driving instruction and driving tests.
Due Care/Reasonable Care
Most insurance policies include a clause saying you must show ‘due care’ or ‘reasonable care’ or they may not pay out in the event of a claim.
This means you must take reasonable steps to prevent loss or damage to your car and not be reckless.
Duty of Disclosure
If you make any changes that affect your insurance policy then you need to let us know straight away. These can include things like changing your car or changing your address.
E
Electronic Vehicle Licensing (EVL)
Electronic Vehicle Licensing (EVL) allows you to get your new tax disc via the phone or internet. It’s quick and simple, but you must have valid car insurance on the renewal date. EVL uses the Motor Insurance Database (MID) to check this.
Endorsement
This is a written amendment on an insurance schedule. It becomes a legal part of the policy.
Exceptions
There are a number of General Exceptions that apply to your car insurance policy. These are instances where a claim can’t be made, such as if your car’s involved in an accident and the person driving it isn’t named on your certificate.
Excess
This is the amount of money you have to pay towards the cost of any claim you make. There are two types of Excess – a compulsory excess and a voluntary excess.
Your ‘excess(es)’ will be detailed on your insurance schedule and will depend on your personal circumstances and the type of cover you choose. Excesses are cumulative, which is to say that the amount paid for a claim will be reduced by the total of both the compulsory excess and the voluntary excess.
F
Fault Claim
This is a claim for an accident or loss where you were to blame, or where the costs can’t be recovered from someone else.
This can be a bit confusing, because it means that if your car is stolen, because there’s no third party to claim costs from, it will be treated as a fault claim.
Financial Ombudsman Service
This is an independent service that settles disputes between businesses that provide financial services, including insurance companies, and their customers:
Financial Ombudsman Service
South Quay Plaza 2
183 Marsh Wall
London E14 9SR
Telephone: 0845 080 1800
www.financial-ombudsman.org.ukFinancial Services Authority (FSA)
The UK’s financial watchdog, the FSA regulates financial services companies, including insurance companies. You can contact the FSA to find out the facts about financial products and services, helping you make an informed decision or you can contact the FSA for advice if you need to make a complaint against an insurance company:
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
www.fsa.gov.ukThe Policy Shop is authorised and regulated by the FSA.
Financial Services Compensation Scheme (FSCS)
The FSCS is an independent body and they are the UK’s compensation fund of last resort for customers of authorised financial services companies, including authorised insurance companies.
This means that the FSCS will compensate you if you have a claim that your insurance company can’t pay. The service is free to customers.
Further information about compensation scheme arrangements is available from the FSCS on 0207 8927300 or by visiting http://fscs.org.uk
G
GAP (Guaranteed Asset Protection)
An Add on product to cover the shortfall, if your car is a total loss and you still owe money to the finance company following settlement of the claim.
Green Card
A Green card is an international motor insurance certificate. It is proof that you have the minimum cover you need by law to use your car in:
- Any country which is a member of the European Union; and
- Any other country for which the Commission of the European Community is satisfied that arrangements have been made to meet the requirements of EC Directives on insurance.
H
Highway Code
The Highway Code is a list of rules that apply to all road users: pedestrians, horse riders and cyclists, as well as motorcyclists and drivers. Many of the rules in the Code are a legal requirement, which means if you break them you’re committing a criminal offence. You may be fined, given penalty points on your licence, be disqualified from driving, or in the most serious cases you can be sent to prison.
Hazard
In terms of insurance, hazards are the things that make a claim more likely. A young driver is generally a greater hazard than an experienced one, a high performance car usually a greater hazard than a family car. And the greater the hazard; the more you generally pay for your insurance.
I
Import or Imported Vehicle
Imported refers to any car that has been brought into the UK from any other country following registration.
Indemnity
Under the terms of your insurance (depending on your cover) if you lose or damage something then an ‘indemnity’ will restore you to the same financial position after the loss/damage as immediately before it took place; in other words it’ll compensate you.
Institute of Advanced Motoring (IAM)
The Institute of Advanced Motoring gives drivers the chance to sit a more advanced test. If you pass the test some insurance companies will give you a discount on your car insurance but you should always check with your insurer.
Insurable Interest
One of the key things about insurance is that you can only take out cover if you stand to suffer a financial loss from an event covered by the insurance policy. In other words you must have an insurable interest to take out a policy.
Insurance Premium Tax
A UK government tax on most non-life insurance premiums, including car insurance. This tax is included in your premium.
Insured
The person(s) covered by an insurance policy.
Insured Incident / Event
An incident that is covered by your insurance, something that happens that can give rise to a claim.
Insured Value
In the case of car insurance, this is the maximum amount the insurance company will pay out for your car if it’s a write-off. It will usually be either be the amount you said the car was worth when you took out the policy or the market value at the time of your claim, whichever is lower.
J
Japanese Import
A Japanese Import is a car that has been brought into the UK from Japan following registration.
K
Keycare
An optional add on product providing cover for loss of keys.
Kit cars
A car assembled from a collection of parts sold in kit form, usually with parts from mass-market models that are easily found in scrap yards. A kit car usually has a Q Plate.
L
Legal Assistance
This helps you recover uninsured losses that you may incur as the result of a claim from the person responsible for the accident. Uninsured losses can include your policy excess, loss of earnings and solicitors fees and expenses.
Liability
Liability means you’re legally responsible for causing loss to someone either because you’ve injured them, or because you’ve damaged something that belongs to them.
Loss Adjustor
Someone who investigates the legitimacy of claims.
Loss Assessor
A person employed by an insurance company to work out if the risk to be undertaken is acceptable. They also calculate the premium to be charged, based on the level of risk involved.
M
Main Driver
The main driver is the person who uses the car the most. It’s important that you tell your insurance company who the main driver is correctly, otherwise a claim may be reduced, or you may be treated as uninsured.
Market Value
This is the value of your car as determined by the ‘market’, the value for cars of a similar age and condition at a point in time.
Material Fact
Any information that may influence either an insurer’s decision to offer you cover or the premium they charge for it. It’s important that you tell your insurer all relevant facts, because if you leave out information that may influence the decision to give you cover, your policy may not be valid and you may be treated as uninsured.
Medical Conditions
Certain medical conditions preclude you from driving. If you have a medical condition and you are unsure as to whether you should drive, you should check the DVLA website to see if you are affected. If this is the case, you may not be eligible for car insurance cover. If you fail to disclose a medical condition to your insurer your car insurance may not be valid.
Modifications
These are any changes made to your car since it was produced, including the addition of such things as alloy wheels, spoilers or engine modifications.
If your car is modified in any way you need to let us know.
MOT
The Ministry of Transport test, more usually referred to as an MOT, is an annual test of car safety and roadworthiness. Any UK registered car that is over 3 years’ old and is used on a public road must have a current and valid MOT certificate.
Many garages in the UK are authorised to carry out an MOT test and issue you with a certificate.
MOT cover
An add on product to cover costs following your car failing its MOT.
N
Named Driver
A driver named on an insurance policy who is not the main driver of the vehicle.
New Car Replacement/New Car Cover
Subject to terms and conditions, some insurers will provide a new car of the same make and model should your car be involved in an accident
New Drivers Act
The New Drivers Act states that if you get 6 or more penalty points on your licence within two years of passing your driving test the DVLA will revoke your driving licence. If this happens you’ll have to reapply for your driving licence as a learner driver and resit your driving test. If you have any points on your driving licence you need to let us know.
No Claim Discount (NCD) / No Claim Bonus (NCB)
This is a discount offered by an insurance company that may increase every year if a claim is not made, to a set maximum. A No Claim Discount is a discount that is offered for not making a claim, so even if a claim is not your fault, your No Claim Discount can be affected. Some people think of it as “A No Blame Discount, not a No Claim Discount”.
No Claim Discount Step-Back
Most insurers have a No Claim Discount scale, which shows how No Claim Discount can be earned for claim free years, as well as how it is reduced in the event of one or more claims.
Non-Fault Claim
A non-fault claim is a claim where the insurer is able to recover their costs from someone else, usually another insurance company.
O
Owner and Registered Keeper
There may be a reason for the owner and registered keeper to be different people. For example if you drive a leased car then the car is owned by the lease company but you will be the registered keeper.
P
Pass Plus
Pass Plus is a training course aimed at new drivers. Statistics show that new drivers are more likely to have an accident in the first two years of passing their test. Pass Plus helps build on newly acquired driving skills and knowledge.
Penalty Points
Points (also called penalty points) are added to your driving licence if you’re convicted of a driving offence such as speeding. If you have points on your driving licence you need to let us know.
Period of Cover
Period of cover or Period of Insurance is the duration of your insurance policy. This is the period between the start date and the renewal date, usually 12 months for car insurance. The start date, or effective date, is shown in your schedule, as well as the expiry, or renewal date.
Personal Accident
If you or your partner are accidentally injured as a direct result of an accident involving your car your insurer will pay the injured person or their legal representatives the amount shown in your schedule (only available with comprehensive cover).
Personal Possessions
Personal possessions, also called personal effects or personal belongings, are items worn or carried on you, such as clothing or luggage
Policy
A policy details the contract between the Insurance Company and the Policyholder.
With The Policy Shop your policy is made up of:
- Your Policy Booklet
- Your Schedule; and
- Your Certificate of Motor Insurance
You need to read all of the policy documents as a whole to understand the cover you’ve bought, together with any restrictions or exclusions that may apply.
Policy Booklet
A Policy Booklet contains all the details of your Policy.
Policyholder
The policyholder is the person who the insurer issues the policy to.
Price Comparison Website
A Price Comparison Website (also known as an aggregator) is an insurance system that captures and displays quotations from many insurance providers in one process. This allows you to compare prices at a glance. There are a number of websites that offer this service.
Premium
A premium is the money you have to pay in return for insurance cover. With car insurance your premium is usually paid annually. Your premium includes Insurance Premium Tax (IPT).
Proof of Discount
An insurance company will issue you a certificate indicating the amount of discount earned by you. This is your proof of No Claim Discount.
Proposal Form
This is an application for insurance cover, it contains all of the proposer’s details which should be checked for accuracy, before the proposer signs and returns it. The premium is based on the details contained within the proposal.
Proposer
This is the person or company who applies to take out insurance.
Pro Rata Rates
Sometimes if you cancel your policy before it has expired, you’ll only be charged for the time you were covered by the insurer and not for the full term of the policy, though a cancellation fee may be applied which will reduce any refund you may receive.
Protected No Claim Discount
If you’ve had a few years without a claim on your insurance, some insurers may let you opt to pay a bit extra to protect it. This then allows you to make a claim without losing your entire no claim discount, though this is subject to the No Claim Discount Step-Back scale. Even though your No Claim Discount may not be reduced by a claim if you have chosen to buy No Claim Discount Protection, your premium may still be affected.
Public Liability
Public Liability covers legal liability for injury or damage caused to others.
Q
Quote
This is process of obtaining a price from an insurer and the amount an insurer intends to charge you for the stated period of time based on the information you’ve given, in addition to any other stated assumptions.
R
Rating Factors
Rating factors are used by Underwriters to work out the price you pay for your car insurance. They use claims experience to determine the effect a factor, such as age or gender, will have on the likelihood of you making a claim. The higher the likelihood of you making a claim, the higher your premium.
Registration Numbers
All cars must have a registration number which is shown on your car registration number plate. These can be personalised plates, DVLA number plates or private number plates. The DVLA keeps a register of all registration number plates, the vehicle to which they applied and the registered keeper, enabling them to trace a car back to an individual.
Renewal Date
This is the date your Insurance Policy expires, which means it’s the end of your Period of Cover.
Renewal Notice
This is to let you know that your policy is due to expire and to give you sufficient notice to renew your policy.
Risk
All car insurance in the UK is offered by assessing a proposer’s risk. Insurers do this by looking at the details provided and determining how likely the driver is to make a claim, and how much such a claim would cost to settle. This is usually worked out by an Underwriter, in conjunction with actuarial tables. They use their knowledge of claims to calculate the level of risk and to decide what premium you should pay.
Risk Factors
Many factors affect the price you pay for your car insurance. Each of these has a different level of risk for an insurance company. If you’re considered high risk, meaning you’re more likely to make a claim or that claim would be costly to pay, then you’ll pay more for your insurance cover. Risk factors include among other things like age, gender, your vehicle and the number of miles you drive each year.
Road Traffic Act (RTA)
This Act governs all car insurance in the UK.
S
Schedule
Your Schedule is issue with your Policy booklet along with your certificate, it is important because it will personalise your policy and advise which particular sections of the policy apply to you.
Settlement
This is the amount you are paid for a Claim. Settlement happens when an insurer pays a claim and the claim is effectively closed. The Settlement will usually be the amount agreed, less any Excesses.
Statement of Fact (SOF)
A modernised proposal form used by some insurers. The main difference being that you do not have to sign and return this document although it forms the basis of your contract with your Insurer in the same way a proposal does. If you receive a SOF you should still check it to ensure the details are correct, and contact us with any areas that need amendment.
Statutory Off-Road Notification (SORN)
If you keep your vehicle off the road and don’t tax it, you must tell the Driver and Vehicle Licensing Agency (DVLA) by making a Statutory Off Road Notification (SORN).
To make a SORN, you must be registered as the keeper of your vehicle.
Subrogation
This is the substitution of one claim for another, for example an insurer who has indemnified a policyholder can take over any legal rights the policyholder may have had in respect of that particular claim.
Sum Insured
This is the maximum an insurance company will pay for a claim.
T
Thatcham
The Motor Insurance Repair Research Centre, or Thatcham as it is known, carries out research for the motor insurance industry on the cost of car repairs and vehicle security.
Thatcham research data is used as the basis for the Car Insurance Group Rating Panel’s car insurance group recommendations.
Thatcham Vehicle Security Categories
This categorises the level of security you have on your car. There are five categories:
Category 1: Electronic Alarm and Immobiliser
Category 2: Electronic/Electromechanical Immobiliser
Category 2-1: Electronic Alarm Upgrade [General Application]
Category 3: Mechanical Immobiliser
Category 4: Wheel Locking Devices
Category 5: After-Theft Systems for Vehicle RecoveryThird Party
A person involved in a claim, but who isn’t the Policyholder or the Insurance Company.
Third Party Fire and Theft Cover (TPFT)
This covers your car against loss or damage caused by fire and theft and provides third party liability cover for injury or damage you may cause to others or their property.
Third Party Only (TPO)
Third party cover is the minimum level of car insurance cover required by law. It doesn’t include any cover for damage to your vehicle.
Total Loss
If your car is said to be a total loss it’s a Write-Off.
Tracking Device
A tracking device is an electronic device that emits a signal so a law enforcement agency can find your car in the UK if it’s been stolen. This security device is usually fitted as an accessory after you’ve bought your car.
U
Underwriter
An underwriter is the person who decides whether to accept a Risk (i.e. whether to insure you) and also works out what Premium you should pay.
Uninsured Loss
These are any losses that you’re not able to recover under your policy. For example these could be loss of earnings after an accident.
Uninsured Loss Recovery (ULR cover)
This is when your insurer gives you cover to help you recover your uninsured losses from a Third Party, where an accident is the third party’s fault. This covers the cost of legal proceedings and is defined in the policy. This is also referred to as Legal Assistance
Utmost Good Faith
This refers to a principle of insurance. It means that insurance relies on the fact that anyone who applies for insurance gives all relevant information to the insurer. See also Material Facts and Duty of Disclosure.
V
Vehicle Certification Agency (VCA)
The VCA is the UK Vehicle Type Approval authority. Their role is to test and certify vehicles, their systems and components.
Vehicle Type Approval
Most countries lay down a set of environmental and safety standards, often referred to as type approval. All vehicles need a certificate to show they’ve been tested and conform to these standards.
Voluntary Excess
Some insurance companies let you pay an additional amount, which is the amount of any claim which you wish to pay yourself. The amount of your Voluntary Excess is reduced from the claim payment which you receive. Excesses are cumulative, which means that the amount paid for any claim will be the total of your Compulsory Excess and any Voluntary Excess. Generally speaking, the higher your Voluntary Excess, the lower your premium will be, however you should not choose a level higher than you are able or prepared to pay.
W
Windscreen Cover
This is exactly what it says on the tin, this is cover for damage to your windscreen.
This refers to accidental breakage of your windscreen or any other car window and any scratches to the bodywork caused solely and directly by the breakage (an excess applies for replacement).
Write-Off
This means your car is damaged to such an extent that it can’t be repaired, or it’ll cost more to repair the car than it is actually worth.
Contact
0844 249 5941
9am - 8pm Monday to Friday
9am - 5pm Saturday
Free call back service.
Standard text message charges will apply.
