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The KwikGuide to: Car Insurance
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choosing car insurance and cutting the cost

car insurance jargon

Information about car insurance is full of technical terms and jargon. Here we explain the most common terms:


all makes and models of car are given a 'group number' by the insurance trade association, the ABI.
This depends on the risk and costs related to each car and so affects what insurers will charge to insure it.

It ranges from the lowest 1 to the highest 50, based on factors like a car's value, performance, security and costs to repair. Most car magazines with price listings in the back will give the insurance group of the cars featured.

KwikTip: always get a car insurance quote from Direct Line too,
as they don't take part in the price comparison websites.

Due to this range of factors, even very similar types of car can have quite different insurance group numbers, and the cost to insure them will vary significantly. So a car's insurance group is always worth checking before buying.

this basically means 'someone else'. The law requires that you must have car insurance that at the very least covers damage you could cause with your car to someone else's property, or to treat injuries you may cause. Read more about types of insurance >>


when an insurer 'writes off' your car, they have decided that the cost of repairing it is more than its value and so the repair is not worth doing.

Instead they will pay you what they feel was its 'fair market value' before the damage was done. For newer cars, the insurer may find you a matching replacement car, rather than pay you the value of your old car. For cars up to one year old, some insurers will provide a brand new replacement.

There are four categories of write off, depending on the severity of the damage. Category A cars are those effectively destroyed, with no salvageable parts. Cat B cars are too severely damaged to be repaired, but a few parts can be salvaged. Cat C cars are potentially repairable, but the cost of repair would exceed the car's value. Cat D write offs could be repaired for less than the car's value but associated extra costs, such as providing a courtesy car, make it uneconomic for an insurance company to do so.

To dispute a decision to write off your car, first ask your insurer which category your car falls into, to see if a buy-back is possible. Taking the payout from your insurance company - normally market value minus salvage value - it may make sense to have your car repaired independently. With some paperwork, the DVLA will re-classify your car as repaired. But be aware that its record will still carry a history of 'accident damage' and this may affect your car's future value and ability to sell it on.

For help determining the market value of your car so you can make sure your insurance company pays you a fair amount, see our car valuation guide >>


this is an amount of money that you are expected to contribute towards the cost of any claim you make, whether or not you were at fault for an accident.

For example, if repairing your car will cost £800 and the 'excess' on your policy is £100, you must pay the repairer the £100 and your insurance company pays the £700 remainder.

There is often a compulsory excess set by the insurance company, which you will have to pay if you make a claim. Plus the facility for an additional voluntary excess - you choose the amount. Volunteering to pay more towards a claim means you take on more risk, so the cost of your policy will be reduced.

If another party is found to be at fault for an accident, you should be able to reclaim from them the excess you have paid, as well as your repair costs.


this is the amount an insurer proposes to charge to insure you for one year, on the basis of the information you have provided. Quotes are normally valid for around a month.


this is the amount you have actually paid for your insurance policy.

this is a discount that insurers will give you off your premium if you haven't claimed on your insurance in previous years. The more years without a claim, the bigger the bonus - often up to an extremely valuable 60 - 70%.

You can take your bonus between insurance companies if you switch when you renew by just providing your renewal document to prove that you are entitled to it.

But remember, this discount really is as it says - for no claims. It's not fault-related. If you have to claim, even for something that was not your fault, you will very likely still lose your discount - unless it is 'protected' (see below).

Sometimes small claims in specified areas, like claims for broken windows/windscreen, will not affect your discount. But this varies between insurers, so check the small-print of the policy if you're concerned.


if you have had a number of years without a claim on your insurance, and so are getting a big 'no claims' discount, you can often opt to protect it by paying a bit extra.

The deal varies between insurers, but if you protect your bonus you are normally allowed to claim once and keep your entire bonus, and perhaps even twice and have your bonus reduced only slightly - within a given period of normally several years. More claims than that and you are likely to lose your no claims bonus anyway, even if protected.

If you have a good driving record, this is well worth including in your policy. It'll cost a bit extra, but if you have an accident you might lose a discount that could be worth hundreds.


for a further extra fee on top of the 'protected' discount charge, some insurers will maintain your no claims discount no matter how many claims you make.
This is normally only available to drivers with a good record, and of course will only make a difference if you choose to renew your insurance with the same company.


this feature of car insurance offers a small payment for non-emergency medical expenses.

this term refers to any personal items you might have in your car that are not actually part of the car. For example, bags and their contents, jackets, laptop computers.

But be warned that, contrary to a common sense assumption that 'car' insurance will adequately compensate for something being stolen from your car, most if not all insurance companies will actually pay out very little for personal possessions. Cover is normally subject to such a low payout limit that, bearing in mind your excess, is hardly worth claiming.

The excuse insurers give for their near-universal feeble cover against such theft of possessions is that people should by now be aware not to leave anything on view in an unattended car. Yet anyone can have an occasional lapse and be unlucky that a thief is in the right place at the right time to take advantage.

However, as almost all insurers offer similarly terrible protection for their customers on this score, the consumer has no choice.


insurance companies have relationships with certain car repairers across the country, which they will recommend that you use to repair a car under their policies.
You don't have to use the repairer they recommend. However, there may be a penalty for choosing another repairer, such as having to pay a higher excess.


when an insurer says they will 'indemnify you' against a certain event, that simply means that they will put you back in the same financial position as you were in before the event happened.


this is shorthand for a sometimes controversial claim-sharing deal between insurance companies. It means that if it's going to take too long to agree who's at fault for an accident, insurers just pay for the claims of their own customers rather than pursuing payment from from the insurer of the other party.

The upside is that it cuts down on paperwork and lengthy legal action, meaning quicker payouts for claims.

The problem for the innocent party in an accident - who often has a much clearer idea of who was at fault for what happened - is that their own insurer can give up on their innocence and foot the bill for repairs themselves. And if an insurance company is out of pocket, that means your own premium, and possibly no claims bonus, will be affected - even if you maintain that the accident wasn't your fault.

Yet this effect of such a deal being struck may not be noticed until time comes to renew, often months after the accident and an appropriate time to do anything about it. Understandably, most would assume that if they were not at fault for an accident, their record will not be harmed.

Such deals between insurers do not affect the ability of the innocent party in an accident to take legal action against the person at fault to recover any financial loss related to their own insurance record being harmed - as long as the other person's fault can be proved.


sometimes called Uninsured Loss Recovery.

This is an optional extra to your car insurance. It provides an amount, up to a maximum, to pay for any legal action needed to recover costs you have suffered as a result of an accident that wasn't your fault, but which weren't covered by your insurance policy. For example, costs like travel expenses, hire car charges and your policy excesses.

Disputes can sometimes occur here because, even if you've paid for legal cover, insurers will only back you under this facility if they believe that the legal case is winnable.


a car will be considered 'modified' if it has had any changes made to the original manufacturer's specifications.

This includes the addition of any extra parts like spoilers or replacements with non-standard body parts. It includes changes like different wheels and improving the performance of the car by tuning the engine or using non-standard mechanical parts in areas like the suspension or brakes.

If your car has been modified in any way from standard, it will very likely increase the cost of insuring the car, especially if insurers assume you are seeking extra speed. It may also cost you by excluding you from the standard quoting systems provided by most online insurance providers, making insurance shopping more time-consuming and ruling out online discounts.


these are normally two items. Most importantly, a short description of your insurance details called your Insurance Certificate. Keep this in a safe place. This is your proof of insurance and you will need it to tax your car.

This is normally accompanied by a bigger booklet which is your Policy Document, containing all the small print about the features of your policy; what's covered, what's not covered, what the limits of various aspects of the policy are.

Next page:
car insurance - common mistakes >>


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