Car insurance jargon buster

The motor insurance industry is no stranger to the use of jargon either, with its own brand of gobbledygook leaving many would-be car insurance policyholders (and casual onlookers) seemingly perplexed of expression and routinely contorted of facial features.

Thankfully this is precisely the juncture where we step into the flabberghasted fray and attempt to translate the modern dictionary deployed by a raft of motor insurance policy providers.

So make yourself comfortable, grab a pen and pad and familiarise yourself with just what’s what and what’s not in terms of car insurance terminology, as the following A – Z glossary attempts to simplify the whole process and put sometimes overly elaborate descriptions into layman’s terms.

By Bobatoo
January 18, 2021


ABI (Association of British Insurers) – While it’s not compulsory (and the Association isn’t classed as a regulatory body for the industry as such), most of the UK’s leading motor insurance providers are fully paid-up members of the ABI. Visit for more information.

Annual Mileage (including annual business mileage) – Pretty much as you might expect this one, as one of the first bits of information any motor insurer will try to glean from a would-be policyholder is that of how many miles you driver per year on average. The more miles you clock up (socially, domestically, pleasurably or business-bearing) then the greater the risk of an accident. The greater the risk of an accident, the more the likelihood is that the policyholder will claim. Hence the risk management factor which car insurance boffins figure into your (unfortunately) higher premiums as a result. And remember, if you don’t use your car for work/business purposes, then you declare your annual business mileage as zero. Or zilch.


Black Box Insurance (also referred to as Telematics and Pay-as-you-go Insurance) – Becoming increasingly popular (especially amongst younger drivers) in recent years, black box insurance is what the owner/driver/policyholder signs up to if they agree to install a small device to their car which allows your chosen insurer to monitor your movements behind the wheel. And thus ascertain just how good a driver you are. The better showing you make at being competent and safe behind the wheel, the more chance of your insurance premiums tumbling over an accrued period of time. Insurers will pay particular attention to a driver’s road awareness, tendencies to accelerate, the mileage they cover and whether they drive during unsociable hours, and take into account a plethora of driving habits recorded by the black box tech and subsequently accessed by the insurer. Learn more >>> Everything you need to know about black box car insurance

Breakdown Cover – Typically a car insurance policy add-on feature which provides peace of mind assistance should you suffer a breakdown while you’re out and about. Although as well as roadside SOS-answering, many breakdown covers will attend to policyholder’s vehicles in response to home call-outs too. The most popular breakdown cover companies (and admittedly household names themselves) are Green Flag, AA and the RAC, and it’s always advisable to extend a motor insurance policy to cover this eventuality.

Broker – A broker in insurance parlance is a middle-man, or intermediary party. They are often the human face of motor insurance policy providers and underwriters per se and act as a conduit between the policyholder and the seller of the insurance product as such. For instance Lloyd’s of London are one of the most famous and longest established insurance underwriters, who by and large sell the majority of its motor insurance plans via individual and company brokers.


Certificate of Insurance – A biggie this, as without evidence of such you’ll find yourself in a bit of strife. While a cover note will provide a temporary 1 – 3 months car insurance umbrella as you circumnavigate the highways of the UK, until such time as you receive the certificate of insurance you’re not completely validated. This documentation is sent out to you immediately after you’ve arranged your motor insurance over the phone or online and instigated a direct debit facility with your new insurance provider, and is effectively written proof that everything is hunky dory/above board.

Comprehensive Cover – In a nutshell, the most complete level of car insurance money can buy, which insures the insured against the cost of repairing or replacing your vehicle if it’s involved in an accident, irrespective of which party blame is found to lie with, as well as the other claimant’s car.

Naturally if it was deemed to have been your fault then expect to pay higher premiums as a result. As an accepted rule of thumb, comprehensive cover will set the policyholder straight for injuries befalling third parties and damage to their property, fire, damage, theft or accidental damage to the policyholder’s vehicle and loss of/damage to personal effects within the car at the time they/it was lost/damaged. Learn more >>> What does ‘third party’ and ‘comprehensive’ car insurance actually mean?

Compulsory Excess – This fiscal amount is more normally set by your insurance provider and is the figure you’ll be contractually obliged to pay towards each claim you make. It’s more commonly arrived at as and when your car insurance provider determine the risk element posed by you as a driver, which itself takes into account the driver’s age, the type of vehicle, how long a driving license has been held and even the kind of claim amongst other differentials.

Courtesy Car – If your car has to be taken off the road while it’s subject to repairs with an insurance-approved garage, then your motor insurance policy will provide you with an alternative means of transport for this period; which is known as a courtesy car. Although this is NOT always the case and does depend on individual policy agreements so always check yours beforehand to opt in or out of this feature.

Claim – This is what you, the policyholder, does in the event of an accident and/or loss of damage (or indeed, theft) occurs to your insured vehicle. Or more pertinently you, the insured party, lodges a claim with your motor insurance provider via the means of a formal application procedure, who in turn will recompense you with payment for your grievances/loss, so long of course that it’s covered by your specific policy.

Cover – Just another word for your car insurance policy or plan often bandied around by providers as an alternative turn of phrase.

Cover Note – This represents your certificate of motor insurance in a temporary guise, and stands as official testament to the policyholder as possessing the appropriate cover should they need to present for any reason while awaiting the arrival of the more far-reaching and universally accepted paper documentation.


DOC (Driving Other Car) – This wordage (or rather acronym) applies directly to the policyholder being legally in the position to drive additional vehicles which they don’t own, which they may need to action in various emergency situations which may arise. Worth noting however that this policy feature means the driver in question is only covered as Third Party Only (more on which later) here in the UK and doesn’t extend to include light commercial vehicles, and nor is it recognised abroad, just for the record. Not all motor insurance policies will afford the insured party this extra-curricular feature, specifically not in the case of younger drivers and those with some occupations.

DVLA (also colloquially known as the Driver and Vehicle Licensing Agency) – The motoring matters branch of the British Government acting as guardians of driver and vehicle databases throughout the UK. In its role as an executive agency offshoot of the Department for Transport, the DVLA is responsible for distributing driving licences, collation of road tax and sells personalised registration plates as predominant parts of its extensive remit. Visit the DVLA website for more information.


Excess – The sum of monies the policyholder is expected to pay towards the cost of any motor insurance claim, historically divided into two different categories, namely compulsory excess and voluntary excess. The former is pre-determined by the individual car insurer while the latter allows the policyholder to set the amount they’re willing to pay from the outset of any claim being filed.

Exclusion – Expressly a particular event or circumstance which may occur at any point in the lifecycle of a policyholder’s term of insurance of which the insurance company is NOT obliged to have to pay out for, irrespective of individual circumstances.


Fault Claim – If a motor insurer is unsuccessful in its pursuit of costs incurred as a direct result of a claim being made against a policy it’s ratified, then this is referred to as a fault claim, irrespective of whether the insured party weren’t considered negligible with regards the claim being filed. The best example of a fault claim in practice is when a theft is carried out, because despite the driver being exonerated there is no third party to accept liability for the miscreant act.


Hazard – Absolutely nothing to do with that triangular-shaped flashing light on the car dash, but instead in motor insurance vernacular is all about the criteria that’s most likely to affect/pre-empt any forecast loss, damage or injury. So for instance if the car insurance policyholder drives a high-powered Maserati Gran Turismo then they are automatically perceived to be a higher risk factor than someone who owns a Vauxhall Adam. Likewise if the owner/driver of any vehicle is of more tender years than their more experienced counterpart.


Immobiliser – An electronic device which halts a vehicle in its tracks until such time it’s deactivated by its owner/driver/policyholder. Admittedly an assemblage which won’t necessarily stop a car from being broken into, the presence of an immobiliser will nevertheless stop it from being driven away by nefarious-intending parties. Where once an immobiliser was an after-market product encouraged by car insurance providers for us to invest in, for the past 20 years they’ve more often than not been factory-fitted to vehicles at the same time as in-built alarms. The presence of an immobiliser will bring about lower insurance premiums too, and the better the manufacturer and level of protection the system offers the greater the discount.

Import – Specifically a vehicle which has been imported to the UK, and as such falls foul of some car insurance provider criteria. Typically separated into 2 classifications, the UK-spec cars are those which are sourced from abroad yet which match UK specifications and the Non-UK Spec vehicles (or grey imports as they were once known), which are again sourced from overseas yet don’t comply with accepted UK specifications. While some companies will provide insurance policies for the former, the latter is much harder to come by policies for, not least on account of replacement parts being difficult to locate/thin on the ground.

Insurance Schedule – This is the in-depth paperwork which accompanies your Certificate of Motor Insurance documentation and explains the exact details of the policyholder’s cover which they’ve successfully arranged and rubber-stamped with the provider, alongside of reiterating the personal and vehicle information which the owner/driver originally submitted when instigated a quote/seeking a policy to be drawn up.

Insured – Also referred to as the ‘policyholder’ and/or the ‘proposed’ in certain related literature, the ‘insured’ is essentially the individual who is insured, or whose vehicle is insured.

Insured Value – Depending on which figure is lower, the insured value is the total amount which a motor insurance provider will recompense the policyholder for with direct reference to their car in the event that it’s considered by experts/insurers as being damaged beyond repair. The monetary value will either represent the amount the vehicle was said to be worth according to the policyholder at the outset of the policy term or the current value at the time of the claim being registered, which is governed by market fluctuations.

Insurer – This is the policy provider and therefore the party accountable for the settling of any outstanding claims filed as a result of accidental loss, damage or theft of the insured vehicle.

IPT (Insurance Premium Tax) – This is a tax levied on a cross-section of insurance products, including those focusing on motor insurance models. The tax is normally included in the premium the policyholder pays either up-front (annually) or distributed evenly though the course of pre-arranged monthly repayments.


Legal Expenses Cover – This pertains to financially aid and abet the process of fee recovery which a motor insurance provider might wish to pursue in instances which aren’t covered by normal car insurance protocol. Or for that matter if it’s proven that a third party is at fault for an accident. If the policyholder’s car is off the road and the insurance company is providing them with alternative means of transport during this passage of time, legal cover can be facilitated by the insurer with a view to recouping their costs in the long run.


Main Driver – This is the person who is adjudged to use the vehicle more than anyone else named on the insurance policy. As straight forward as it may sound, some people choose to class themselves as the main driver only then to allow their offsprings, partner or siblings drive the car on a more permanent basis. In this case the policyholder risks invalidating any future claim which may be lodged as the chances are they may not have been behind the wheel in the event. Honesty is the best policy according to experts.

Modifications – From the more obvious tweaked engine, spoilers and alloy wheels through to the slightly more contentious tinted windows, sat nav installations and parking sensors. Any change to your vehicle – however insignificant it may seem to the policyholder – needs to be recorded with the insurance provider; and failure to do this could well contravene and therein, compromise the validity of an existing policy agreement. Learn more >>> How do car modifications affect car insurance prices?


NCB (No Claims Bonus) – Every 12 months a car insurance policyholder will benefit from a further year’s no claims bonus, so long as the policyholder hasn’t made a claim on their policy in the intervening year, subject to a maximum number of years claim-free driving. Also known as a No Claims Discount in certain quarters, the greater the accrued number of NCB’s the greater the impact in reducing annual motor insurance premiums; the reward aspect generally coming into effect in the shape of the following year’s more competitively priced premium.

Non-Fault Claim – The opposite spectrum to the aforementioned fault claim, the non-fault claim allows your motor insurer to attempt to recover the incremental cost of a successful claim from someone else, in the aftermath of having reimbursed the policyholder in the first instance.


Owner and Registered Keeper – This is traditionally you, the insured, the driver, the proposed, the policyholder and any other title you may have bestowed upon you. However in more recent times a less orthodox approach to this subject has manifest itself. It’s now possible that the owner and registered keeper may well be two separate entities. In as much as the policyholder may drive a company or lease vehicle, which is subsequently not therefore under their ownership. Some insurance providers may not afford interested parties policies if these proposed people are not one of the same.


Protected No Claims Bonus (also known as No Claims Discount) – This benefits any drivers who have managed not to claim on their insurance policy for at least 4 concurrent years, which then triggers a clause which allows them to pay an extra amount so as to protect their accumulated NCB’s henceforth. This then means that should the policyholder make a claim in the future then they’re NCB’s won’t be affected. Although this period is rarely indefinite and usually amounts to a select number of years dictated by the individual’s insurer. Just to clarify though, protecting your NCB’s doesn’t mean your annual premium won’t rise if you do happen to file a claim in the intervening period. Ostensibly, protecting the bonus only safeguards the a policyholder’s bonus discount.

Points – Unfortunately points don’t equal prizes in this instance; in fact, quite the opposite. Points are added to a license every time a driver/policyholder is convicted of a motoring offence. These routinely include speeding, failing to stop after an accident, driving without due care and attention and various acts of what are deemed to be, dangerous driving to name but a few. The more points a policyholder accrues then the more expensive their motor insurance premiums are likely to be as time goes on. If and when 12 points are reached, the driver is automatically banned from driving, and should this happen then their chances of securing a good deal on car insurance in the future will be severely hampered.

Policy – The document which duly makes the case for and underlines the legal rights and obligations of both the policyholder and the motor insurance provider with regard to the following 12 months.

Policyholder – The named individual who is in possession of a dedicated motor insurance policy, underwritten specifically in relation to that particular person and the use of a specific vehicle over a pre-defined time, not normally in excess of 12 months from the point of the policy starting.

Premium – The total financial amount which the policyholder is required by law to pay for their car insurance policy over the pre-determined term of contract ratified between the two parties (policyholder and motor insurer). This can either be paid in one lump sum at the commencement of the policy or, as is more popular in the UK, spread evenly over a 10 – 12 month period as agreed with the insurer.

Proposer – See ‘Policyholder’ and ‘Insured’.


Renewal Notice – A statement received from your current motor insurance provider which seeks to give the policyholder sufficient notice regarding the termination of their current, pre-agreed policy and a timely reminder as to renewing your existing policy with said insurer. This tends to be within 1 month of the present policy concluding.

Road Traffic Act – First introduced back in 1930 to provide funds to compensate innocent victims of accidents, this Act which governs all motor insurance has been twice amended. First in 1972 so as to incorporate passenger interests and then again in 1988, when it was extended to cover third party property. RTA cover stood the test of time as being the minimum legal requirement for car insurance in Great Britain and habitually covers (unlimited) third party injury or death, up to £250,000 in property damage and emergency medical costs. See the Road Traffic Act in full here.


Settlement – In the event of a claim being successful, this is the fiscal amount which a motor insurer pays-out to a policyholder/injured party.

Sum Insured – In light of the above, this is the maximum monetary figure that the policyholder’s insurer will be responsible for paying out when a claim is lodged.


Thatcham – This is one of the most recognisable of all the companies involved with vehicle security systems and most notably, the presence of immobilisers. Although not a manufacturer itself, Thatcham Research oversees (and is acknowledged as the ‘go to’ experts for) which in-car security device safeguards vehicles the best, and then proceeds to approve these assemblages at different levels (i.e, Thatcham 1 and Thatcham 2). When not applying its experience and logistics to vehicle security measures, Thatcham is also heavily involved in the research of repair costs for the car insurance industry across the board. Visit for more information.

Third Party Only (TPO) – The accepted minimum standard of motor insurance available to policyholders, third party only is demanded by law and whilst legally covering the policyholder against any damage to other party’s properties and injury to their person as a crucial part of its remit, TPO doesn’t go as far as to cover damage incurred to the policyholder’s own vehicle.

TPFT (Third Party Fire and Theft Insurance) – This policy covers all the motor insurance and liability bases covered by TPO, with the main difference being it additionally protects both the policyholder and their vehicle/property from unforeseen circumstances which ultimately impinge on their ability to go about their immediate driving business like before. Providing the policyholder isn’t found to be culpable, TPFT protects the insured against vehicle damage consistent with fire or theft.


Underwriter – Employed by the insurance provider, the underwriter is an individual or a company who/which peruses a significant volume of data supplied by the would-be policyholder so as to assess the risk they potentially pose from the insurance provider’s perspective. It’s their job to ascertain the degree of risk and whether or not it’s a calculated risk worth taking; and therein furnish the would-be insured party with appropriate policy cover.

Voluntary Excess – This is the fiscal amount the policyholder pre-agrees to stump up out of their own pocket before their insurer digs deep thereafter, should they need to register a claim on their car insurance policy. As a slide rule, the higher the sum you suggest as voluntary excess, the less the annual premium you’ll be expected to pay. However the trade-off with this theoretical arrangement is that should you be involved in an accident/instigate a claim for whatever reason, then you’ll have to fork out a (possibly) sizeable sum from the outset before your insurance provider chips in and makes up the outstanding amount.