Annual mileage and annual business mileage
Most insurance companies want to know how many miles you drive a year and whether you use your car for social, commuting or business. The more miles covered in a year, the greater the potential risk of a claim. If you do not use your car for business, your annual business mileage should be zero. Reducing your annual mileage can be a great way of reducing your insurance premium.
Association of British Insurers (ABI)
The Association of British Insurers (ABI) promotes best practice, transparency and high standards in the industry and works with government, regulators and policy makers. Its membership totals two-hundred and fifty companies that account for more than ninety percent of the UK market. Each follows a code of conduct. It does not sell insurance, but will provide consumers with general information.
Approved Repairer
An approved repairer is recommended by – and whose services might be paid for via an insurer should your vehicle require a repair.
Certificate of Insurance
Once you have paid for your car insurance, your insurer will issue you with a Certificate of Insurance. This is proof that you are insured and your insurance is valid for the duration of the policy.
Comprehensive Cover
Comprehensive cover is the highest level of car insurance cover and usually covers you and your car for:
- Injuries to other people
- Damage to other’s property
- Accidents caused by your passengers or a driver named on your policy
- Fire damage and/ or theft
- Medical expenses, up to a specified limit
- Use of a trailer whilst attached to your car
- Loss of, or damage to personal belongings in the car, up to a specified limit
Policy features vary between insurers and it is recommended you check before you buy.
Current Market Price
The current market value is what your insurer will pay you if your vehicle is damaged beyond repair and classed as an insurance write-off. After your vehicle is deemed to be an insurance write-off you should immediately get an up-to-date market valuation so you are prepared for the first offer your insurer gives you.
Insurers should offer you a sum that will allow you to buy a like-for-like car in a similar condition to your previous one. All that should be deducted is the excess agreed when you bought the policy.
Knowing your car value when the insurer offers you a pay-out will give you a good indication of what you can expect to receive, however you should always expect insurers to start at the bottom end so be ready to reject the first offer
Driving Other Cars (DOC)
An insurance policy might enable you to drive other cars for which you are not separately insured in an emergency. A trip to hospital, perhaps. Cover is typically third party. The vehicle must be insured by another party and you must have the owner’s permission. It is recommended you contact your insurer to check if you are able to drive other cars.
Excess (Compulsory & Voluntary)
The excess is the amount of money you contribute towards every claim. Once you have paid your excess, the insurance will be liable for any additional costs. As an example, you may be involved in an accident that causes £250 worth of damage. If you are at fault and your excess is £100, you would have to pay £100 and your insurer would pay the remaining £150.
Most excess’ include a compulsory element and a voluntary element. The compulsory element is set by your insurer depending on policy type and personal circumstances and the voluntary element is what you agree to pay in addition to the compulsory excess. When comparing car insurance or renewing your policy, try choosing to pay a higher voluntary excess as a way of lowering your premium.
Setting a high voluntary excess can be a great way of reducing young drivers insurance, or those drivers that have recently been involved in a fault claim accident.
Fault Claim
A fault claim occurs when you are considered to be at fault in an accident or loss, or your insurer cannot recover all losses from a third party. The latter, for example, includes a break-in where items are stolen, or when your car is struck while parked and the offender cannot be traced. Compare with Non-Fault Claim
Financial Conduct Authority
The Financial Conduct Authority protects consumers, financial markets and promotes competition. Within this remit, it can advise you should you have a dispute with your insurance company.
GAP Insurance
GAP insurance is a belt and braces cover. Imagine you purchase a new vehicle – via finance – for £10,000. It is then written-off three years later when it is only worth £4,000. The insurer therefore pays you £4,000, but that is not enough to repay the remainder of the loan and purchase a replacement of comparative quality. GAP insurance repays a percentage of the difference.
Indemnity
In insurance terms, indemnity is protection against loss. It is to be compensated so that your life returns to its state prior to an incident. Your car might be repaired following a collision, for example, or you receive money to buy a replacement if it is stolen.
Insurance Premium
An insurance premium is the amount of money the provider charges for active coverage. The sum you pay for your premium is dependent on numerous factors, including but not limited to, age, driving experience, location and vehicle type.
Loss of Cover
Insurance is provided based on decelerations. If you misrepresent a vehicle, or yourself, the provider might refuse to settle a claim, resulting in loss of cover.
Main Driver
The main driver is the person who uses the car for most day-to-day activities. It is always best to be honest when telling your insurer who is the main driver. If your son or daughter uses the car permanently and you are the main driver (known as fronting), you risk invalidating any claim should they or you be involved in an accident.
You can always compare quotes for multiple named drivers from separate insurers before buying car insurance.
Compare Quotes for Multiple Named Drivers
Modifications
The insurer assumes your vehicle is in factory specification. It bases the premium accordingly, so you must declare any enhancements. These include anything that is considered to alter the value of your vehicle, such as upgraded wheels.
If you are determined to add modifications to your vehicle, choose cheaper options and make sure you tell your insurer as non-disclosure can result in claims being refused after an accident.
No Claims Bonus & Protected No Claims Bonus
If you are a new, unproven, driver your insurance policy is priced at a standard rate. However, after a year of trouble free motoring you receive a no claims bonus of (say) ten percent. This might rise to (say) twenty percent the following year. The maximum is typically four to five years. If you make a claim you lose part of the bonus, most often two years. A protected bonus – which is a cost extra - ensures the yearly total is not reduced following a claim.
Non-Fault Claim
A non-fault claim occurs when the insurer recovers all costs from a third party. Examples include a motorist that hits your vehicle due to a lack of concentration, admits responsibility, and is insured. Compare with Fault Claim.
Thatcham Device
Thatcham Research places security devices such as alarms and immobilisers into categories of effectiveness. Its framework enables you to compare systems and buy based on your requirements.
Third Party Only (TPO)
Third party only cover is the minimum level of car insurance cover required by law. This type of policy does not cover any damage to your vehicle, but does usually cover the following:
- Injuries to other people
- Damage to other’s property
- Accidents caused by your passengers or a driver named on your policy
Third Party, Fire and Theft (TPFT)
A Third party, fire and theft policy would provide cover for everything mentioned in third party only, as well as protecting you against damage to your vehicle from fire, or theft of the vehicle, as long as you’re not at fault.
Underwriter
An underwriter considers your circumstances, decides whether the risk of insuring you is too high and – if not – sets the premium.
Uninsured losses
Uninsured losses includes anything that is not covered by your insurance policy, including, but not limited to loss of earnings or compensation for an injury suffered in an accident
