Knowing your way around the car insurance industry and its unique terminology can be daunting. It doesn’t matter if you’re a new driver or a seasoned motorist, there are times when everyone is left wondering what certain terms mean. To simplify the process, here’s a breakdown of some of the most questioned jargon you’ll encounter when buying or renewing your car insurance in the UK.
Excess
Excess is a fundamental concept in car insurance. It’s the amount you, the policyholder, must pay out of pocket before your insurer covers the remaining costs involved with a claim. Excess is usually divided into two types, compulsory and voluntary.
The compulsory excess is set by the insurer based on the details of the policy and your risk profile. You can choose to raise or lower your voluntary excess depending on how much you want your premiums to be. A higher excess means more to pay upfront if you want to make a claim.
No Claims Bonus (NCB)
A No Claims Bonus is a discount applied to your car insurance premium. It accumulates every year you don’t claim on your policy and can significantly reduce your insurance costs in the long term. Having no claims against your policy is a clear sign that you’re a lower risk to insurers who are likely to reduce your premium accordingly.
Comprehensive Cover
Comprehensive cover is the highest level of car insurance available, covering you against personal injury, accidental damage, theft and third-party liability. It’s the best option for peace of mind on the roads because it keeps you and other motorists financially protected in an accident.
Third-Party Insurance
Third-party insurance is the minimum legal cover required to drive a car in the UK. It covers damage to third parties, their property and any vehicles in an accident that you cause. You and your vehicle aren’t covered by a third-party policy.
Temporary Car Insurance
If you need insurance for one day or longer, temporary car insurance gives you the flexibility to cover yourself or another driver without committing to a long-term policy. This is a much more versatile option and makes insuring someone for the short term much more convenient and affordable.
Policyholder
The policyholder is the person who owns the car insurance policy. This individual is responsible for ensuring that the policy details are accurate and for making premium payments. The policyholder may not necessarily be the primary driver of the car, but they are legally the ones held accountable for the contract with the insurer. They accrue any No Claims Bonus, not named drivers.
Telematics/Black Box
Telematics, often referred to as black box insurance, involves fitting a device in your car that tracks driving behaviour including speed, acceleration and mileage. This data is used by insurers to assess risk and adjust premiums accordingly. These options are ideal for young or new drivers, helping to lower premiums by demonstrating safe driving habits.
