Car insurance jargon buster
A handy car insurance glossary
Searching for of car insurance can be a tedious and thankless task, and the sea of jargon doesn’t help.
So to help you we've compiled the following A-Z of car insurance terminology:
Annual mileage and annual business mileage
Your annual mileage is the number of miles you expect to drive during the year in which you’re insured. This includes your trips to the shop, commutes to and from work, and long journeys on holiday.
If you use your car for business, some insurers may want to know how many miles you drive for business as well.
A device that’s installed in your car to monitor your driving performance. The box usually measures how you accelerate, brake and take corners. Some boxes also act as a security tracker.
The aim with these devices is to reward good driving with insurance discounts.
See no-claims bonus
Usually an optional extra to a car insurance policy, but some insurers may throw it in for free.
This add-on gives you roadside assistance if your car breaks down. Some breakdown packages also include home call-outs, where someone comes to start your car at your own property.
Many insurance companies sell their services through intermediaries or brokers.
Brokers take your details and speak to a number of insurers to try and get you the best deal for your insurance.
Some brokers may also help you out if you need to make a claim.
Certificate of insurance
This is your proof that your car is insured and is valid for the entire policy term.
Some insurers will post you a physical copy, whereas some may send it to you via email.
Until your certificate arrives, you can ask your insurer for a cover note.
A policy that grants you all the benefits of third-party, fire and theft (TPFT) insurance, but also covers damage to your own car.
This applies even if you’re at fault for the accident.
Sometimes added as part of a comprehensive policy, but not always.
If you have an accident, with this add-on you’d get access to another car until your own is repaired.
This usually means you need to have your car repaired at a garage that’s been approved by your insurer.
A temporary solution to tide you over until you get your certificate of insurance . This acts as proof that you have valid insurance cover, but it’s only valid for a short while.
Driving other cars (DOC)
An added benefit of some comprehensive policies, this lets you drive other cars that you don’t own.
This benefit only applies to the policyholder, and the level of cover provided is third-party only.
There are also a number of other restrictions including age, type of vehicle and location. DOC should be used in emergencies only – ideally you should get properly insured to drive that car.
Check that your policy allows for DOC – don’t assume that you have it automatically.
DVLA conviction code
Conviction codes can be found on a driving licence along with the rest of the conviction details.
It’s usually a four-figure code made up of letters and numbers. Some of the most common are:
SP30 - speeding in a built-up area
TS10 - traffic signals offence
IN10 – driving without insurance
Check out our full list of motoring conviction codes.
Excess is the amount of money that you pay in the event of a claim, before you’re given your payout by the insurer. There are two types of excess:
Compulsory excess is an amount that you have to pay – this can vary depending on your age, experience, or type of car.
Voluntary excess is an amount you set that is added to your compulsory excess. This often results in cheaper insurance costs, but means you get less back if you make a claim.
For starters, it’s not the same as “blame / not to blame”.
A non-fault claim is simply a claim where the insurer is able to recover all their costs from someone else.
If they can’t do this, then it is a fault claim. Even if you didn’t cause the accident, it would count as a fault claim.
In circumstances where fault can’t be determined – like if your car is damaged by a driver that can’t be found - it would also count as a fault claim.
Financial Conduct Authority (FCA)
Confused.com is authorised and regulated by the Financial Conduct Authority (FCA).
This is an independent non-governmental body that regulates companies that offer financial services, and consequently safeguards consumer rights.
The body does so with statutory powers granted by the Financial Services and Markets Act 2000.
See green card.
A free, internationally-recognised document that proves you’re insured to drive your car throughout Europe.
This provides you with the most basic level of cover abroad. If you’re looking for something more robust, you’ll need to upgrade your policy.
Most European countries don’t require a green card anymore. But carrying one with you could make things easier if you need to work with the policy or make a claim.
Our guide to driving abroad has more information on green cards.
A piece of tech that stops a car from being started until it’s deactivated by a key or fob. This effectively stops a car from being “hot-wired” by a thief.
It won’t stop the car from being broken into, but it may stop it from being driven away.
A car made overseas that’s then brought into the country. Imports fall into two categories:
Parallel imports – cars from abroad that match UK specifications.
Grey imports – cars that come into the UK but haven’t been EU-approved.
Grey imports are harder to insure than parallel imports due to the difficulty in sourcing specialist parts.
This is the reason insurance exists.
Indemnity aims to ensure that, if something has been lost or damaged, a person ends up in the same financial position as they were before the loss occurred.
Institute of Advanced Motoring (IAM)
A body that offers further training to drivers once they’ve passed their test.
The IAM aim to improve driving standards and safety, and boost confidence in drivers.
Whoever owns or part-owns something that’s being insured, they have an insurable interest in it.
For example, if you’ve bought your car outright, you have an insurable interest. If you buy it on finance, the finance company also has an insurable interest.
Legal expenses cover
There are two basic types of driving licence:
Provisional – you’re allowed to drive with an eligible experienced driver, or with a qualified driving instructor. You can still insure your car with a provisional licence.
Full – once you pass your practical driving test, your licence is upgraded to allow you to drive solo. You should tell your insurer as soon as you can when this happens.
The person who drives the car the most is the main driver – it doesn’t matter who owns the car or who paid for it.
This is especially important when adding younger drivers to a policy – if they drive more than you, they’re the main driver.
Any information that might influence an insurer’s decision about providing you with cover. This also applies to any information that might affect how big a risk they consider you to be.
Under UK law, you’re obliged to tell your insurer about anything that could be considered a material fact. Failing to do so could mean your insurance is invalid.
Anything that alters the way your car performs or behaves, eg:
- tinted windows
- uprated suspension
- more powerful engine
You need to tell your insurer about any modifications you make to your car.
Motor Insurance Bureau (MIB)
A group that aims to reimburse people who are left out of pocked from accidents involving uninsured drivers.
The group also pays out to people who aren’t able to get their costs back from their insurer.
Visit the MIB for more information on what they offer.
No-claims bonus (NCB)
A discount that a driver earns for going a full policy term without making a claim.
Each successive claim-free year gives you another year of NCB. Most insurers offer a discount for up to five years’ worth.
When you have an accident, it’s common for you to lose some NCB as a result.
Owner and registered keeper
If you’ve bought the car and you’re the one driving it, you’re both owner and registered keeper.
If you’ve been given a company car, your employer is the owner, but you’re the registered keeper.
Essentially, the owner of a car is the one who put up the cash for it. The registered keeper is the one who’s going to be using it day-to-day.
A top-up course for new drivers that offers extra tuition for driving at night, driving on motorways and more. There’s no exam to take – completing the course is a pass.
Some insurers may offer a discount if you complete the Pass Plus course, but not all.
If you’ve had a motoring conviction, you’ll get points on your driving licence. The number of points depends on the severity of the offence.
You must tell your insurer if you get points on your licence. This’ll likely increase your insurance premium, but failing to do so could invalidate your cover.
The length of time that a car insurance policy is valid for.
In most cases, this is 12 months from when your cover starts. Sometimes, you can get an accelerated policy that lasts only 10 months.
This allows you to gain a year’s worth of no-claims bonus in less time.
Confused.com has teamed up with Towers Watson to provide a snapshot of average car insurance prices across the UK.
This is broken down by age, sex and postcode region. The car insurance price index is updated every three months.
Pro rata rates
Sometimes, when a policy is cancelled, you’ll only be charged for the time you were covered by the insurer and not for the full policy term.
Protected no-claims bonus
If you protect your no-claims bonus, you’re allowed to make a certain number of claims over a certain amount of time without impacting on your bonus.
This usually comes at an additional cost, and protecting your no-claims bonus won’t stop your premium from going up after a claim.
The period of time for which an insurance quote is a valid. This’ll vary between insurers, so it’s worth noting when the quote expires.
If your quote expires and you decide to buy the policy, there’s no guarantee that you’ll get it at the price you were initially quoted.
Between three and four weeks before the end of your policy term, your insurer should notify you that your policy will soon renew.They’ll also let you know what your premium will be that year.
If you don’t cancel your policy in time, it’ll automatically renew. So if you’re not happy with the price, it helps to shop around for a better deal beforehand.
All car insurance premiums are worked out based on how likely you are to make a claim.
To do this, insurers use years’ worth of claims statistics to build a picture of how big of a risk you may pose.
Insurers weigh up a number of factors when doing this, such as the kind of car you drive, your address, your age and experience, and your claims history.
These combine to form a risk profile, and it’s this that is used to figure out how high your premiums are.
Road Traffic Act (RTA)
This Act governs all car insurance in the UK. It first came into force in 1930 to make sure innocent victims of accidents weren’t left out of pocket.
It was amended in 1972 to include passengers and again in 1988 to cover third-party property.
See black box.
This is an immobiliser or alarm made by recognised experts Thatcham Security.
Third-party, fire and theft (TPFT)
All the benefits of a third-party only policy, but you’re also covered if your car is stolen or set alight.
Third-party only (TPO)
A policy that covers damage to other vehicles, people and property where an accident is deemed to be your fault.
This doesn’t cover any damage to your own car.
A tracker is a device that emits a signal when the car is stolen. This helps police to recover the car and get it back to you.
Some black box devices have this as an added bonus.
Uninsured loss recovery (ULR)
What happens if you’re hit by an uninsured driver? Who pays for the damage to your car?
The usual way to protect against this is with uninsured loss recovery (ULR) or legal expenses cover (LEC).
This can sometimes come as standard on your policy, but not always. If not, it’s an add-on that costs extra.
What kinds of tasks you use your car for. This is an important one as the more you use the car, the more likely you are to be involved in an accident.
These are the standard “classes of use”:
Social, domestic and pleasure
This covers drivers for normal day-to-day driving, such as driving to visit family and friends or shopping.
Covers drivers to drive back and forth to a permanent place of work. Travelling to a railway station, where the car is parked, is also classed as commuting.
Covers the car in connection with your job, such as driving to different sites away from your main place of work.
Covers the car to be used for such things as door-to-door sales.