Everyone legally is required to have car insurance in order to drive on the road making insurance an emotive subject. With price being a key driver & a certain comparison site giving away a free cuddly toy to soften the blow on the premium, not everyone takes the time to read their policy. We know, insurance policies are long, lots of pages often complex & filled with words that even a brain surgeon would be forgiven for not understanding. At Motum we make the complex simple, but to help you out even if your not buying with us we’ve outlined some of the terms used in insurance & their meanings below. ABI ABI stands for the Association of British Insurers. The ABI offers consumer advice, while working with the Government. The ABI is also involved in recommending insurance group ratings. ‘Act of God’ An event or accident that no one could have prevented. It usually relates to natural disasters like storms or floods. Annual mileage How many miles you expect to drive in a year. If you use your car for business, your insurance provider may want you to detail how much you use your car for work, and how much for personal needs. Approved repairer Someone your insurance provider recommends using to repair your car. You don’t have to use an approved repairer, but if you don’t, you might have to pay an extra charge. We would always recommend checking your policy if using your own repairer is particularly important to you Betterment If you are being placed into a better position than you was in prior to the incident as a result of vehicle repairs, then your insurer may ask you to contribute towards the cost. Black box If you have black box, or ‘telematics’ insurance, a small box is attached to your car to monitor you’re driving. It measures how you drive, for example how you brake and take corners, as well as your speed. The data is sent back to your car insurance provider. If you drive well, your insurance provider could charge you less for your premium. This can be useful for young drivers. Broker Just like Motum, a broker is an intermediary that acts on your behalf to find the right policy to meet your needs. Brokers often work with a vast array of insurance companies, including those that do not trade in a retail space. Excess This is a fixed charge you’ll need to pay if you want to make a claim. There are two types of excess - compulsory and voluntary excess. Insurance policy Your car insurance documents, detailing the terms and conditions of your contract. There are three types of car insurance policy: third party, third party fire and theft, and comprehensive. Certificate of insurance This is the legal proof that a driver is insured. It shows what car is covered, who’s allowed to drive it and what it can be used for - for example, whether that’s business or just pleasure. Claim In the event of an incident whereby you wish to utilise your insurance policy, the formal process in doing so is called a claim. Class of use Class of use covers how you intend to use your car. There are three classes-of-use groups: Social, Domestic and Pleasure (SDP), Social, Domestic, Pleasure and Commuting (SDP+C), and Personal Business use (SDPC+Business use). Comprehensive car insurance Comprehensive car insurance is the highest level of cover. It insures your car as well as any other cars you might damage in an accident. Compulsory excess This is how much you’ll have to pay to make a claim. Your insurance provider sets the amount, which is non-negotiable. This is different from voluntary excess, which is the amount you choose to pay in addition to the compulsory excess. Compulsory excess can vary according to each insurer, you and your vehicle. Courtesy car If you have an accident or your car breaks down, your insurance provider could offer you a courtesy car. You can drive the courtesy car until your car is repaired. It’s often included in a comprehensive car insurance policy, but might not be, so always check your policy documents or directly with your insurer. DOC Cover DOC stands for ‘driving other cars’. You’re not automatically allowed to drive someone else’s car, so before you get behind the wheel of a friend’s car, check if DOC is included in your policy. Typically when included, it’ll only be on a third-party basis – you won’t have full comprehensive cover. Alternatively, you could be added to someone else’s car insurance policy as a named driver. Endorsement This is an extra clause that changes the standard cover the policy provides. Exclusions There are specific things that insurance providers won’t pay out for. These exclusions should be clearly set out in your policy terms and conditions. Fault claim A claim whereby the incident is your fault, i.e. an incident whereby you hit someone else, or alternatively when there is no one else to claim from, for example if you was to have a collision with a deer FCA FCA stands for the Financial Conduct Authority, formerly known as the Financial Services Authority. The FCA regulates firms that provide financial services to consumers, like car insurance provider & brokers. Fronting Car insurance fronting is a type of fraud and is illegal. The overall aim is to use someone else as the policyholder who may be able to achieve a lesser premium than someone who couldn’t, typically this is seen whereby a parent will be the policyholder with their child being a named driver, despite the fact the child is the main user of the vehicle. Immobiliser An immobiliser is a piece of electronic car security kit. It prevents a car from starting if someone tries to hotwire it or start it with the wrong key. If your car was made after 1998 it’ll probably have had an immobiliser fitted when it was manufactured. If not, you can get one fitted. Having an immobiliser could help you make savings on your car insurance. Indemnity This ensures you won’t lose out financially after an accident. So if your car is damaged, you’ll still be in the same financial position you were before it happened. Insurance Premium Tax Insurance Premium Tax (IPT) is a tax on all insurance policies. It’s automatically included in the premium price. Legal owner The legal owner of a car is the person who paid for it. This won’t necessarily be the same as the registered keeper of the car, who is the person who keeps and uses it. Company cars are an example of when the legal owner and the registered keeper may be different. Legal Expenses Cover Legal expenses cover is an add-on product that can be utilised in the event that your not at fault for an incident. The policy will cover the cost of bringing a claim to court & the cost of legal expertise. Whilst not necessarily required it will ensure you receive 100% of your compensation, whereas without this cover your solicitor may take a portion of your compensation, sometimes up to 40%. Loss adjuster Someone who investigates claims on behalf of an insurance provider to make sure it’s a legitimate claim, and to ensure that the insurance provider isn’t paying out more than they should. Main driver This is whoever drives the car most, not necessarily who owns it. This is worth noting if your teenager drives your car more than you do, getting this wrong could result in allegations of ‘fronting’. Market value of your car This is the price your car would sell for on the open market now. It’s likely to be less than you bought it for. When you take out car insurance you’ll usually give the price you paid for the car, as its value. Always check your policy to confirm if your pay-out in the event of a write off is for declared value, market value or the lesser of the two. Using a broker can be particularly beneficial in this instance where your vehicle is limited edition or rare. Named driver A named driver is an additional driver who has been added to a car insurance policy, for example your partner or child. No claims discount A no claims discount (NCD), also known as a no claims bonus (NCB) is the discount you’ll receive on your premium if you don’t make a claim. The discount is calculated every year when you renew. The policy has to run for a full year before you can earn that year’s discount. Non-fault claim A non-fault claim is when your insurance provider can recover the total cost of a claim from the person responsible for the accident. Period of insurance The dates an insurance policy is valid for. Policy schedule This is part of the insurance contract and sets out details of your policy. It shows the period of insurance, car details and information about the policy excess. Premium How much you’ll pay for your insurance policy. This is usually paid via direct debit either monthly or annually. Registered keeper The registered keeper of a car is the person who uses it and keeps it. They’re also responsible for the car as far as the police and Driver and Vehicle Licensing Agency (DVLA) are concerned, and their details will be on the V5 registration document. The registered keeper isn’t necessarily the same person as the legal owner of the car – the owner is the person who paid for it. Think of a company car, for example. This is why the V5 document isn’t considered evidence of ownership. Statement of fact A form showing all the information you’ve given to your insurance provider. A statement of fact forms part of your insurance contract. Telematics car insurance Also known as ‘black box insurance’, telematics car insurance involves an in-car device or online app that monitors your driving. The information is relayed back to your insurance provider who may use it to calculate premium. Particularly popular with young drivers however at Motum we have a similar solution for fleet operators. Third party car insurance Third party car insurance is the most basic level of cover, and the minimum required by law. It covers damages to the owner of the other vehicle and passengers in your car. It won’t cover any injuries you suffer, or damage to your car if the accident was your fault. Third party fire and theft Third party fire and theft insurance provides the same level of cover as third party, but also means you’d be covered if your car is stolen or damaged by fire. Underwriter Underwriters create insurance policies and cover. They decide whether someone is a good risk and worth insuring. They also work out the cost of premiums for insurance providers. Uninsured loss recovery If you have an accident that’s not your fault, uninsured loss recovery (ULR) could help you reclaim any money you have to pay out to fix the damage. Voluntary excess How much you choose to pay if you make a claim. This is usually agreed when you take out the policy. Having a higher voluntary excess could bring down the cost of your premium (just make sure you can afford both the voluntary and compulsory excess should you have to claim).