Car insurance lingo explained...
To lend a hand so you can make sense of the jargon that's often used when you buy car insurance, here is a quick run through of some of the motor insurance terms.
Association of British Insurers (ABI)
The ABI, the Association of British Insurers is a non-regulatory body who helps decide such things vehicle group ratings which are then adopted by insurers.Â Â
After reporting a claim your insurer will normally put you in contact with an approved repairer in order to arrange repairs for you.Â Â By using the recommended approved repairer you will be safe in the knowledge that your insurer will have inspected their workmanship to ensure that it is all up to standard.Â Also this negates the need to obtain two estimates which delays the repairs whilst waiting for approval.Â Â Â
Third party only (TPO)
Third party cover is the basic level of car insurance cover required by law and contains no cover for damage to your vehicle. It typically 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 typically provides cover for theft, attempted theft and for fire.Â Â
Comprehensive is the highest level of cover, and typically provides the same level of cover as Third Party Fire and Theft and also for:
Accidental damage to your own car, glass cover, medical expenses, loss of or damage to personal effects in the car.Â
Each insurer sets a limit to the cover provided and cover can vary from policy to policy, so always check before you buy.
Driving other cars (DOC)
Myth:- just because you have comprehensive cover does not mean that you automatically receive the extension to drive other peoples cars.Â Â Â Â
Many policies do not include this extension and even if cover is provided cover is restrictive.Â If cover has been granted then this is on the basis that it for emergency purposes only.Â If you regularly use someone elseâ€™s car you should be named on their policy.Â Cover under this is for Third Party Only and the vehicle you are using cannot be a hire/loan car and needs to taxed, insured and have a valid MOT.
A claim is only considered not to be you fault if your insurer makes a 100% recovery of their outlay.Â Â It is not a no blame bonus.Â Â Therefore if your car is hit whilst parked, by someone who cannot be traced, this will go against you and count as a fault claim although clearly the nature of the incident was through no fault of your own.Â .
Financial Services Authority (FSA)
The FSA (Financial Services Authority) regulatesÂ all aspects of the insurance industry and without their approval it is an offence to carry out any insurance activity.Â Â
Insurance Premium Tax (IPT)
Every insurance premium has a tax applied which each insurer then passes onto the government.Â Â
The insured value is the maximum amount that an insurer would pay you if your car was damaged beyond repair.Â Any offer will be on the basis on the vehicles pre incident market value less any policy excess.Â
Some policies can provide the option of an agreed value especially on classic or modified vehicles.Â Â Once the value has been agreed any total loss claim will be settled on this agreed value less any policy excess.Â Â Â
No-claims bonus/discount (NCB or NCD)
For each year you drive without making a claim on your insurance you will receive a year's no-claims bonus.Â The maximum number of years varies from insurer to insurer as does the discounts applied.Â If a claim has been reported during the year any bonus is then reduced in accordance with the insurers step back scale.Â Â NCB can only be used on one vehicle at time and if it is not used for 2 years it becomes invalid.Â Â Some specialist/classic policies do not utilise or build up and NCB.Â Â Â
The Motor Insurance Repair Research Centre, or Thatcham, carries out research for the motor insurance industry on the cost of repairs and vehicle security. Thatcham research data is used as the basis for the agreeing group ratings.Â Â Thatcham also rates security devices which are typically categorised as being Thatcham approved category 1, 2 or 3.Â Â
An underwriter decides whether to accept you as an insurance risk and then calculates the premium to be charged to cover this risk.Â Â There are many factors that go into assessing the risk and these factors derive the premium e.g. area, age, security, claims/conviction history, occupation, NCB, vehicle group, etc.Â Therefore premiums can be very varied although on the face of it you may feel that the risk is the same.