Car insurance A-Z Glossary

Get to grips with car insurance jargon with our handy round-up of the main terms you'll come across.

The financial industry is renowned for its complicated jargon, and car insurance is no exception. We’ve put together this simple glossary to help you decipher common terms, from agreed value to write off.



Admin charges. Fees that you may need to pay to your car insurer above and beyond your insurance premium, for example when you cancel or make changes to your policy part way through an insurance term.

Adjustment fee. A fee that applies when you make a change to your policy. These might include changing your name after getting married, moving address, changing profession, increasing your annual mileage, or adding a named driver.

Agreed value insurance. When you take out agreed value car insurance, you agree on the value of your vehicle with your insurer up front. If your car is stolen or written off, this is the value you receive. It most commonly applies to rare or classic cars that are hard to apply a market value to. Unlike mainstream cars, which tend to be insured based on market value, the agreed value of the car will not automatically decrease over time.

Annual mileage. The number of miles you drive in a year. You’ll be asked to estimate your annual mileage as closely as possible when you apply for insurance as it affects your premiums. Typically, the higher your annual mileage, the more you’ll pay, as being on the road for longer increases the chance you’ll be involved in an accident.

Any driver car insurance. A type of car insurance that lets almost anyone drive the vehicle, or vehicles, covered by the policy – with the owner’s permission. It’s usually expensive.

Approved repairer. A repairer that is part of network of garages contracted and approved by your insurer to carry out car repairs following a claim. You don’t have to use an insurer’s approved repairer, but if you don’t you may miss out on certain benefits (such as a courtesy car).

Association of British Insurers (ABI). A trade body representing more than 200 UK insurance providers. It also publishes car insurance research and consumer advice.

Auto renewal. When your car insurance company automatically renews your car insurance policy at the end of your insurance period. Usually it’s for the same period as your current contract


Black box car insurance. (also see Telematics car insurance). A specialised type of cover that’s designed to give good drivers cheaper car insurance. A ‘black box’ device is attached to your car to record your driving performance. Careful drivers are rewarded with lower premiums; reckless driving is likely to be penalised.

Breakdown cover. A car insurance add-on offered by some providers, often for an extra fee. If you break down the breakdown provider will send someone out to you to try to fix your car or tow it to a garage.

Business car insurance. Covers you if you use your car for business purposes, such as transporting work equipment or driving to lots of different work destinations. Regular car insurance will usually only cover you to commute to and from the same place of work.


Cancellation fee. A charge that most insurers apply if you cancel your policy part way through a period of cover. The level of the fee will depend on whether or not you cancel within the cooling off period.

Car insurance group. A rating of 1-50, given to all new cars in the UK, to help insurance providers decide how to calculate car insurance premiums. A car’s insurance group tells insurers which cars are the most and least expensive to cover based on factors such as their original sale value and the cost of replacement parts.

Certificate of motor insurance. A document you get from your insurer that provides legal evidence that you’re insured.

Claim. The formal process you go through of applying to your insurer to cover the cost of repairs to or replacement of your car and/or damage to a third party’s car or property following an incident.

Class of use. A field on a car insurance application form that describes how you plan to use the car. Standard car insurance usually only offers 2 choices: Social, Domestic and Pleasure (SDP) or Social, Domestic, Pleasure and Commuting (SDP+C). You’ll need to select the latter if you plan to use your car to get to and from a regular place of work. If you expect to use your car for other work purposes, you’ll need business car insurance.

Commercial private hire car insurance. A type of business car insurance aimed at professional drivers, such as tax drivers.

Comprehensive cover. The highest level of cover you can buy to protect your car. It covers you for damage to your own car following an incident, as well as damage to other people’s cars or property.

Compulsory excess. The non-negotiable part of a car insurance excess, which is the amount you have to pay towards a claim. Unlike the voluntary part of any excess, the compulsory excess is set by the insurer and can’t be adjusted.

Cooling-off period. This refers to the 14 days after your car insurance cover starts or you receive your policy documents (whichever is later). During this period, you are allowed to cancel your policy for any reason and receive a refund of the premiums. Your insurer will usually deduct a pro-rata amount for any days during which your cover was in place.

Courtesy car cover. If your car is being repaired or has been written off after a claim, this cover provides a hire car vehicle until you have your own again. Some policies include it as standard, while others charge extra.


Defaqto. An independent financial analysis firm that carries out research into the quality of car insurance policies and provides star ratings for insurance products.

Depreciation. The change in a car’s initial market value over time. Insurers take depreciation into account when assessing the market value of a car if they need to pay out following a claim. According to government money advice site MoneyHelper, cars typically depreciate by between 15-35% in the first year and up to 50% or more over three years.

Driving abroad insurance. Provides cover to drive your car abroad, for example if you take it across the channel to France. The rules depend on the countries you plan to drive in.

Driving conviction. A driving offence that can result in a fine, points on your licence or, in the most serious cases, driving bans or even imprisonment. Driving convictions can make it much harder to get affordable car insurance.

Driving other cars (DOC) cover. A feature of some car insurance policies that insures you to drive someone else’s car (usually on a third party basis) without being a named driver on their policy. While this used to be a standard element of comprehensive car insurance policies, it’s less commonly included these days. You may be able to buy it as an add-on.

Duplicate document fee. A charge for an additional, usually paper, copy of your policy documents. This is rarely applied in practice these days, partly because many insurers send policy documents in digital format.

Duty of disclosure. A requirement to answer an insurer’s questions truthfully when applying for car insurance. If you don’t, it can refuse to pay out if you claim. If there’s a change in the details you gave the insurer – you move home or change job, for example – you have to tell it.

DVLA. Stands for the Driver and Vehicle Licensing Agency, the the government department that is responsible for maintaining a database of UK drivers and vehicles, issuing licences, and collecting road tax.

DVSA. Stands for Driver and Vehicle Standards Agency. It’s the government department responsible for carrying out driving tests, approving people to be driving instructors and MOT testers, testing to make sure lorries and buses are safe to drive, carrying out roadside checks on drivers and vehicles, and monitoring vehicle recalls.


European car insurance. Cover to drive your car (or another car from the UK) in Europe. All UK policies give third party cover for driving in the EU, according to the government website. If you want a higher level of cover, you can usually add it.

Excess. The amount you pay towards any car insurance claim. It’s made up of two parts: a compulsory excess (which is set by the insurer, and you can’t change) and a voluntary excess (which you can tweak to reduce your car insurance premiums, if you want).

Exclusion. A restriction on car insurance cover that limits when it will pay out for a claim. Some exclusions mean you won’t be paid out for any sort of claim made where the exclusion is in play, or could even invalidate your policy. Common car insurance exclusions are wear and tear, modifying your car without telling your insurer, or driving under the influence of alcohol or drugs.


Fault claim. A car insurance claim following an accident that was your fault, or – in some cases – when your insurer was unable to hold any other parties responsible and claim costs back from them. This might apply, for example, if a careless driver scrapes your parked car, drives off without leaving their details, and can’t be traced.

Financial Conduct Authority. The UK financial watchdog, which is responsible for regulating the insurance industry.

Fronting. An offence that applies when an older, more experienced driver claims to be the main driver of a car when in fact, a younger, less experienced driver is. This approach is designed to reduce insurance costs for less-experienced drivers, but is illegal in the UK. If someone is found to be guilty of fronting, even inadvertently, it will invalidate their insurance and could even lead to a criminal conviction.


Green card. A car insurance Green Card is an internationally recognised document that serves as proof of insurance. You get one from your insurer and it shows that you have (at the very least) third party cover. You need to carry one when driving in some countries in Europe.


Hire car excess insurance. Car insurance typically comes as part of the package when you hire a car, but excesses are often very high (£1,000 or more in some cases). Hire car excess insurance covers this amount so you don’t have to pay it.


Imported car insurance. A specialist type of car insurance designed for cars that were originally designed to be sold and used in another country.

Insurance broker. A professional intermediary that sells insurance on behalf of multiple car insurers. Some specialise in certain types of car insurance (such as classic car insurance), so may be able to help you find insurance if you have unusual requirements.

Insurance Premium Tax. A tax on insurance premiums set by the government. It’s included in the cost of your insurance.

Insurance term (see also Period of cover). The length of time that your insurance policy is valid, as outlined on the policy schedule. Insurance terms are usually a year, though some can be longer or shorter.

Invalidated car insurance. Where an insurance policy becomes null and void because of an action you took, or failed to take. For example, if you lied to an insurer when you applied for insurance, or failed to let it know about a change that would affect your car insurance cover. If you have an accident and make a claim while your insurance is invalidated, you will not get a payout, even if your premium payments are up to date. You may also get into trouble with the police if you’re caught effectively driving without insurance, even if you didn’t know there was a problem.


Learner driver insurance. A type of car insurance policy designed to cover provisional licence holders to practise in a friend or family member’s car – or in some cases their own car – while learning to drive. You might also see it referred to as “provisional licence car insurance”.

Legal expenses cover. This covers the legal costs of taking someone to court to reclaim costs arising from a car accident that insurance hasn’t covered.

Low-mileage insurance. A specialist type of insurance designed for people that don’t drive very far each year. It promises cheaper premiums in exchange for keeping distances down, since people who drive fewer miles are less likely to be involved in an accident.


Main driver. The person named on a car insurance policy that uses the car the most. This is usually the person that owns the car and paid for the car insurance policy, but there are exceptions. For example, if your son or daughter drives a car you own and insurer more than you do, they should be listed as the main driver. If the person that drives the car the most is listed as a named driver rather than the main driver, you could be found guilty of an offence known as ‘fronting‘.

Market value. The price that your car would sell for on the open market. It’s the measure of value that most insurers use when they pay out a claim if a car is written off or stolen. It may be considerably lower than the price you paid for a car, because of depreciation.

Modification. Any change made to a car once it leaves the factory floor is considered a modification. This can include anything from adding an alarm to pimping up the power or appearance. Many modifications can have an impact on your insurance. Adding security features may reduce your premiums, while cosmetic changes and power boosts may drive premiums up.

Motor Insurance Bureau (MIB). An organisation, funded by car insurers, that was established in 1946 to compensate the victims of negligent uninsured and untraced motorists. If you are involved in an accident that wasn’t your fault, but can’t claim from the other driver (because they are uninsured or drive off), the MIB may be able to help you get compensation.

Motor Insurance Database (MID). Run by the MIB, this database is a central record of all insured vehicles in the UK. It’s used by the Police and the Driver and Vehicle Licensing Agency (DVLA) to enforce motor insurance laws.

Multi-car insurance. A type of cover that allows you to insure 2 or more cars registered at the same address on the same policy. It can sometimes work out cheaper than buying separate insurance, as you’ll be given a discount for each additional vehicle on your policy.


Named driver. The term commonly used by insurers to describe someone that a main driver officially adds to their car insurance policy as an additional driver. Named drivers will have the same level of cover as the main driver.

No-claims bonus. Also known as a no-claims discount. For every year you drive without making a claim, an insurer will typically give you a discount on the following year’s premium. The more years you go without making a claim, the bigger the discount – though there’s usually a maximum limit.

Non-fault claim. A claim made after an accident that was caused by another driver, and for which your insurer is able to fully recoup the cost of paying for your claim from the other driver’s insurer.


One day car insurance. This is a form of temporary car insurance that covers you for a single day. It could be useful if, for example, you want to test drive a car before buying it, or plan to borrow a friend’s car for a day trip.

Optional extra. An extra feature of car insurance that you can choose to bolt on to your main policy, usually for an extra fee. Common optional extras include breakdown cover and courtesy car cover.


Pay as you go insurance. A type of car insurance policy where you’re charged according to how much you drive or the way you drive, rather than paying a flat annual premium. Your insurer will usually use a telematics device to keep track of when you drive and your premiums will be adjusted accordingly.

Pay monthly fee. An interest charge applied if you pay your premiums in monthly instalments rather than as an un-front, annual payment.

Period of cover (see also Insurance term). The time period that an insurance policy is valid for. With standard policies this is usually a year, but it may be much shorter if you take out a temporary car insurance.

Personal accident cover. This pays out for medical treatment and lost income if you or your partner is seriously injured in a car accident. Some policies include a certain level of personal accident cover as standard. With others its an optional extra.

Premium. The amount you pay to insure your car for the agreed period. For annual cover, this may be charged in full up-front or in monthly instalments.

Policy document. Your insurer will send you this. It contains the nitty gritty of what your policy will and won’t cover.

Protected no-claims. An optional extra that you can add to your policy. It means that if you claim, your no claim bonus will stay intact. You typically need at least three years of not claiming to qualify for this.

Provisional driver insurance. This is a type of policy designed to cover learner drivers, for example while they’re practising in a friend or family member’s car (or their own). It’s also known as learner driver insurance.


Registered keeper. The person who “keeps” the car on a daily basis, and is usually the main user of the car. The registered keeper doesn’t have to be the owner of the car (for example, with company cars, the company might own the car while an employee is the registered keeper).

Renewal fee. May apply when you renew your policy. Renewal fees are pretty rare, but some brokers (that offer insurance from a panel of insurers) may apply them.

Replacement key cover. If your keys are lost or stolen, this covers the cost of replacement. Some policies include it as standard; with others it’s an optional extra.

Risk. The term often used by insurers when they’re underwriting your insurance policy. Your ‘risk’ level is their assessment of how likely you are to make a claim and the size of any likely claims. Underwriters use the assessment of your risk to set your premiums; typically, the higher the risk, the higher your premiums.


Schedule. A car insurance document that outlines the cover that your policy includes and names the drivers that are insured.

SORN. This stands for Statutory Off Road Notification. It’s the official process for telling the DVLA that the vehicle won’t be on the road and therefore you shouldn’t have to pay car tax or be legally obliged to buy car insurance.

Specialist car insurance. Provides cover for drivers (and their cars) who need something a bit different from their standard car insurance. For example, if they own an unusual or classic car, or have risk factors that make it harder for them to find mainstream insurers. There are dedicated car insurance brokers that specialise in insurance for atypical cars or circumstances.


Telematics car insurance (also see Black box insurance). A type of insurance policy where a small device is installed in your car to keep track of your driving habits. Careful driving is rewarded with lower premiums, and vice versa. It can be a good way for new drivers with no track record of incident-free driving to manage their premiums.

Temporary car insurance. A type of time-limited cover that typically insures you on a vehicle for periods between 1 and 28 days.

Third party cover. The minimum legal requirement to drive on UK roads. If you are responsible for causing an accident, you’ll be covered for damage to third party vehicles or property. However, it won’t cover any damage to your own car.

Third party, fire and theft cover. This will give the same level of cover as third party as well as provide protection against any fire damage to your car or theft of your car. Damage to your own car after an accident won’t be covered.


Uninsured Driver Promise. A guarantee issued by some car insurers that your no-claims discount won’t be affected following a claim where an uninsured driver was at fault. Some insurers will also waive the excess in such claims.

Uninsured Drivers Agreement. If you have an accident that wasn’t your fault, but the other driver doesn’t have insurance, your own car insurer may not pay out (for example if you only have third party or third party, fire and theft cover). Under the Uninsured Drivers Agreement, you may be able to make a claim for compensation from the Motor Insurance Bureau.


Voided car insurance. Voided car insurance is any policy that has been ruled invalid by the insurer. The most common reasons for this are that the customer fails to pay their premium, or has submitted false or incorrect information to the insurer.

Voluntary excess. The optional, adjustable part of a car insurance excess. Most insurers allow you to pay an additional voluntary excess on top of the compulsory excess in return for a cheaper car insurance premium.


Windscreen cover. Covers the cost of repairing or replacing your windscreen if it chips, cracks or breaks. Replacing a windscreen typically costs between £200 and £400, so it’s worth considering this as an optional extra with your policy. Although it’s included in many comprehensive policies, you’d still have to pay the excess if you claimed, unless you had this extra cover.

Write off. Where a car is damaged to the extent that the insurer thinks it will cost more to repair than the car is worth. Instead of paying for repairs, it will “write it off” and pay you the market value. This is also sometimes called “total loss”.

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