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Glossary of insurance terms

This glossary of terms can help shed light on some confusing insurance terms

Aggregator

A company or firm which collates information supplied by a customer or consumer in order to supply a range of insurance quotes or premiums.

An aggregator service should offer a shopping service to the consumer where the aggregator returns as many of the product results requested as possible offering the customer or consumer a range of choices or options on which products meet their request.


Alarm

A car alarm is a device installed in a car in an attempt to discourage theft of the car. Most alarms work by making a loud noise, others send a signal to the owner warning that their car is being disturbed. Some insurers will offer a discount if the vehicle is alarmed.


Annual mileage and annual business mileage

In order for you to receive your motorcar, bike or van insurance quote an insurance company or broker will want to know how many miles each vehicle covers in a year. The reason for this is simple; the more miles spent on the road, the greater the likelihood of an accident. Annual mileage is the total mileage you do in a year. Business mileage is the amount of miles you cover in direct connection with your employment or business.

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Bonus

Please refer to No Claims Bonus.


Broker

A broker is an independent intermediary who sells one or a range of policies from different insurance companies. One reason why brokers have managed to compete in the marketplace is that they are able, in certain circumstances, to negotiate the premium directly with the insurance company which may lead to a cheaper premium.

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Certificate of Motor Insurance

The proof of motor insurance that is required by law which shows what car is covered, who is allowed to drive it and what the car can be used for.


Comprehensive cover

Please refer to Cover Type.


Compulsory excess

Please refer to Excess.


Conviction code

Conviction codes are shown on the relevant driving licence. This is a 4 digit code of letters then numbers, i.e. AC10, SP30, TS30, XX99 etc.


Cover note

This is a document showing temporary proof of cover for a motorcar, van or motorcycle policy, while the policy and certificate are being prepared by the insurer.


Cover type

Third party only (TPO) This covers damage that you have caused to a third party’s vehicle, it does not cover damage to your own vehicle

Third party fire and theft (TPFT). This covers fire and theft of the driver's car in addition to third party only cover.

Comprehensive (Comp) This covers accidental damage to the driver's car in addition to third party fire & theft cover.

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Driving other cars (DOC)

If your policy includes DOC then it will be stated on your Certificate of Motor Insurance. DOC is explicitly for emergency use only.


DVLA

Driver & Vehicle Licence Agency. www.dvla.gov.uk

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Endorsement

Something that could change the original cover provided by the policy. Any endorsements will be listed on your Policy Schedule.


Excess

The excess on your insurance is the cost of the claim that you pay for, the compulsory excess is what is set by the insurer and must be paid in the event of a claim.

In addition to the compulsory excess, you can choose to add a voluntary excess which is what you agree to pay in addition to the compulsory excess in the event of a claim.

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Fault or non-fault claim

The way to tell the difference between fault & non-fault claims boils down to whether or not the insurance company were able to recover all their costs from the third party involved.

There are situations where the insured can say that they were in no way responsible for a claim and yet still have the claim classed as fault. e.g. A theft claim where items have been stolen from a vehicle. Naturally the insured feels absolved of any wrong doing, however, as there is no third party to recover the cost of the stolen items from, the claim becomes a fault claim.

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Green card

You may need at some point to drive abroad. Most policies will offer some level of cover as standard, perhaps RTA (Please refer to Road Traffic Act) or Third Party Cover (Please refer to Cover Type) whilst driving in Europe. However is imperative that you confirm this cover exists on the policy before you drive abroad as driving without the proper insurance can mean claims can be very expensive and may even lead to possible driving convictions if you are not driving with the correct level of insurance for that country.

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Hot Hatch

A type of car based on an existing hatchback model, with bigger tyres and wheels to improve road handling and to give a more aggressive look, along with a more powerful engine to give increased performance. Some may also have revised suspension to give better handling or a firmer ride. Most hot hatches feature sporty interior trims, along with racing style steering wheels and bucket seats.

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Immobiliser

An electronic immobiliser disables the engine of your motor vehicle. More recent motor vehicles have these factory fitted by the manufacturer and the details of the immobiliser should be shown within your car brochure. It's also possible to have an immobiliser fitted by a garage or specialist who would supply a certificate of installation detailing the exact model of immobiliser. Some insurers will offer a discount if the vehicle has an immobiliser.


Import or imported vehicle

UK-specification These are cars brought in from abroad that match UK specifications.

Non-UK specification These are cars that are brought into the UK from abroad but differ from current UK specifications.



Indemnity means protection or security against damage or loss by compensation, or something by the way of compensation. In insurance terms this would generally equate to being put back in the same state or financial position you were in prior to a loss.


Insurable interest

An example of insurable interest would be in order to insure a car it would need to be your own possession. So you couldn't insure your neighbours car, as if it is damaged or stolen then you incur no financial loss.


Insurance intermediary

Please refer to Broker.

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Kit cars

A kit-car is an automobile that is available in kit form, i.e. you buy a set of parts that you assemble yourself. Usually many major mechanical parts such as the engine and transmission are taken from one or more donor vehicles. Kits vary in completeness from as little as a book of plans to a complete set of all the components required.


Knock-for-Knock

An agreement where each motor insurer pays for damage to its policyholder's car, regardless of which driver is to blame, providing the policy covers damage to the policyholder's own car.

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Licence type

There are a number of different licences that exist, i.e. UK Full, UK Provisional, EEC Full, International etc. From an insurance point of view you must have at least a provisional licence before you can legally drive on the road.


Legal Owner and registered keeper

More often than not the legal owner and registered keeper of the vehicle is the proposer (Please refer to Proposer). This may not always be the case. Should the proposer for instance, be driving a company car, then the vehicle would most probably be owned by the company but possibly the registered keeper would be the proposer.

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Main driver

Whoever drives the vehicle the most is classed as the main driver. This can be a major factor in how the insurer arrives at its premium, the insurer is well within its rights to invalidate a claim or even cancel a policy outright.


Modifications

Any changes made to the vehicle that are NOT classed as factory standard. This could include engine modifications, alloys, spoiler or sunroof etc. Should you not inform us about modifications on your car or vehicle when obtaining your policy, the insurer has the right to refuse payment for any claim or potentially invalidate your policy.

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No Claims Bonus (NCB)

For every year you hold an insurance policy, without a fault claim, you receive no claims bonus. This is a discount applied to premiums by an insurer which reflects a cheaper premium for, potentially, a safer risk or driver. So the more continuous years driving without a fault claim, the greater the discount applied. However, should you have a fault claim it is likely that your NCB will be reduced, unless you have protected NCB or PNCB (Please refer to Protected NCB).

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Pass Plus

Pass Plus is a training scheme for new drivers. A number of insurers will offer discounts for taking these extra lessons. Please be aware that you will need to provide your certificate to the insurer if they allow a discount.


Points

Should a driver be convicted of an offence, for instance, speeding or dangerous driving, the driver will receive points on their licence. These will be a factor in how much the insurer quotes for their premium. More often than not the greater the number of points, the higher the premium quoted.


Proposer/policyholder

The term given to the person who takes out the insurance policy. So if you go to our site and choose to enter a quote, you are deemed the proposer of the policy. Another term you may see used for proposer is policyholder.


Protected No Claims Bonus

Once you have accumulated a certain number of years NCB (Please refer to No Claims Bonus) insurers will allow you to protect your NCB. This means that should you have a fault claim then the number of years NCB will remain the same. However, this may not prevent your premium from rising as most companies rate on claims history as a separate factor.

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Q-Plate

You've probably noticed (or not) that there aren't many q-plated vehicles on the road. The q-plate is used to point out something more than a unique registration. Here are some of the main reasons why a vehicle would have a q-plate:

  1. Built from unknown parts, unknown ages, or insurance write-offs.
  2. Stolen/recovered vehicles.
  3. Ex-military vehicles (Including Ex-Army, Ex-Navy & Ex-RAF Land Rovers and other forces vehicles.
  4. Imported vehicles.
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Registered keeper

Please refer to Owner and registered keeper.

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Risk

In order for any insurance company to provide an insurance quote they must first evaluate the risk they are quoting for. This generally means looking at the customer's quote details and assessing them by their claims history, the cost or type of the vehicle they drive and perhaps the area they live in.

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Road Traffic Act (RTA)

In 1930 the Road Traffic Act came into force to guarantee that cover would compensate the innocent victims of accidents. An example of this is third party property damage: the limit is £250,000.

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Security

Please refer to AlarmImmobiliser or Tracker.


Sum Insured

The amount that is paid out by the insurer when an insured event occurs.

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Third party

Someone involved in a claim who is neither the policyholder nor the insurer.


TPFT cover

Please refer to Cover Type.


Tracker

Vehicle Tracking Systems are electronic devices installed in vehicles to enable vehicle owners or third parties to track the location of a vehicle. Most modern vehicle tracking systems now use GPS modules to allow for easy and accurate location of the vehicle. Many systems also combine a communications component such as cellular or satellite transmitters to communicate the vehicle's location to a remote user. Some insurers will offer a discount if the vehicle has a tracker.

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Use

Social, domestic & pleasure: This covers mainly personal use. Shopping, visiting friends, etc.

Commuting: This cover is solely to allow drivers to drive to and from a permanent place of work. Please note that travelling to a railway station, where the car is parked, is classed as commuting.

Business use: This covers the car in connection with your employment, such as driving to different places in addition to your permanent place of work.

Commercial travelling: Covers the car to be used for door-to-door sales, etc


Underwriter

The party that decides if a risk should be accepted and then calculates the premium.

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Voluntary excess

Please refer to Excess.

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Write-off

A damaged vehicle which is not repairable, or costs more to repair than the value of the car before damage occurred.

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Yearly premium

The amount you are quoted by an insurance company to cover the risk details you have supplied, inclusive of I.P.T (insurance premium tax). There can be instances where the total amount you're required to pay to an insurance company for a year is higher than just the yearly premium quoted. This may well be for charges for other products such as payment protection or windscreen protection or due to an additional cost for paying by instalments.

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