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04 Aug 2021
Jamie Gibbs Jamie Gibbs

Car insurance jargon buster

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Searching for and comparing car insurance can often leave you drowning in a sea of jargon.

Car insurance terms can also be confusing when you’re reading your policy documents and checking what you may or may not be entitled to claim.

Whether you’re shopping around for a new policy or putting in a claim, our A-Z of car insurance terminology is here to help.

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A

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 shops, commuting and longer road trips.

If you use your car for business, some insurers might want to know how many miles you drive for business as well.

 

Black box

A device that’s installed in your car to monitor your driving performance. The telematics box usually measures how you accelerate, brake and take corners. Some boxes also act as a security tracker.

The aim of these devices is to reward good driving with insurance discounts.

 

Bonus

See no-claims bonus

 

Breakdown cover

Usually an optional extra to a car insurance policy, but some insurers may throw it in for free.

Breakdown cover 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.

 

Broker

Many insurance companies sell their services through intermediaries or car insurance brokers.

After taking your details a broker will scour the market to get you the best car insurance deal, providing the right cover at the best price. 

Some brokers might also help you make a claim.

 

C

Certificate of insurance

This is your proof that your car is insured and is valid for the entire policy term.

Some insurers post you a physical copy, whereas some may send it to you via email or via your online account.

Until your certificate arrives, you can ask your insurer for a cover note.

 

Comprehensive insurance

Comprehensive car insurance 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.

 

Compulsory excess

See excess.

 

Courtesy car

Sometimes added as part of a comprehensive policy, but not always.

If you have an accident, the courtesy car add-on gives you 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.

 

Cover note

 When you’ve just taken out your policy, this document provides proof that you have valid insurance cover. You can use this while you’re waiting for your insurer to send you your certificate of insurance. 

 

D

Driving other cars (DOC) 

An added benefit of some comprehensive policies, Driving Other Cars 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.

As DOC only provides minimum cover required to drive a car it should only be used in emergencies.

If you’re going to be driving the car regularly, its owner should arrange for you to be insured on it properly. 

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 lights offence

IN10 – driving without insurance

Check out our full list of motoring conviction codes.=

 

E

Excess 

Your car insurance 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’s added to your compulsory excess. This could result in cheaper insurance costs, but means you get less back if you make a claim.

 

 

F

Fault/non-fault 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.

 

Foreign extension 

See green card.

 

Fronting

Fronting is a type of fraud where an experienced driver is wrongly named as the main driver on an insurance policy to reduce costs.

In truth, a typically younger driver who may have only just passed their test is actually the primary driver of the car. See main driver.

 

G

Gap insurance

If your car is declared a total loss, gap insurance (guaranteed asset protection) pays the difference between the current value of the car and the original amount you paid for it.

This means you don’t end up out of pocket if your car has depreciated in value.

 

Green card 

A free, internationally-recognised document that proves you’re insured to drive your car in most European countries including all of the EU.

It’s offered by all UK motor insurance companies but only provides you with the most basic level of cover abroad.

If you’re looking for something more robust, talk to your insurance company about upgrading your policy.

You’ll no longer need to carry a physical green card when you’re driving in these countries. 

Our guide to driving abroad has more information on green cards.

 

I

 

Immobiliser 

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.

The engine immobiliser won’t stop the car from being broken into, but it may stop it from being driven away.

 

Import 

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, typically outside of the EU.

Grey imports are harder to insure than parallel imports due to the difficulty in sourcing specialist parts. They’re also likely to be expensive vehicles and require specialist mechanics. 

 

Indemnity 

This is the reason insurance exists.

Indemnity aims to ensure that, if something has been lost or damaged, the person covered by the policy ends up in the same financial position as they were before the loss occurred.

 

Institute of Advanced Motoring (IAM) 

A body that offers advanced training to drivers once they’ve passed their test.

The IAM aims to improve driving standards and safety, and boost confidence in drivers.

 

Insurable interest 

Whoever owns or part-owns something that’s being insured, has an insurable interest in it.

For example, if you’ve bought your car outright, you have an insurable interest. If you buy it on car finance, the finance company also has an insurable interest.

 

Insurance premium tax

A tax charged on insurance premiums. It should automatically be included in your quote.

 

International Driving Permit (IDP)

An International Driving Permit lets you drive in over 140 countries.

If you have a photocard driving licence, you won't need an IDP to travel to an EU country.

If you have a paper licence or are driving outside of the EU, you might need a specific IDP beforehand.

 

 

L

Legal expenses cover 

See uninsured loss recovery.

 

Legal owner 

See owner.

 

Licence types 

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.

Not sure what licence you have? Here’s how you check your driving licence.

 

 

M

Main driver 

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. See fronting.

 

Material fact

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.

 

Modifications

Anything that alters the way your car performs or behaves, eg:

  • Tinted windows

  • Uprated suspension

  • A 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 pocket 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.

 

N

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 no-claims bonus. Most insurers offer a discount for up to five years’ worth.

When you have an accident, you usually lose some of your NCB as a result.

 

 

O

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 driving it.

 

P

Pass Plus

A top-up course for new drivers that offers extra tuition for driving at night,  on motorways and more. There’s no exam to take with the pass plus course – completing the course is a pass.

Some insurers may offer a discount if you complete the Pass Plus course, but not all.

 

Points 

If you’ve had a motoring conviction, you might 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.

 

Policy term

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.

 

Price index

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 going up after a claim.

 

Q

Quote expiry

The period of time for which an insurance quote is 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.

 

 

R

Rating factors 

See risk.

 

Registered keeper 

See owner and registered keeper.

 

Renewal notice

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 for the coming year. This might not be the best deal so it’s worth shopping around to see if you can save some money.

If you don’t cancel your policy in time, it’ll automatically renew.

 

Risk

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 a risk you pose.

Insurers weigh up a number of factors when doing this, such as the kind of car you drive, your occupation, 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 calculate the premium you pay .

For more information, check out our guide on how car insurance is calculated.

 

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.

 

S

SP30 

See DVLA conviction codes.

 

T

Telematics

See black box.

 

Thatcham device

This is an immobiliser or alarm made by recognised experts Thatcham Security.

 

Third-party, fire and theft (TPFT)

A third-party fire and theft policy has all the benefits of a third-party only policy (see below), 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.

 

Tracker 

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.

 

TS10 

See DVLA conviction codes.

 

U

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 motor legal protection.

This can sometimes come as standard on your policy, but not always. If not, it’s an add-on that could cost extra.

 

Use types 

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.

Commuting 

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.

Business use 

Covers the car in connection with your job, such as driving to different sites away from your main place of work.

Commercial travelling 

Covers the car to be used for such things as door-to-door sales.

 

For more information, check out our guide on car insurance classes of use.

 

V

Voluntary excess 

See excess.

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