Frequently asked questions
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Insurance jargon buster
A
Accidental damage cover
Insurance cover for damage to goods. For example, if you accidentally put a foot through the ceiling whilst in the loft, this would be covered under the accidental damage section of your buildings insurance policy. Alternatively, if you accidentally dropped paint on your carpet, this would be covered under the accidental damage section of your contents insurance policy.
Act of God
An unpreventable and unpredictable event, which could cause loss or damage to buildings, land, vehicles, etc. Insurance policies often exclude acts of God or acts of war, although they will usually cover natural disasters such as floods.
Alarm
An alarm is a device installed to a vehicle or home in an attempt to discourage theft. Most alarms work by making a loud noise, others send a signal to the owner warning that their vehicle or home is being disturbed.
All risks or personal possessions cover
Some insurance policies include cover if you take certain items outside your home, for example your laptop or jewellery and most will let you buy additional cover which is known as personal possessions or all risks cover. You'll need to check your policy to see if it includes personal possessions cover.
Amendment
A change to your original policy. For example, if you increase the amount of mileage you will be doing throughout the year.
Ancillaries (optional extras)
Insurance companies will often offer extra levels of cover for an additional premium. In some cases these optional extras are extensions of cover already included in the insurance quote, and in other cases they are a completely separate cover.
For home insurance these could be, for example, home emergency cover or legal cover. For car insurance, legal cover or breakdown cover.
Annual mileage and annual business mileage
Annual mileage is the total mileage you do in a year.
Annual business mileage is the mileage you do in connection with your employment or business.
Annual premium
The price you are quoted by an insurance company for your insurance.
Arbitration clause
This is a clause in your insurance policy which states that if neither you nor your insurer can agree on an 'appropriate claim settlement' you both hire a mutually agreed appraiser to settle the dispute. The appraiser elects an independent mediator and is neutral to both parties. A majority decision will decide the amount of the claim.
B
Bedrooms
Your home insurance company will ask how many bedrooms you have in your property to see what size your home is. A bedroom is generally defined as a room either originally designed for sleeping in (even if now used for other purposes), or later converted for sleeping in. For example, a house extended by loft conversion into a bedroom would increase its total number of bedrooms.
Bonus
Please see no claims bonus.
Broker
A broker is an independent intermediary who sells one or a range of policies from different insurance companies.
Buildings cover
Buildings insurance covers the building itself, together with permanent fixtures and fittings which you own or which you are legally responsible for within the premises, such as fitted kitchens, baths and toilets. Many policies also offer insurance cover which includes outbuildings such as greenhouses, sheds, garages and accidental damage to underground pipes and cables, glass in doors and windows.
Buildings insurance is usually a requirement if you have a mortgage.
C
Cancellation
Ending an insurance policy before it is due to finish.
Your insurer may charge you if you want to cancel your policy before it is due to end. There may be a cancellation fee to pay as well as a percentage of your premium. Your insurer's cancellation rates can usually be found in your policy booklet. You will need to phone your insurer to cancel your policy.
Cash / money
The usual definition of cash or money for home insurance purposes is:
- Current legal tender, postal and money orders, cheques
- Gift tokens, luncheon vouchers, traveller's cheques, premium bonds, travel tickets
- Savings certificates and stamps
- Unused postage stamps not forming part of a collection
Please check your insurance documents to confirm exactly what is covered.
Certificate of insurance
A document or certificate issued by insurance companies as proof that insurance is in force, to meet the requirements of the law.
Claim
A claim is a request or demand for payment under the terms of your policy.
For example, if you have an accident or if someone steals your vehicle and it needs to be repaired or replaced, you make a claim against your insurance policy.
There are two types of claim you need to be aware of:
- Fault claim
You are deemed to have caused an accident or incident, or your insurance company cannot recover all their costs from the other party.
Some claims will always be classed as fault claims, for example when your car has been broken into and items have been stolen from it. Although you haven't done anything wrong, there is no-one to recover the cost of the stolen items from and the claim becomes a fault claim.
- Non-fault claim
You have been involved in an accident or incident and your insurance company can recover all their costs from the third party.
Claims and losses
A loss for insurance purposes is an event that has occurred that has resulted in damage to, or loss of use of, something. A claim is an application to your insurance company to compensate you for that loss, within the level of cover in force on your current policy.
Claims history
Insurance companies will look at your claims history (how many claims you have made and what you have claimed for) when deciding on what to charge for your insurance premium or renewal premium. Your claims history will help paint a picture of the potential risk you pose as a customer. Some insurance companies won't look to insure anyone who has previously made a claim.
Comprehensive cover
Please see cover type.
Compulsory excess
Please see excess.
Contents cover
Cover for household possessions. Generally contents cover should include just about everything you would take with you if you moved house such as furniture, household goods, kitchen equipment, frozen food and drink, televisions, video, cds, computer and audio equipment, personal items and valuables up to your policy limits, or for which you are legally responsible.
Contents cover doesn't always include jewellery and cash as standard, so it's important to check your cover and the limits of these items in the policy wordings.
Conviction code
When someone commits a motoring offence and receives a motoring conviction, a four-digit code is put on their licence by the Driving and Vehicle Licensing Agency (DVLA).
For example, SP30 is the conviction code for exceeding the statutory speed limit on a public road.
Cover note
A document showing temporary proof of cover for a motorcar, van or motorcycle policy, while the policy and certificate are being prepared by the insurer.
Cover type
- Third party only (TPO)
Covers any claim by third parties. This does not cover damage to the driver's own vehicle.
- Third party fire and theft (TPFT)
Covers fire and theft of the driver's vehicle in addition to third party only cover.
- Comprehensive (Comp)
Covers accidental damage to the driver's vehicle in addition to third party fire and theft cover.
D
Damage
Loss or harm to a person or property.
Depreciation
Depreciation is a deduction for wear and tear of your possessions. Even with a replacement as new policy (new for old), you should deduct from clothing and household linen claims an amount for wear, tear and depreciation. A man's suit, for example, is reckoned to have a lifespan of around five years. For each year you have had your suit you should deduct one fifth of today's price of a new one. Please note that this is only a guide and we recommend you confirm these details with any insurer you are looking to take out a policy with.
Driving other cars (DOC)
Using another car you don't have insurance cover for. Subject to certain conditions, some insurers will allow someone not insured on a car to drive it in an emergency. If your policy includes DOC then it will be stated on your certificate of insurance.
If you do have this cover, the following usually applies:
- It is third party only cover on another vehicle; you won't be covered for any damage to the car you are driving
- The car must be currently insured by another party
- You must have the owner's permission to drive
- You can only use it for cars that do not belong to you; or
- Vehicles not hired to you under a hire purchase agreement
- It is for emergency cover use only, not for day-to-day use
E
Endorsement
A change made to an insurance policy which becomes part of the policy. For example, if you change your car the vehicle details will be changed and your new car is insured instead of your old car.
Excess
An excess is what you are liable to pay towards any claim. It usually has to be paid to the garage fixing your car once it is repaired before you can drive it away.
The main excesses types are:
- Compulsory excess
- - Set by your insurance company
- - Depends on the details you provided to them when you took out your policy
- - Higher excesses are more likely on policies with young drivers or high-value cars
- Voluntary excess
- - When you take out a policy, you choose to pay more towards the cost of a claim
- - Generally reduces the price of what you pay for your insurance when you buy it
- - Is paid as well as any compulsory excess
Exclusions
Insurance companies won’t pay out for certain risks or types of loss or damage. These will be clearly set out in the terms and conditions of your policy and are known as exclusions.
Common exclusions are theft if you have let or sub-let your house (or part of it) unless there is forced entry, or loss/damage arising if you leave your house unoccupied for long periods of time, usually more than 30 consecutive days.
F
Fault claim
You are deemed to have caused an accident or incident, or your insurance company cannot recover all their costs from the other party.
Some claims will always be classed as fault claims, for example when your car has been broken into and items have been stolen from it. Although you haven't done anything wrong, there is no-one to recover the cost of the stolen items from and the claim becomes a fault claim.
Freezer cover
If you have a power cut or your freezer breaks down, freezer cover insures you for the loss of your freezer's contents. There may be a limit on how much your insurance company will pay out - this will be shown in your policy documents.
G
Garden cover
Some insurance policies will include cover for items in the garden and/or the garden itself. You may be able to increase the level of cover offered by buying a garden cover ancillary from your insurance company. Garden cover may include garden furniture or children's toys, plus re-landscaping if damaged by fire, explosion, lightning, malicious persons, theft or attempted theft.
Good state of repair
A property in a good state of repair is one without structural problems. Your property is not considered to be in a good state of repair if it has dry rot, rot or infestation requiring timber or window replacement, damp, roof or chimney stack damage, faulty wiring or incomplete construction.
Green card
Required to drive abroad. You must confirm with your insurer that you have this cover before you drive abroad as some countries impose severe penalties if you don't.
- A green card provides basic Road Traffic Act cover for driving while on holiday abroad
- Recognised in over 40 countries (check with your insurer to see what countries they cover)
- For an additional charge, most insurers will extend your cover so you have the same level abroad as you have at home
- Some countries will confiscate your vehicle if you cannot provide the correct documentation
H
High risk items
High risk items are those items that are most frequently stolen from our homes when they are burgled.
Examples are:
- Antiques
- Articles of gold, silver or precious metals
- Binoculars
- Cameras and photographic equipment
- Computer or laptops and equipment
- Jewellery
- Paintings and other works of art
- Stamp, coin and medal collections
- Televisions
- Video and audio or DVD equipment
- Watches and clocks
Home emergency cover
This is extra cover you can buy to help with common household emergencies such as:
- Central heating failure
- Electrical failure
- Lost keys
- Plumbing and drainage problems
- Security issues
The cover offers you extra protection in emergency situations.
Home / property
The private dwelling in which you live, its garages and outbuildings, used solely for domestic purposes.
I
Immobiliser
An additional security device for your vehicle. An electronic immobiliser disables the engine of your vehicle. Newer vehicles usually have these fitted by the manufacturer as standard and details can be found in your vehicle instruction booklet.
If you have an immobiliser fitted by a garage, they will give you a certificate of installation showing the make and model. Some insurers offer a discount if a vehicle has an immobiliser.
Import or imported vehicle
Vehicles made outside the UK and brought into the UK market.
Indemnity
Protection or security against damage or loss by compensation, or something by the way of compensation. In insurance terms it means being put back in the same state or financial position you were in prior to a loss.
For example, if you are involved in an accident and your vehicle is damaged, your insurer will pay for the repairs to it, and you will be able to use it again.
Insurable interest
To insure a private vehicle, you would have to own it and suffer a financial loss if it was damaged. You can't for example insure your neighbour's vehicle. As you don't own it, there would be no loss to you if it was damaged.
Insurance intermediary
Please refer to broker.
Insurance premium
The price insurers charge for insurance cover.
J
Joint proposer
If there are two people wanting to insure a property (for example husband and wife), they are known as joint proposers.
K
Kit car
A car that you assemble yourself from a kit. Usually the mechanical parts such as the engine and transmission are taken from one or more donor vehicles. Kits can vary from as little as a book of plans to a complete set of all the components required to build the car.
Knock-for-knock
An agreement where each motor insurer pays for damage to its policyholder's car regardless of which driver is to blame, providing the policy covers damage to the policyholder's own car (comprehensive cover).
L
Legal expense or legal protection
Protection for certain things that would not usually be dealt with on a motor insurance policy. Some insurance companies include it automatically in their policies, but more often than not there is an additional charge to be paid for it. Typically it:
- Pays for legal costs if they arise from an accident which happens while you are driving
- Provides assistance to recover uninsured losses from the other driver's insurance company should you be involved in a non-fault accident
- Arranges for a solicitor to pursue a claim for compensation if you are injured
- Generally helps with the recovery of the excess on your policy, medical losses or loss of earnings
Licence type
A permit to drive a motor vehicle, gained after passing a driving test. There are a number of different licences which are issued depending on the type of vehicle you drive and where you lived when you passed your driving test.
The main licence types seen in the UK are:
- UK full
- UK provisional
- UK automatic
- EEC full
- EEC provisional
- International
- Other European
For further details please visit www.dvla.gov.uk
M
Main driver or rider
The person who drives or rides your vehicle the most. You must tell your insurer who this is as they will take it into account when working out how much to charge you for your policy. If you make a claim and your insurer finds out the main driver or rider is not who you told them it was when you took out your insurance, they can refuse to pay your claim or cancel your policy.
Material fact
A material fact would be information that would affect an insurance company's willingness to accept a policy, or the premium it would charge. Failing to disclose a material fact could invalidate a policy.
Modifications (mods)
Any changes made to your vehicle that are NOT classed as factory standard. This could include engine modifications, alloys, spoiler or sunroof, etc. If you don't tell your insurance company about any modification when you buy your policy, they can refuse to pay out if you make a claim or cancel your insurance.
N
New for old
New-for-old policies, also referred to as replacement-as-new cover, meet the full cost of replacing items if they are stolen or destroyed, should the claim be deemed valid. Alternatively, the cost of repair will be met if the items are damaged. Some exclusions may apply with each insurer such as clothing or pedal cycles.
No claims bonus (NCB)
A reward for people who don't make a claim on their policy. Insurance companies will usually give a discount for claim-free driving. It is a 'no claim' not a 'no blame' discount, so if you do claim on your policy despite an accident not being your fault, it will affect your no claims bonus unless your insurer recovers their costs from the other driver’s insurance company.
The basics of no claims bonuses are:
- For every fault claim you make, you lose two years' bonus
- Most insurers have maximum no claims discount levels, commonly four or five years
- You can usually protect your bonus once you reach the maximum discount level
- If you protect your no claims bonus and make a claim, you do not lose two years' bonus. You will still receive maximum discount on your policy, but;
- What you pay for your insurance may increase when you renew your policy as you have made a claim (insurance companies see policies with claims as a greater potential risk than claim-free insurance policies)
Once you have driven for a certain number of years claim free, you can protect your no claims bonus.
Non-UK specification
These are vehicles that are brought into the UK from abroad but differ from current UK specifications. This type of import will usually be more expensive to insure as parts are more difficult to get and may have to be imported as well.
O
Optional extras
Please see ancillaries.
Owner and registered keeper
Usually the person taking out an insurance policy - please see policyholder or proposer.
Sometimes the owner and registered keeper are different people. For example, a company car would usually be owned by the company, but the registered keeper may be the proposer.
P
Personal possessions cover
Personal possessions is a valuable extension to contents cover and generally insures clothing, baggage, cash/money, credit cards, sports equipment, prams, pedal cycles and other personal belongings that you wear or take away from the home in everyday life.
This includes cover for jewellery, spectacles, binoculars and telescopes, mobile telephones, keys, pedal cycles, sports equipment for social use and cameras.
Points
Added to your licence should you be convicted of a motoring offence such as speeding. Will generally mean an increase in the cost of your insurance premium.
Policyholder or proposer
A policyholder is the person or organisation to which the insurer issues the policy. More clearly defined as the person who the insurance company will pay the benefits of the insurance policy cover to, should a claim arise.
Premises
For home insurance purposes, this will be the risk address or household which requires the cover and is stipulated as the premises during the quote process. The premises or risk address will be shown in the policy schedule once cover has been issued.
Premium
The sum of monies paid to an insurance company for an insurance policy.
Protected no claims bonus
Please see no claims bonus (NCB).
Q
Q-plate
A vehicle which wasn't originally registered in the UK and the age of which couldn't be proved when it was registered, or a vehicle built using a large amount of used parts. Examples are:
- Insurance write-offs
- Stolen/recovered vehicles
- Ex-military vehicles (including ex-army, ex-navy and ex-RAF Land Rovers)
- Imported vehicles
Quote
The price an insurer offers for insurance cover based on the information provided by the person asking for the quote.
R
Rating
Insurance companies base the price of their policies on a number of factors such as the driver's age, postcode and driving history. This is commonly known as 'rating' in the insurance industry.
Rebuilding cost
The rebuilding cost is the total cost of rebuilding your home if it was completely destroyed. It includes the cost of all professional fees, materials and labour, including the cost of demolishing and clearing the old building.
As house prices fluctuate, you cannot guarantee that the rebuilding costs will be automatically lower than the purchase price/value of the house to be insured. Remember that although the cost of the land was included in the cost of the house purchase, this would not be included in the rebuilding costs. If you have held insurance previously for the home you are insuring, your rebuilding cost or 'buildings sum insured' will sometimes be shown on your policy schedule or renewal notice. It may also appear on any survey or valuations carried out on your home, but if it is an old valuation remember to adjust for inflation purposes.
Registered keeper
Please refer to owner and registered keeper.
Renewal
Continuing an insurance policy once its initial term ends. For example, if you take out a 12-month policy and then stay with the same insurer after 12 months, your policy is renewed.
Riding other motorbikes
Riding other motorbikes allows you to ride another motorbike with the owner's permission in an emergency situation. Some comprehensive policies give this cover, you need to check your policy documents to see if it's included in your motorbike insurance policy.
Risk
In order for any insurance company to provide an insurance quote they must first evaluate the risk they are quoting for. This generally means looking at the customer's quote details and assessing them by their claims history, the cost or type of the vehicle they drive, and perhaps the area they live in.
Road Traffic Act (RTA)
In 1930 the Road Traffic Act came into force to guarantee that cover would compensate the innocent victims of accidents.
S
Schedule
This gives policy details of how much cover you have (the sum insured), the discount you qualify for (if any), the period of insurance, the premium you have to pay and the sections that apply. With some policies you may get a new schedule when you renew the policy or whenever you change any policy details.
Security
Please refer to alarm, immobiliser and/or tracker.
Single article limit
This is the maximum amount that one item can be covered for on your home insurance policy. The single article limit value is set by the insurance company.
Stripped down policy
A budget policy which excludes some of the benefits you'd normally associate with vehicle insurance, such as windscreen or stereo cover. It is designed to keep the cost of car insurance as low as possible and may have higher excess levels in order to reduce the price of the policy.
Sum insured
The amount paid out by the insurer when a claim is made on a policy.
T
Telematics insurance
Telematics car insurance policies - also known as 'pay-as-you-drive' and 'pay-how-you-drive' policies - are priced according to how a car is driven. Data is collected through a 'black box' that is fitted to the car and monitors information such as the time of day the car is driven, distance travelled and speed. This information is then used to calculate insurance premiums.
Third party
Someone involved in a claim who is neither the policyholder nor the insurer. For example, if you are in a car accident, the driver of the other car is a third party.
TPFT cover
Please refer to cover type.
Tracker
Vehicle tracking systems are electronic devices installed in vehicles to enable vehicle owners or third parties to track the location of a vehicle. Most modern vehicle tracking systems now use GPS modules to allow for easy and accurate locating of the vehicle. Many systems also combine a communications component such as cellular or satellite transmitters to communicate the vehicle's location to a remote user. Some insurers offer a discount if a vehicle has a tracker.
U
UK specification
Vehicles brought in from abroad that match UK specifications. This type of import generally does not increase the price of your insurance.
Under insured
When the sum insured on your policy is not enough to cover the maximum possible potential loss or damage.
Underwriter
An underwriter is employed by an insurance company to decide whether to accept a risk and calculate the premium to be charged. Underwriting, then, is the method that an underwriter uses to determine what kind of risk your details are and what would be a fair charge if your risk is deemed worthwhile by the insurance company.
Use (class of use)
What you use your vehicle for will have a substantial effect on your insurance premium. If you only use it for driving or riding to visit family and friends or to go shopping, this would be the minimum risk rated by an insurer. However, if you use your vehicle for both social and business use you will face a higher rate from your insurer as you are considered at greater risk of making a claim because of the extra mileage you drive or the goods you may carry.
The different categories of vehicle use are:
- Social, domestic and pleasure
You are covered for day-to-day driving or riding - such as visiting family, friends or going shopping - but not driving to work.
- Social, domestic, pleasure and commuting
You are covered for everything in the social domestic and pleasure category, plus driving or riding to and from one fixed place of work. It also includes travelling and parking at a railway station.
- Business use
You can use your vehicle in connection with your job, such as driving or riding to more than one place of work.
- Commercial travelling
You can use your vehicle for things like door-to-door sales.
Your policy documents will state what you can use your vehicle for.
V
Valuables
These are items which may fall into the high-risk items section but have a higher value than the high-risk items limit. For a list of possible items please refer to high-risk items.
Voluntary excess
Please refer to excess.
W
Warranty insurance
Warranty insurance, if applicable to the policy, provides cover against the cost of repairs to broken-down household appliances.
Write-off
A damaged vehicle which is not repairable, or costs more to repair than the value of the vehicle before damage occurred.
Y
Year built
The year that the property was actually built, or the vehicle manufactured.