Buying car insurance should be clear and straightforward. But sometimes it's easy to confuse IPT with TPFT, or the FCA with the ABI. So here's our guide to help you with the jargon.
Association of British Insurers (ABI)
Many insurance companies are members of the ABI, but membership is not compulsory and the ABI is not a regulatory body.
Members sit on a Group Rating Panel, which recommends the car insurance group rating for each new model built to a UK specification.
Approved repairer
A garage recommended by your insurance company for car repairs covered by your insurance policy.
Comprehensive cover
The highest level of car insurance cover, which usually covers you for:
- Injuries to other people.
- Damage to other people's property.
- Accidents caused by your passengers or a driver named on your policy.
- The use of a trailer, while attached to your car.
- Fire damage and/or theft.
- Accidental damage to your own car.
- Medical expenses, up to a stated limit.
- Loss of or damage to personal effects in the car, up to a stated limit.
Policy features vary between insurers, so always check them before you buy.
Compare with third party, fire and theft cover
Driving other cars (DOC)
Many insurers don't offer this as a standard policy feature, so make sure you're covered before getting behind the wheel of someone else's car. It's also worth noting that when it is included, you usually get third-party-only cover.
Fault claim
An accident or loss where you are considered to be to blame, or where you or your insurance company can't recover costs from somebody else.
Remember, if your car is hit while parked, by someone who cannot be traced, this counts as a fault claim.
Non-fault claim
With a non-fault claim your insurer can recover the cost of the claim from someone else.
Financial Conduct Authority (FCA)
The UK's financial watchdog, the FCA regulates the financial services industry, including insurance companies. If you have a complaint or concern, we encourage you to get in touch with us. However, the FCA can also advise you about making a complaint against an insurance company.
Indemnity
As an insurance policy holder, you're placed in the same financial position following a loss as you were before it. So, if your insurance company pays to repair your car following an accident, for example, you'll be in the same financial position as you were before the car was damaged.
Insurance Premium Tax (IPT)
A tax on general insurance premiums, including premiums for car insurance. This tax is included in the price of your car insurance premium.
Insured value
The total amount the insurance company will pay out for your car if it's damaged beyond repair. This will either be the amount you stated the vehicle was worth when taking out the policy, or the current market value at the time of the claim – whichever is lower.
Material fact
Any information that may influence either an insurer's decision to offer you cover, or the premium they charge for it. If you leave out information which may influence a decision to offer cover, your policy may be invalidated.
No claims discount (NCD)
For each year you drive without making a claim on your insurance you get a year's no claims discount, subject to a maximum. This discount usually reduces the cost of your car insurance premium for the following year. Also described as a no claims bonus (NCB).
Settlement
The amount your insurer pays out for a claim.
Thatcham Research
The Motor Insurance Repair Research Centre (Thatcham Research) carries out research for the motor insurance industry on the cost of car repairs and vehicle security. The Group Rating Panel, which meets to assign new car models to an insurance group, is administered by Thatcham Research on behalf of the Association of British Insurers.
Third party only (TPO)
Third party cover is the minimum level of car insurance cover required by law and contains no cover for damage to your vehicle. It usually covers your legal liability for:
- Injuries to other people.
- Damage to other people's property.
- Accidents caused by your passengers or a driver named on your policy.
Third party, fire and theft (TPFT)
Third party fire and theft cover provides the same level of cover as third party cover, but also protects you against damage to your vehicle from fire, or theft of the vehicle, as long as you're not at fault.
Compare with comprehensive cover
Uninsured losses
Any losses not covered by your insurance policy, such as your policy excess; any out-of-pocket expenses following an accident, for example a loss of earnings; or compensation for an injury suffered in an accident.
Uninsured loss recovery (ULR cover)
Help recovering your uninsured losses from a third party, where an accident is the third party's fault.
Underwriter
An underwriter decides whether to accept you as an insurance risk and then calculates your car insurance premium.