Car Insurance Terms

October 10th, 2019

Does car insurance jargon leave you confused? Read our essential guide of terms to help you.

Certificate of insurance

This documentation certifies that the car insurance you have is legitimate and is issued by the insurance company. All specific details relating to the premium will be outlined in full so keep it safe.

Comprehensive car insurance

Comprehensive policies are all-inclusive and will insure your vehicle against accidents that occur due to a fault of your own or another. Most come complete with fire, theft, and even weather damage.


The insurance premium is the sum of money that is owed to the insurance company from the policy holder. How this will be paid and at what intervals is agreed between the two parties involved.


A claim is the process by which an insurance policy is activated due to a cost incurred through a medium covered by the policy e.g. a car accident.


A commonly used synonym for insurance policies.


A policy outlines the legal obligations between the policy holder and the insurance company.


The excess is the amount of money to be paid by the policy holder in the event of an insurance claim. Voluntary excess is where the policy holder sets out whether or not the excess is included, and the cost. Compulsory is where the amount is decided by the insurer.

Cover note

Before the certificate verifying your policy is complete, a covering note is issued as substantiating proof that the policy is active.

Insurance schedule

The insurance schedule outlines everything covered in the insurance policy between the policy holder and the insurance company.


Exclusion is any incident that is not covered by the insurance policy.


An immobilisers is a security feature on cars which acts by deactivating the engine unless a specific key is entered into the ignition.


The insured party is the individual who holds the policy and whose name is listed on the certificate.


The insurer refers to the organization that issues the policy and provides any payment for claims.

Market value

Market value is the amount of money that it will cost to replace a vehicle like-for-like in the event of a road traffic accident (RTA).

No-claims bonus

If no claim is made during the first calendar year of the premium activation, a discount is applied in the following year. This continues on a rolling basis until a claim is made or a protected no-claims bonus is applicable.

A protected no-claims bonus

When a no-claims bonus runs into its fourth successive year, the option to protect it is activated. This will incur a charge but will also allow the policy holder to make a claim without affecting their bonus.


Underwriters make a thorough risk assessment of any potential policy, furthermore deciding whether someone is insurable or not.


The individual who took out the policy is referred to as the policy holder.

Renewal notice

This is usually sent out when the policy is nearing its climax, acting as a reminder to the customer of whether they wish to renew the policy or not.

Third party car insurance

Third party insurance covers the policy holder if involved in an accident with another driver; it also compensates the cost of the other vehicle. Third party does not remunerate the holder of the insurance policy’s vehicle.

Third party, fire and theft car insurance

Third party insurance with fire and theft cover as well.

Sum insured

The sum insured is the ceiling figure that the insurance company will pay in the event of a claim.

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