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Guide to Car Insurance Jargon


The world of car insurance can be confusing and is often made more complicated by the amount of jargon that is used. The process of obtaining a quote and buying a policy can be littered with words and phrases that make lots of sense to people who work in the industry, but very little to the average motorist.

MyMoneyComparison.com has devised this “jargon buster” guide, providing a list of words and their associated meaning to help when buying car insurance.


Agreed value is the value that is placed on a vehicle by an insurer when a policy is first taken out. In the event of a total loss or theft, this is the amount the insurer will pay. This term is used mainly when referring to classic car policies.


The annual premium is the total cost of a policy over the period of a year.


A garage or mechanic that is recommended by the insurance company to carry out any repairs that are covered by the policy.


An agent who sells insurance policies on behalf of insurance companies.


A document issued by an insurance company or broker that is used to verify the existence of insurance coverage to the named individuals. More specifically, the document lists the effective date of the policy, and the registration of the vehicle that is covered.


Collision damage waiver (CDW), or car hire excess insurance as it is also known, is an insurance product that covers an individual’s liability for hired vehicles in the event that any damage or loss should occur.


Commercial vehicle insurance is designed to cover policyholders who need to cover their van or lorry for use in connection with their business, occupation or profession. Within commercial vehicle insurance there are two types of use: one is carriage of owned goods; the other is carriage of goods for hire or reward. An example of occupations that would require cover for hire and reward are haulage contractors, delivery or courier firms.


The most complete level of car insurance available. Comprehensive insurance normally covers:

  • Injuries to other people
  • Damage to other people’s property
  • Accidents caused by named drivers
  • The use of a trailer
  • Fire damage and theft
  • Accidental damage
  • Medical expenses (up to a limit)
  • Loss or damage of belongings in the vehicle (up to an agreed limit)


A period during which a customer who has entered into an insurance contract, may cancel it without incurring a penalty. Usually up to fourteen days after the inception date of the policy.


A document providing temporary evidence of cover while the insurance policy and certificate are being prepared.


An amount of money that the policyholder has to pay towards the cost of a claim, for example, the first £150 of a claim. There could be a compulsory excess required by an insurer due to the age of the driver or the type of vehicle. This is in addition to any voluntary excess that is requested.


This describes an accident or loss where the policyholder is considered to be to blame, or where the insurer cannot recover costs from someone else. If damage is caused to a vehicle and the person responsible cannot be traced, this is classified as a fault claim. It is worth noting that a theft claim is usually classed as a fault claim because the insurer cannot normally recover its outlay from the perpetrator of the crime.


A non-fault claim is when a third party is at blame and the insurer is able to recover the cost of the claim from someone else.


The Financial Conduct Authority (FCA) was previously the Financial Services Authority (FSA) and is the UK’s finance watchdog. It is an independent, non-governmental body that has investigatory and enforcement powers. The FCA is able to advise people on making complaints about insurance or financial services products.




Insurance of non-life risks where the policy offers cover for a limited period, usually one year, for example, car insurance or home insurance.


The Green Card is a document that is recognised in over 40 countries including all the countries of Europe. It is proof that the minimum legal requirements for insurance in any country for which the Green Card is valid are covered by the insured person’s own motor policy. A Green Card is not required by law to cross borders within the European Union and some other countries. This is because all EU countries and certain other countries comply with the first directive on motor insurance, which says that every insurance policy issued in the EU must provide the minimum insurance cover required by law in any other EU country. The countries that do need a Green Card are Albania, Belarus, Bosnia and Herzegovina, Republic of Macedonia, Islamic Republic of Iran, Israel, Moldova, Morocco, Russia, Serbia and Montenegro, Tunisia, Turkey and Ukraine.


A tax imposed on most non-life insurance premiums. IPT is charged at a standard rate of 6% on motor insurance. A higher rate of tax is applied to travel insurance.


A person or organisation that offers advice and arranges insurance. Intermediaries may be either “tied” – representing one company in the case of life business or a limited number of companies for general business – or “independent” – with no limit on the number of companies with which they can deal.


Individuals, companies or websites that provide information to consumers about specific products or services.


This insurance covers the cost of legal proceedings in circumstances defined within the policy. This type of insurance provides cover for any unforeseen legal costs, which can include employment disputes, litigation and many other situations. There is a specified limit of cover under a motor insurance policy, which is normally around £50,000. Always check the policy details.


A loss adjuster is an employee of an insurance company who investigates claims. It is their job to ensure that claims are legitimate and that the insurance company is not paying out too much in relation to a claim.


Information that has an effect on a policy or premium. For example, a driving conviction. Failure to disclose a material fact could invalidate a policy.


A body funded by motor insurance companies that deal with claims for injury compensation when the driver at fault is not insured or cannot be traced.


Cover for property where an item that has been lost or destroyed would be replaced with a brand new one, with no deduction for wear and tear. Also called “replacement as new”.


A reduction in a renewal premium to reflect a claim-free record. It is worth noting that this discount is only applied when the previous insurance policy was held within two years of the start of the new policy


The length of time for which policy provides insurance cover.


The person or organisation to which the insurer issues the policy. Normally the person to whom any benefits are payable.


The person or organisation recorded by the Driver and Vehicle Licensing Agency (DVLA) as being the legal keeper of a vehicle. The registered keeper is not necessarily the legal owner of the vehicle. The registered keeper is responsible for the vehicle’s day-to-day use on the road and is the person who is liable for licensing the vehicle.


Short term insurance is designed for customers who do not require an annual policy. The insurance period in question is normally between 1 and 30 days. This type of policy is particularly useful if a driver wants to insure someone else on their car without putting their own no claims bonus at risk.


In the world of car insurance this normally refers to someone involved in a claim who is neither the policyholder nor the insurer.


If a motor accident was the fault of a third party, the insurance company will attempt to recover its losses such as repair costs. Uninsured loss recovery is a form of legal expenses insurance that helps to recover money that a motorist may have paid out for things not covered by the standard policy following an accident that was a non-fault claim.


A standard that requires both the applicant and insurer to act honestly towards each other and to not mislead or withhold critical information.


A damaged vehicle which cannot be repaired or would cost more to repair than the car was worth before the damage occurred. Also known as a “total loss”.


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