Best terminology explained of Car insurance

Your car insurance – we try to make buying a policy as clear and straightforward as possible for you.
But sometimes it's easy to confuse IPT with TPFT, or the FCA with the ABI.
To help you make sense of the jargon that's often used to describe car insurance, here is our guide to motor insurance terminology.

Association of British Insurers (ABI)

Many insurance companies are members of the ABI, but membership is not compulsory and the ABI is not a regulatory body.
ABI members sit on the Group Rating Panel, which recommends the car insurance group rating for each new model built to a UK specification.

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Approved repairer

A garage recommended by your insurance company for car repairs covered by your insurance policy.

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Comprehensive cover

The highest level of car insurance cover, which usually covers you for:

• injuries to other people
• damage to other people's property
• accidents caused by your passengers or a driver named on your policy
• the use of a trailer, while attached to your car
• fire damage and/or theft
• accidental damage to your own car
• medical expenses, up to a stated limit
• loss of or damage to personal effects in the car, up to a stated limit

Please note that policy features will vary between insurers, so always check them before you buy.

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Driving other cars (DOC)

Many insurers don't offer this as a standard policy feature, so make sure you're covered before getting behind the wheel of someone else's car. It's also worth noting that when it is included, you usually only get third party only cover.

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Fault claim

An accident or loss where you are considered to be to blame, or where you or your insurance company cannot recover costs from somebody else.
Remember, if your car is hit while parked, by someone who cannot be traced, this counts as a fault claim.

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Non-fault claim

With a non-fault claim your insurer is able to recover the cost of the claim from someone else.

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Financial Conduct Authority (FCA)

The UK's financial watchdog, the FCA regulates the financial services industry, including insurance companies. The FCA can advise you on making a complaint against an insurance company.

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Indemnity

As an insurance policy holder you are placed in the same financial position following a loss as you were before it. For example, if your insurance company pays to repair your car following an accident, you are in the same financial position as you were before the car was damaged.

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Insurance Premium Tax (IPT)

A tax on general insurance premiums, including premiums for car insurance. The tax is included in the price of your car insurance premium.

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Insured value

The total amount the insurance company will pay out for your car if it's damaged beyond repair. This will either be the amount you stated the vehicle was worth when taking out the policy, or the current market value at the time of the claim – whichever is lower.

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Material fact

Any information that may influence either an insurer's decision to offer you cover or the premium they charge for it. If you leave out information which may influence a decision to offer cover, your policy may be invalidated.

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No-claims bonus (NCB)

For each year you drive without making a claim on your insurance you get a year's no-claims bonus, subject to a maximum. This bonus reduces the cost of your car insurance premium for the following year. Also described as a no-claims discount (NCD).

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Settlement

What your insurer pays out for a claim.

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Thatcham Research

The Motor Insurance Repair Research Centre (Thatcham Research) carries out research for the motor insurance industry on the cost of car repairs and vehicle security. The Group Rating Panel, which meets to assign new car models to an insurance group, is administered by Thatcham Research on behalf of the Association of British Insurers.

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Third party only (TPO)

Third party cover is the minimum level of car insurance cover required by law and contains no cover for damage to your vehicle. It usually covers your legal liability for:

• injuries to other people
• damage to other people's property
• accidents caused by your passengers or a driver named on your policy

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Third party, fire and theft (TPFT)

Third party fire and theft cover provides the same level of cover as third party cover, but protects you against damage to your vehicle from fire, or theft of the vehicle, as long as you're not at fault.

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Uninsured losses

Any losses not covered by your insurance policy, such as your policy excess, any out-of-pocket expenses following an accident, eg a loss of earnings, or compensation for an injury suffered in an accident.

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Uninsured loss recovery (ULR cover)

The assistance in recovering your uninsured losses from a third party, where an accident is the third party's fault.

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Underwriter

An underwriter decides whether to accept you as an insurance risk and then calculates your car insurance premium.

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6 best ways to bring down the cost of your car insurance

If you're a young driver looking to insure your first car, you probably already know that you face some of the highest car insurance premiums around.
Just a look at road accident figures for young drivers can explain why insurance premiums are so high.
What you may not know is that there are a few things you could do to bring down the cost of car insurance in your first years on the road.

 

1. Five facts about accidents involving young drivers*

1. One in five drivers has an accident in the first year of driving
2. 26 per cent of road accidents involve at least one young car driver aged 17 to 24
3. 79 teenage drivers were killed on the roads in 2009, another 770 were seriously injured and 9,500 slightly injured
4. A higher proportion of young driver accidents occur on Friday and Saturday nights
5. 57% of reported accidents involving young car drivers occur in urban areas

Being aware of the risks that come with being an inexperienced driver can help you to think about how you can drive safely and avoid incidents which may involve an insurance claim.
* Sources
AA Public Affairs report: Young drivers
DfT Road Accident Statistics Factsheet No. 6, 2009: Reported road accidents involving young car drivers

2. Earn a no-claims discount

If you drive safely – by following the Highway Code and staying within the speed limit – you will reduce your chances of being involved in an accident. By avoiding accidents you will improve your chances of earning that all important no-claims discount when you come to renew your car insurance.

3. Choose a car in a low insurance group

In the UK every new car is assigned to a car insurance group. Rated from 1 to 50, each insurance group is based on how much the car is likely to cost insurers per claim. Cars in group 1 represent the lowest cost for insurers, so the lower the insurance group a car is in, the lower your insurance premium is likely to be.

4. Car security

Thinking about the security of your car could help you reduce your premium. Things to consider:
Where your car is kept overnight
If you can, the ideal place to keep your car is in a locked garage. If this isn't an option, your car is best kept off the street.
Security devices
It may be worth considering additional security devices for your car. Your insurer can advise on approved security devices. Devices which may attract lower premiums include:

• alarm/immobiliser systems
• high security door and ignition locks
• mechanical immobilisers
• glass etching – etching the registration number to vehicle glass
• a visible VIN (Vehicle Identification Number) which can be seen through the windscreen acting as a further deterrent to thieves

Remove valuables from you car
Take the stereo, sat nav and valuables with you when you lock your car.

5. Don't modify your car

Fins, spoilers and other extras may look good, but if you modify your car it's likely to mean a higher car insurance bill.

6. Compare like with like when buying car insurance

Car insurance policies with the same price may not offer the same level of benefits. So when you search for insurance compare like with like to see whether a policy covers everything you need.
If you think you've found a bargain, always look closely at the detail, particularly at any compulsory excesses which you would have to pay when making a claim. What looks like cheap car insurance could actually be expensive if the excess is more than you can afford to pay.

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Funeral insurance options for everybody in the World

We get that it's not the cheeriest topic on the block, but covering the cost of your departure from the earth is worth some research.
Like the name suggests, funeral insurance is designed to cover the cost of your funeral. Sounds easy enough, but we found:

• you can end up paying more in premiums than the value of the funeral cover
• pre-paid funerals, funeral bonds and life insurance are better options.

According to actuaries Rice Warner, taking out funeral insurance at age 65 could mean your premiums almost add up to the costs of four funerals if you live until 91.

So what are all the options?

Funeral insurance

If you go down this route you'll usually make a regular contribution until age 90, after which time cover continues for free. The benefit amount is either fixed or increases over time, and you're usually only covered for accidental death for the first couple of years. An age limit of between 18 and 79 years normally applies – the older you are, the higher the premium.

Risky business

• Premiums can be fixed or increase each year, and can vary according to your gender and whether or not you smoke.
• If premiums are not fixed you often won't know how much they increase in subsequent years.
• If you stop paying your premium, you'll no longer be covered and in most cases won't receive a refund.
• Premiums can add up to more than four times the cost of a funeral.

Call for reforms to funeral insurance

In 2013, CHOICE joined 10 other consumer and pensioner advocacy groups, including the Consumer Action Law Centre (CALC), in calling for reforms to funeral insurance in Australia. 
In response to this, Hollard Insurance has released their "Guaranteed Funeral Insurance" product, which promises that:

• premiums will never increase
• premiums will actually reduce by five per cent after every continuous five years of the policy
• the total premiums paid will never be more than the benefit paid – that is, they will pay the higher of the benefit amount or the total premiums paid since product was taken out.

"It's positive that there's now a funeral insurance product with improved terms", says Matt Levey, CHOICE Director, Campaigns & Communications. "But our advice is still that consumers look at options that can be more affordable and can give them better value for their money such as life insurance, pre-paid funerals or simply using a separate savings account."

Pre-paid funerals

The pre-paid option's a better choice, and covers all or part of your funeral, usually at today's prices. The services you pay for are covered when you die, regardless of how much they cost at the time.
There are a few ways to fund pre-paid funerals.

• Small contributory funds: You make small, regular payments for part or all of a funeral service with a particular funeral director. Conditions vary between funds.
• Pre-purchased products: You pay for a cemetery plot, wall niche or place in a memorial garden, usually directly from the cemetery or crematorium.
• Pre-paid funeral plans: You choose the type of funeral you like and pay for it in full. Or make a deposit and pay installments over a fixed period. Few plans offer a refund if you cancel – check this before committing.

Funeral bonds

Funeral bonds are usually offered by friendly societies or life insurance companies, and require you to make a lump-sum payment or pay by installments. The money is invested and can only be used to cover your funeral. The funeral bond can be in your name or joint names. If you go for the latter, the benefit is normally paid on the death of the first joint owner.

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