Car Insurance A to Z

ABI stands for the Association of British Insurers. Many insurance companies are members of the ABI, but membership is not compulsory and the ABI is not a regulatory body.

Your annual mileage is the number of miles you expect to drive during the year which you’re insured for. This includes weekly shopping, daily commute to and from work, longer holiday journeys you expect to take and any business trips you’re required to make.

This is a garage that your insurance company recommends for car repairs that are under your policy.

A black box is a device in your car to monitor your driving performance. An insurance policy linked to your box usually measures how you accelerate, brake and take corners and aims to reward good driving with discounts.

This optional extra gives you roadside assistance if your car breaks down. Some packages include home call-outs, where someone comes to start your car at your own property.

A broker is an intermediary that insurance companies choose to sell their services through. The brokers take your details and speak to a number of insurers to try and get you the best deal for your policy.

This is the proof that your car is currently insured, and it’s also proof of the policy term that it’s valid for. Some insurers will send you a physical copy, whereas others may provide a digital copy via email. Until your certificate arrives, you can ask your insurer for a cover note.

This is a fully comprehensive policy that offers you all the benefits of third-party, fire and theft (TPFT) insurance, but also covers damage to your own car even if you’re at fault for the accident.

This is an optional extra that gives you access to another car, following an accident, until your own is repaired. Usually you need to have your car repaired at a garage that’s been approved by your insurer for this to apply.

This is a confidential ranking based on your credit history that can be used to determine the premium of your insurance policy.

‘Driving other cars’ is an optional benefit of some comprehensive policies that lets you drive other cars that you don’t own. This is not offered by every insurance company and only applies to the policyholder. The level of cover provided is limited to third party insurance.

The Driver and Vehicle Licensing Agency is the government organisation that handles driver and vehicle records. Essentially, their the organisation that deals with everything to do with vehicles and their drivers. For example, if you’ve been found to have committed driving offences, DVLA conviction codes will be places on your driving licence along with the rest of the conviction details. Each one is usually a four-figure code made up of letters and numbers. The most common ones are:

In the event of an accident or damage to a vehicle, insurance companies want to know who is at fault. When you are not to blame for the damage, a non-fault claim is made, as your insurer is able to recover all their costs from the person who is at fault. If they can’t do this, then the result is a fault claim. In circumstances where fault can’t be determined – like if your car is damaged by a driver that can’t be found – it will also count as a fault claim.

The Financial Conduct Authority is an independent non-governmental body that regulates companies offering financial services. The body does so with statutory powers granted by the 2000 Financial Services and Markets Act.

Guaranteed Asset Protection insurance is granted if your car is declared a total loss. GAP insurance pays the difference between the current value of the car and the original amount you paid for the car, so you don’t end up losing out if your car has depreciated in value.

This is a free, internationally-recognised document that proves you’re insured to drive your car throughout countries in Europe. This provides you with the most basic level of cover abroad. With this, you don’t need to get specialist European driving insurance for each individual country you’re planning to drive in – as long as the green card is valid in those countries.

The Institute of Advanced Motoring is a body that offers further training after you’ve passed your test. The IAM works to improve driving standards and safety.

This is technology that stops a car from being started until it’s deactivated by a key or fob. This means that your car can’t be ‘hot-wired’ by a thief.

A car that’s produced overseas and then brought into the country. In the UK, imports fall into two categories:

Indemnity is the primary reason insurance exists. It’s a clause that aims to ensure that if something’s been lost or damaged, the person who’s lost out initially ends up in the same financial position as they were before the loss occurred.

In order to insure something, you must clearly show that you have an insurable interest – that you own or part own it.

All cars fall into an insurance group, which determines the cost of your policy. The lower the group number, the cheaper the insurance, with smaller and less powerful models generally falling into lower groups. These groups run 1-50.

The main driver is the person who drives the car the most – it doesn’t matter who owns the car or who paid for it. This is most important when adding younger or new drivers to an existing policy.

This is any information that might influence an insurer’s decision about providing you with cover or might influence how big a risk they consider you to be.

The Motor Insurance Bureau is a group that aims to reimburse people who financially lose out following accidents involving uninsured drivers. It also pays out to people who aren’t able to get their costs back from their insurer.

This is a top-up course for new UK drivers that offers tuition for driving at night, driving on motorways and more advanced skills that aren’t necessarily covered in detail in standard driving courses.

You receive points on your license if you’ve had a motoring conviction – the number of points depends on the severity of the offence committed.

This is the length of time that your car insurance policy is valid for. Usually, this is 12 months and is required to be reassessed annually.

In the event of your policy being cancelled early, you’ll only be charged for the time you were covered by the insurer rather than the full policy term. The pro rata method is used to accurately calculate how much you’ll pay for your shorter period of cover.

If you protect your no-claims bonus, you’re allowed to make a number of claims during an outlined period of time without affecting your bonus.

Temporary insurance (also called short-term insurance) can be taken in case of emergencies, or if you only need to insure a vehicle for a short period.

This is an alarm made by recognised safety experts, Thatcham Security.

Third party fire and theft insurance provides you with all the cover of a third party insurance only policy, but you’re also covered if your car is stolen or set on fire.

Third party only is a policy that covers damage to other vehicles, people and property where you’re at fault for an accident. This doesn’t cover damage to your car.

A tracker is a device that produces a signal if and when your car is stolen, helping the police to recover your car.

Buying car insurance can feel like a complicated process, but understanding the jargon puts the power back in your hands. Using this list of the most common insurance terms will help you to navigate the market and get the cover you need. For more advice on car insurance, finance and purchasing, take a look at our handy guides.