Glossary of insurance

The insurance industry – especially when it comes to car insurance – is full of specific terms and words that many people may be unaware of. To try and make the insurance process as simple and straightforward as possible, Tempcover has put together a list of insurance terms that you may come across.

Whether you’re getting a temporary car insurance quote or reading through your policy documents, you may come across some of the below terms.

• Agent – An intermediary who arranges insurance. They act as a bridge between the insurer and his client.
• Broker – Intermediary who arranges insurance for individuals or companies. Must be registered under the Insurance Brokers’ (Registration) Act, 1977.
• Business use – Driving your vehicle for anything other than for your own personal use will be deemed as ‘for business use’. This includes delivery, errands or any related driving that happens while at work or for work.
• Certificate of insurance – A document issued by an insurer to certify that insurance is in force. It should be kept throughout the duration of the policy as it acts as proof of insurance.
• Claim – A demand for money after an injury, loss or damage affecting the insured under the terms of an insurance policy.
• Comprehensive cover – Provides the highest level of cover. A person is covered for any damage or injury if an accident was, or was not their fault.
• Contract – An agreement between two or more people which has legal effect.
• Driving Other Cars – Otherwise referred to as DOC insurance, this allows you to drive another car without being a named driver or having to take out a temporary car insurance policy.
• Excess – The amount the insured must pay towards any claim. This can be voluntary although some insurers will have a minimum excess (known as a compulsory excess).
• Expatriate (expats) – Those who reside in another country but have previously lived in the UK and hold, or have held a full UK driving licence.
• The Financial Conduct Authority – The FCA is the regulatory body for financial services in the UK. It operates independently to ensure consumers get a fair deal.
• Gadget cover– Cover against the cost of replacing hand-held electronic gadgets that are stolen, or damaged accidentally whilst in the vehicle.
• Impounded vehicle – A vehicle seized under Section 165A of the Road Traffic Act, after being driven without valid insurance or without a valid driving licence.
• Insurance Premium Tax – Insurance Premium Tax (IPT) is a tax on general insurance premiums. Decided by the government, the current rate is 12% (as of June 1st, 2017).
• Like 4 Like – The offer to take out a new policy to replace an existing one due to error/amendment.
• Material fact – Anything which could affect the judgement of a prudent underwriter in accepting or deciding terms for a risk.
• Motor Insurance Database – The Motor Insurance Database stores all information regarding drivers and their insurance. Also known as the MID, it is used by the police to check whether a vehicle is currently insured.
• Misrepresentation – A false statement of a material fact (can be innocent or fraudulent).
• Named driver – A driver who is added to an insurance policy where another driver does most of the driving. The named driver receives the same level of cover as the main driver.
• No claims discount – NCD is the discount applied to your annual insurance based on the number of years in which you haven’t made a claim.
• Personal accident cover – Insures you against accidental injury either in the vehicle or whilst getting in and out of the vehicle.
• Policy – A written contract of insurance between the policyholder and the insurer. Your policy is evidence of your insurance.
• Policy documents – A series of documents sent to you after you purchase a policy. These documents outline the details of your policy.
• Premium – The amount of money you have to pay your insurer to provide you with insurance.
• Renewal – The continuation of insurance for a further period usually another 12 months.
• Risk factor – A number of factors which determine how much risk you are to your insurer. This affects how much you pay for insurance. These risk factors range from previous driving to offences to your job and address to the car you’re driving.
• Roadside assistance – Get roadside assistance as an optional extra with your insurance policy. You’ll get assistance by the roadside if the driver is more than a quarter of a mile from home or towed to a local garage if the vehicle can’t be fixed at the roadside.
• Schedule of insurance – An important document which outlines the information you’ve provided, on which the insurer has decided to insure you. It also states the individual details of your policy.
• Third Party Fire & Theft – Covers your vehicle for repairs if your car is stolen or damaged by fire. It also offers protection to other drivers if you are deemed to be the cause of an accident.
• Third Party Only – The minimum level of insurance required in the UK. It protects other drivers, their vehicles and property in the event of an accident that was deemed your fault.
• Underwriter – The insurance company that assesses your risk and decides whether to accept it and offer you cover. They pay out if you make a successful claim.
• Uninsured Loss Recovery – Having uninsured loss recovery (UIL) within your policy means your insurer will attempt to recover any associated costs you incur from an accident. This could be additional travel or childcare costs as a result of an accident that wasn’t your fault.

Car insurance acronyms

• DOC – Driving Other Cars
• FCA – Financial Conduct Authority
• IPT – Insurance Premium Tax
• MID – Motor Insurance Database
• NCD – No Claims Discount
• UIL – Uninsured Loss Recovery