Motor Insurance Glossary
Accidental Damage: This is a type of insurance cover that is designed to protect the policyholder’s possessions against damage caused by unforeseeable circumstance, but not theft. The policyholder may be subject to an excess fee (see Excess).
Agreed Value: The ‘agreed value’ is the sum reimbursed to you in the event of a total loss (if your vehicle is stolen or written off). The underwriters will have agreed this value at time your insurance cover commenced, and be endorsed on your current policy, rather than at the date you make a claim.
Any Driver: This term refers to ‘any driver’ that drives the given vehicle as long as they have the permission and hold a licence to do so. An age restriction will usually apply.
Association of British Insurers (ABI): The trade body for all insurance companies the United Kingdom.
Break Down Cover: A policy that protects the policyholder in the event of breaking down whilst travelling in the insured vehicle, usually providing you with roadside assistance and repair services.
Comprehensive Cover: Fully comprehensive car insurance covers almost every potential claim. It covers damage or injury that you cause to property and/or persons involved in an accident for which you are to blame. Fully Comprehensive also covers damaged to the policyholders vehicle.
Cancellation Clause: A contractual provision which gives you or your insurer the means to terminate your policy contract before its expiration date.
Chartered Insurance Institute: CII refers to the governing body for the insurance industry.
Claim: An incident that would give rise to a request by the policyholder for a payout or indemnity under a policy.
Compulsory Excess: If your car is lost, damaged or stolen, you will be required to bear an amount of the claim’s settlement. Your insurers will pay all of a valid claim except this amount.
Cooling off Period: This refers to the time in which you as the policyholder have to cancel your policy without incurring anything but an administration charge.
Chartered Insurance Institute: CII refers to the governing body for the insurance industry.
Excess: This is the term given for the sum you will be required to bear of any claim settlement. This amount will vary given the type of policy and amount of cover the policy has.
Financial Ombudsman: The independent organization set up by parliament to be responsible for settling disputes between customers and businesses. This is usually for parties who haven’t been able to resolve their dispute themselves.
Financial Service Authority (FSA): FSA refers to the independent organization of regulators for the Financial Services Industry in the UK.
Lapse: This refers to the process, which will occur if there is a non-payment of the premium on your policy at renewal. There is no grace period involved. If your policy has lapsed due to non-payment, you will be required to set up a new policy under a new contract, which will not be backdated to the expiry of your previous lapsed policy.
Market Value: If you have taken out a policy on a ‘market value’ basis, it means the amount that will be paid for the replacement of your car in its current form, i.e. the same make, model type and age, with the same mileage and in a similar condition.
Named Driver: Is a driver specified on your policy to drive the vehicle insured.
No Claims Bonus: The discount that policyholder earns as result of whole years claim free driving. This discount is determined by the number of years the policyholder made no claims on previous policies.
Premium: This is the sum you will pay for your entire insurance cover. This sum can either be paid in one single payment, or may usually be paid by monthly installments.
Renewal: You will be given a renewal date at the beginning of your policy. This is the process where you, the policyholder will be invited to reinsure with us.You will receive a Renewal Notice usually 21 days before the renewal date when, if you chose to renew, the ‘renewal’ process will begin.
Schedule: This is the documentation that the policyholder will receive, containing the details of cover given by your insurance company. This is a very important document, which needs to be kept safe.
Settlement: The payment made by the insurance company to the insured under the term of an insurance contract meet a claim.
Third Party, Fire and Theft: This is a type of cover you can choose for your vehicle. Although it may offer a cheaper premium to the policyholder, it does not cover any costs which you may have incurred in the event an accident. This cover does however cover you, in the event of your vehicle being stolen or damaged by a fire.
Total Loss: In the event of a ‘Total Loss’, this will usually mean that we will consider the insured vehicle is uneconomical to repair following an accident, fire or theft.
Voluntary Excess: This refers an amount of excess you elect to carry in addition to any compulsory excess that has to be paid in the event of a claim. Unless you have chosen to add this excess on to your policy, you will not be required to pay this in the events of a claim. You can usually choose how much ‘Voluntary Excess’ you are prepared to pay out in the event of a claim and this usually gives the possibility of a reduced premium.
