Car Insurance Terminology: Getting to Grips with the Jargon

Understanding car insurance can be challenging, especially with all the jargon insurers use. This glossary explains key car insurance terms in plain English for UK drivers.

A

ABI
Association of British Insurers. A trade body that represents UK insurance companies.

Act of God
An event beyond human control, such as lightning or flooding. Some are covered by insurance policies, while others may be excluded – always check your cover.

Amendment
A change made to your existing car insurance policy.

Annual Business Mileage
The number of miles you drive in a year for work or business purposes.

Annual Mileage
The estimated number of miles your car covers in a year in total.

Annual Premium
The total cost of your insurance policy if paid yearly.

B

Breakdown Cover
Optional protection that provides roadside assistance and vehicle recovery if your car breaks down.

Broker
An insurance intermediary who compares policies and arranges cover with insurers on your behalf.

C

Cancellation
Ending your policy before the renewal or expiry date. Fees may apply.

Certificate of Motor Insurance
The legal document that proves your car is insured. You must carry valid cover to drive on UK roads.

Claim
A request made to your insurer for compensation after an incident.

Comprehensive Cover (Fully Comp)
The most inclusive level of cover. It typically includes:

• Damage to your car (accidental, fire, theft)
• Damage or injury caused to others
• Cover for passengers and named drivers
• Limited medical expenses and personal belongings cover
  Always check your policy as terms and limits vary.

Cover Note
Temporary evidence of insurance before your full certificate is issued.

Cover Type
The type of insurance you choose: Third Party Only, Third Party Fire & Theft, or Comprehensive.

D–F

Duty of Disclosure
Your obligation to inform the insurer of changes that affect your policy, such as change of car or address.

Endorsement
A change or condition added to your policy, e.g., adding a named driver.

Excess
The amount you must contribute towards a claim. This includes a compulsory amount (set by your insurer) and a voluntary amount you choose.

Exclusions
Incidents or risks not covered by your policy, clearly listed in its terms.

Fault Claim
A claim where your insurer cannot recover costs from another party, even if you were not at fault.

Financial Conduct Authority (FCA)
The UK regulator for insurance and financial services.

I–L

Indemnity
Compensation paid to cover a loss, either through repair, replacement, or cash settlement.

Insurable Interest
The principle that you can only insure a vehicle if you would suffer a financial loss if it were damaged.

Insurance Premium Tax (IPT)
A government tax included in your insurance cost.

Insured Value
The amount your insurer agrees your car is worth, used to calculate premiums and payouts.

Knock-for-Knock
An agreement between insurers to cover damages to their own customers’ cars, regardless of blame.

M–N

Main Driver
The person who drives the vehicle most often. Declaring this incorrectly (known as fronting) is considered fraud.

Market Value
The amount it would cost to replace your vehicle with one of similar type, age, mileage, and condition immediately before the loss.

Motor Insurance Database (MID)
A UK-wide system holding details of every insured vehicle, used by police and insurers.

Modifications
Any changes to a vehicle from factory standard (such as engine tuning, new alloys, or spoilers). Always notify your insurer.

No-Claims Bonus (NCB)
A discount applied to your premium for each year you don’t make a claim, usually up to a maximum.

Non-Fault Claim
A claim where your insurer recovers all costs from a third party.

O–R

Optional Extras
Additional cover options, such as legal protection or courtesy car cover.

Period of Cover
The time during which your insurance policy is valid.

Points
Penalty points added to your licence for motoring offences. These can increase your premium.

Policyholder
The person who owns the insurance policy.

Premium
The cost of your insurance, paid monthly or annually.

Quote
An insurer’s price to provide cover, based on your details and risk factors.

Rating
The process insurers use to assess risk and set your premium. Factors include age, driving record, postcode, occupation, and vehicle type.

Registered Keeper
The person named in DVLA records as responsible for the vehicle. Not always the legal owner.

Renewal
When your insurer offers to continue your cover at the end of the policy term.

Risk
How likely you are to make a claim and how costly it might be. This assessment determines your premium.

S–T

Schedule
A document confirming important details of your policy, such as cover type, named drivers, and start/end dates.

Telematics (Black Box Insurance)
Insurance that uses a device or app to track driving behaviour. Safer driving can lead to lower premiums.

Third Party
Someone involved in a claim who is not you or your insurer.

Third Party, Fire & Theft
Covers damage to others plus fire or theft of your own vehicle.

Total Loss (Write-Off)
When repairs to your car cost more than its value, leading the insurer to declare it a write-off. Categories (A–N) define levels of damage and repairability.

U–W

Underwriter
The insurer or specialist who decides the terms and pricing of your policy.

Uninsured Drivers Agreement
Protection via the Motor Insurers’ Bureau (MIB) if you are hit by an uninsured driver.

Uninsured Losses
Costs not covered by your policy (e.g. excess, lost earnings, personal items).

Untraced Drivers Agreement
MIB scheme covering accidents with hit-and-run or untraceable drivers. Strict reporting deadlines apply.

Use / Class of Use
The permitted use of your car (e.g. social only, social and commuting, business use). Using your vehicle outside its declared class may invalidate cover.

Voluntary Excess
The extra amount you opt to pay towards a claim, which usually reduces your premium.

Write-Off
See Total Loss – when the car is deemed uneconomical to repair