Understanding Car Insurance Jargon: Making Car Insurance Easy to Understand

Anytime you look to secure insurance, whether it’s for travel, home, health or your car, you are hit with an insurmountable number of terms, conditions, and words that leave you scratching your head over what it all means.

When it comes to insuring your car, you will want to make sure you are covered correctly.

We have trawled through the terms that are most likely to require clarification in an insurance policy, and have given an insight into what they mean and why they are important.

What does ABI mean?

You may often see this on a variety of insurance providers’ credentials. The ABI is the Association of British Insurers. Providers do not have to be a member and it is not a regulatory body.

What is an approved repairer?

Your insurance provider will recommend someone that can fix your car. This could be an independent or national garage. You are not obliged to take the recommendation, but you could find that your policy costs a little more if you don’t. If you do choose the approved repairer, you will likely get an extended guarantee on any work carried out.

What does a betterment charge mean?

If you do require repair work on your car, it can sometimes end up being worth more than it was when you purchased it. If this is the case, your insurer could ask for a contribution towards the repair costs.

What is black box insurance?

This can be particularly useful for first-time drivers – a box is attached to the car and it monitors how you drive. It will monitor speeds, braking and general driving standards. This data is then sent back to the insurer. If they see consistently good driving, your premium can come down in price.

What is comprehensive cover?

Although what is covered may vary per provider, a comprehensive policy is the highest possible cover you can get from that insurer. A policy that is “fully-comp” will insure you against the cost of repairing or replacing your vehicle no matter who was at fault for the accident. Most policies will cover fire damage, any medical expenses, injuries to others and damage to other people’s property. It is always advised to check what is covered, though, as between providers there could be some key variants.

What is class of use?

Your vehicle may be used for just one reason or several. Class of use covers how you plan to use it. There will be three classes:

• Social, domestic and pleasure (SDP)
• Social, domestic, pleasure and commuting (SDP+C)
• Personal business use (SDPC+B)

What does DOC cover mean?

You will not see this offered by all providers, but DOC simply means “driving other cars” Typically, you cannot drive someone else’s car, but you will be able to if DOC is included in your policy. This then means you are covered on a third-party basis when driving that vehicle.

What is a fault claim?

If you were at fault in an accident and consequently liable for the damage, it constitutes a fault claim. However, in some instances the fault is not yours but may still be classed as such. This could be when another driver causes the accident but drives off and cannot be traced, or where an unavoidable collision with an animal takes place. You could be liable for the repair costs in these examples and then lose your no-claims discount.

A non-fault claim would be where the costs can be recovered from someone else.

What is insurance indemnity?

Indemnity means you will not be any worse off financially because of the accident. If your car is damaged, your finances remain the same as the insurance company will cover the cost.

What does material fact mean?

Any information provided that could help influence the insurer’s decision over whether they should offer you cover or what premium they should charge. If you were to withhold any information that could determine your validity for a policy, you could find your application dismissed or any approved policy cancelled.

What is a loss adjuster?

You will often see a loss adjuster referenced in the world of insurance. This is simply somebody that investigates claims on behalf of the insurer and makes sure it is legitimate. This will then help any payment by the provider be correct and not excessive in any way.

What does no claims bonus mean?

If you continually drive safely and have no claims made, you will accumulate a bonus. This can then be used against your policy when it comes to renewing resulting in a cheaper policy.

What is a protected no-claims bonus?

These are not always available, but should you have four years, or more, no claims bonus, you might be able to protect it by paying a little more. This means you could put in a claim without your no-claims bonus being affected.

What is the third-party cover?

Third-party cover is the lowest level of insurance and will not cover damage to your vehicle. Instead, it covers any injuries caused to other people, damage to other people’s property, and accidents caused by your passengers or any named drivers on your policy.

You can also add third-party fire and theft (TPFT) to a policy. This means you are covered for damage to your vehicle from fire or theft of the vehicle, as long as you are not at fault for either occurrence.

What does uninsured loss recovery mean?

If an accident is not your fault, ULR cover can help you claim your losses from the third party.

There are of course many more terms hidden within policies that may give you reason to be confused; we hope that our guide has explained some of the more unusual ones. If at any stage you are unsure of the policy you are being offered, ask your insurer for more information.

Whether it’s brand new cars on finance you are looking for or just cheap car finance to help you secure your first vehicle, you will always need insurance. Whilst we cannot insure you, we can certainly help you find a car suitable for your needs. With years of experience in securing the best options for new drivers, as well as those with a poor credit history, contact the Euphoria Finance team today and see how you can be driving your new car tomorrow.