Your insurance jargon buster

Do you ever get confused by all the complicated jargon that insurers use? To the majority of people, understanding all the ins and outs of car insurance can seem like learning a whole other language – and it can be frustrating trying to sort out your insurance with someone who’s using a load of words that don’t make much sense.

At DNA, we believe in being straight-talking and easy to understand at all times, but there are some terms and phrases it pays for you to understand. This is because we need to use formal insurance terms and acronyms in your paperwork so we want you to understand what your policy means. That’s why we’ve pulled together this jargon buster for you.

ABI

ABI stands for The Association of British Insurers, which is a trade body made up of 250 leading insurance companies. It accounts for over 90% of the UK insurance market.

Act of God

An unpredictable event which isn’t the fault of any individual, such as a lightning or meteor strike. Acts of God may not be covered in your policy and are often separate from extreme weather events like flooding or falling trees.

Betterment

A payment made by an insured party that recognises the fact that their vehicle will be worth more as the result of repairs relating to an insurance claim. 

Certificate of insurance

This is a document that is required by law and shows the car being insured, who is allowed to use the car and the classes of use (see below).

Class of Use

A term used by insurance companies to determine what you use your car for and how often. There are three classes of use:

• Social, domestic and pleasure
• Commuting
• Business use

The class of use you select will often have an impact on your insurance premium. It’s very important you are certain what class you fall into as supplying inaccurate information could invalidate your policy.

Comprehensive cover (or fully comprehensive)

The broadest type of insurance, which will cover you and your vehicle, as well as the vehicles of third parties if you are at fault. 

Compulsory excess

This is a set amount you need to pay to your insurer when making a claim. The level of your compulsory excess will depend on how much of a risk you are judged by the insurer. 

Conviction Code

If you commit a motoring offence the DVLA (see below) will add a four digit conviction code to your licence. 

Cover note

A document that shows you have temporary car insurance while your insurer is preparing your policy documents and certificate of insurance. Some insurance companies don’t issue cover notes and will instead issue you with a certificate on the day you accept the insurance. 

Duty of disclosure

When you take out a car insurance policy you have a duty to inform your insurer of any changes in your circumstances, such as a change of address or a modification to your car. 

DOC

Drive Other Cars (DOC) is a type of cover that some insurance policies will include and means you are insured to drive another person’s car, with their permission. This will usually only be third party cover and cannot be for day-to-day use. 

DVLA

The Driving and Vehicle Licensing Agency (DVLA) is the body responsible for issuing licences and collecting car tax for all drivers in Great Britain. 

Fault Claims

When you make a claim but your insurer cannot recover the cost from the third party. This could be if you’re deemed to have caused an accident or for other reasons that aren’t your fault, but where there’s no other known party involved such as theft or vandalism.

FCA

The Financial Conduct Authority regulates the car insurance industry as well as other financial services companies.

Green Card

A document that proves to non-EU countries that your insurance provider provides the minimum insurance necessary to drive in the country.

Insurable Interest

This is the basic requirement of taking out car insurance and refers to the fact you have an interest in the vehicle being insured and would suffer a loss if it were damaged.

Main Driver

The person who drives the car most of the time as stipulated on the insurance policy.

MID

The Motor Insurance Database is a record of every insured car in the UK.

Optional Extras

Also known as Add Ons, these are benefits that can be added to your policy for a fee, such as breakdown cover and replacement vehicles.

Policy

This is the main document between you and your insurance provider. It will detail all the terms of your insurance, including the premium and term. Not to be confused with the certificate of insurance, which is required by law.

Premium

The amount paid to your insurance provider to hold the policy. This can be paid in monthly instalments or in one yearly sum.

Schedule

This document forms part of the contract between you and your insurer and shows things like your excess and any endorsements you might have.

SORN

Statutory Off Road Notifications can be obtained from the DVLA are required by law if you plan to keep your vehicle off the public road and not use it.

Third Party

This type of policy will cover your vehicle for damage from third parties only. 

Third Party, Fire and Theft

This type of policy will cover your vehicle for theft and fire, as well as damage from third parties only.

Voluntary Excess

This is the fee you pay to your insurance provider towards the cost of a claim. You can set your own voluntary excess before taking out the policy, with a higher excess usually resulting in a lower premium.

Write off

If the cost associated with repairing your vehicle is more than your insurance company deems the vehicle to be worth, then it’s considered a write off.