Car Insurance Glossary of Terms

Agent - Someone who acts for one or a number of companies, particularly in the selling of insurance contracts. After the 15th January 2005, anyone selling General Insurance products needs to be registered by the Financial Services authority
 
Betterment -  This is the principle by which the policyholder makes a payment towards the cost of the claim because his or her property will be in better condition after repair than before the loss or damage occurred. For example if your car is in better condition after the insurer has repaired it, they may ask for a contribution to the claim, this usually happens when the insurer has to replace items such as tyres or other parts that wear out.

Broker - to call yourself an insurance broker, a company used to have to be registered with the Insurance Brokers Registration Council (IBRC) under the Insurance Brokers (Registration) Act 1977. This act has now been repealed and anyone licensed to trade insurance can call themselves a broker if they wish. Some companies elect to call themselves agents or Intermediaries
 

Certificate – There are various certificates of insurance and insurers to provide documentary evidence of insurance produce them. Some, like Certificates of Motor Insurance are required to tax a vehicle and to show to the police as evidence of insurance. Employers Liability certificates have to be displayed where employees can see them, you may be fined for not displaying an employers liability certificate.

Claims and Underwriting Exchange – This is a computerised register of information shared by most insurance companies and the police. Insurers may search the database if they believe someone is submitting a fraudulent claim or to check underwriting information. By accepting a policy with an insurer you will almost certainly be agreeing to allow your details to be placed on the exchange. This system helps to reduce fraudulent claims, which is turn, should help to keep everyone’s premiums down.

Composite Insurer – The name given to an insurer that transacts both life and non life insurance policies.

Comprehensive Insurance –This term is usually applied to private Car Insurance and represents the widest cover you can buy. It does not however mean that everything is covered and you should study your policy document carefully.

Conditions- These are inserted in to insurance policy wordings by insurers and the policyholder must follow these conditions if a claim is to be considered valid. An example of a policy condition would be the requirement to fit special locks to windows and doors under a home insurance policy.

Deductible - The specified amount a loss must exceed before a claim is payable. Amounts above the deductible up to the policy limit are payable. Deductibles are usually called a policy excess. A typical excess on a motor insurance policy would be £50.00

Green Card - A document issued to policyholders to extend their United Kingdom motor insurance policy as evidence that they have the minimum insurance cover required by the law of the country visited. No longer required for European travel, because minimum legal cover is now automatically included in UK policies.

Third Party - The term applied to someone involved in an incident that is neither the policyholder or the policyholder insurance company. Third Party Insurance cover will provide a payout to anyone that the policy has a fault accident with but will not cover the damage to his own car.

Certificate - this is the document issued by insurers as evidence that insurance is in force. It is also used to obtain Road Tax for the vehicle. It is shown to the police if they require evidence of insurance.
 
Claim. - you will be entitled to compensation from your policy if you suffer a loss and such loss is covered by your policy.
 
Commission - monies paid by an insurance company to a broker/ independent intermediary/agent for selling insurance policies. Under the Financial Services Authority guidelines, it is not a requirement to declare commissions but brokers must not apply unreasonable charges to products that they sell
 
Consulting Engineer - Following an Accident, an insurer may appoint an engineer to check the repair work being proposed by a garage. The engineer will check the prices being charged and will decide if the vehicle is to be written off or not.
   
Contribution - the principle of contribution applies where a risk is insured twice or more, The insurers involved will each pay a portion of their loss. It is not possible to make two claims for the same amount
 
Cover Note - This is an insurance document giving temporary evidence of cover while the policy and certificate are being prepared. Normally, cover notes are issued at the start of a policy by an agent. The agent will forward all the necessary supporting documents to the insurer along with a copy of the cover note and request that the full insurance policy document is issued
 
Direct Insurers - Insurance transacted where no intermediary or broker or agent is involved, The contract is formed directly between the policyholder and the insurer. This can but not always help to lower premiums
 
Endorsement - This is a written amendment to an insurance policy that becomes a legal part of the insurance documentation. An endorsement usually alters the scope of your policy cover. It can extend as well as restrict the cover on offer.
 
Excess - This is an amount of money that the policyholder has to pay towards the cost of a claim. There is normally a combination of compulsory and voluntary excesses. A typical excess is £50.00 or £100.00
 
Exclusion - This is a specific event or peril that the insurance policy does not cover. Some exclusions are typical to all insurance contracts. You should always study the exclusions to your policy most carefully
 
Ex Gratia Payment - Any payment made by an insurance company that is not necessary, because there is no actual cover under the policy wording. This payments are usually made as the policy wording was not clear or perhaps following bad service.
 
Green Card - This is a document issued to policyholders who will be motoring abroad as evidence that they have the minimum insurance cover required by the law of the country visited. Not essential for EU driving, because minimum legal cover is automatically included in UK policies. If you are going to Travel abroad, always inform your insurance company, some will make a charge for a Green Card. If you are going to Spain, it is essential that you also take a Bail Bond, in Spain you may find your vehicle impounded following an accident, The Bail Bond will help secure your vehicles release.
  
Indemnity - The insurance principle by which policyholders are put in the same financial position after a loss as they were immediately a loss occurred.
   
Insurance Company - A company that takes on risk by selling contracts of insurance. In the United Kingdom all insurers have to be authorised.
 
Insurance Premium Tax - A UK government tax imposed on most non-life insurance premiums. In respect of motor insurance, the current rate of insurance premium tax is 5%
   
Insured - The individual covered by an insurance policy and named in the schedule of insurance
 
Intermediary - This is the person or organisation that offers advice and arranges policies for clients. They will usually perform “advised” sales and may represent a number of different insurance companies and Lloyd of London
   
Knock-for-Knock - An agreement whereby each motor insurer agrees to pay for damage to its policyholder's car, regardless of blame, providing the policy covered damage to the policyholder's own car. This agreements are now almost obsolete.
 
Liability - This is the legal responsibility for causing loss to someone else by injuring him or her or damaging their property. If you admit liability for an accident, it means that you have accepted responsibility fore the occurrence. If your insurers admit liability on your behalf, it means they will pay the Third Party claim.
 
Loading - This describes the extent to which a proposer is charged more for their insurance. There are a variety of reasons why a motor insurance policy may be loaded, these include;  

• A loading because of a poor accident history.

• A loading because of motoring convictions.

• A loading because of occupation.

• A load because of age/.type of vehicle to be insured. 

Loss Assessor - This is an individual acting on behalf of policyholders in assessing claims. The policyholder will have to pay the loss assessor if they want them to act on their behalf
   
Motor Insurance or Car Insurance - This insurance covers legal liabilities ( Third Party Road Traffic Act cover| arising from the use of a motor vehicle. Comprehensive policies also cover damage to the vehicle. The minimum legal cover in the UK is third party insurance. Cover has to be unlimited for Third Party Personal In jury and £20,000,000 in respect of Third Party property damage
 

Motor Insurance Anti-Fraud and Theft Register - This a computerised record database of claims for stolen or written-off vehicles. Insurers search the data base in order o detect fraudulent motor claims. When you take out an insurance policy you give the insurer permission to search the database for information.

No Claims Bonus. - For each year that goes by without a claim, the insurer will reward you with a discount from your annual motor insurance premium. If you make a claim you may loose all or part of your no claims bonus. Bonus ranges from 30%-65%
 

Non-comprehensive Cover - A motor insurance term relating to any cover that is not Comprehensive. At the present moment, in practice, this terms relates to Third Party Fire & Theft & Third Party only covers.

Policy - The insurance document providing full details of the contract between the insurer and the policyholder. This document will outline all of the covers as well as all of the exclusions. The policy documents will come with a certificate of insurance which can be used as evidence of cover.
 
Policyholder - This is the person to whom the insurer issues the policy. It normally also means the person to whom benefits are payable Other people may benefit from the policy if they are named under the contract.
   
Premium - The amount paid by the policyholder for insurance. This is sometimes also called consideration

Proposal Form - This is an application for insurance cover. It is signed and returned to the insurance company. It asks for information to enable the insurer to asses the risk on offer. It will form the basis of the contract between the insurer and the policyholder.
 
Proposer - This is the person or company who applies to take out insurance. Once the insurance is put in place, the proposer becomes the insured.
   

Renewal Notice - An insurance notice sent to the policyholder inviting him/her to renew a policy for a further period and stating the premium payable. Insurers have to issue this document 21 days in advance of the renewal date. It will also state any alterations to your policy wording that will come in to effect from the renewal date. There are no days of grace in respect of motor insurance
 
Subrogation - The right of an insurer who has indemnified a policyholder to take over any legal rights the policyholder may have had in respect of that particular claim. Basically this means that once the policyholder has been paid, the insurer can seek to recover it’s losses acting in the place of the policyholder.
   
Third Party - A party involved in a claim who is neither the policyholder nor the insurer. The insurers and the policyholder are the fist and second parties.
   
Write-Off - A damaged car or vehicle which is not repairable, or one that would cost more to repair than the car was worth before the damage occurred. “Beyond economical repair “is a term usually used. Also known as a "total loss". Often an insurance company will declare a car a total loss once damage reaches a certain percentage of the total car value. If your car is less than one year old, you may find that your insurance company offer to buy you a new vehicle.