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Like any financial product, car insurance can be a minefield of difficult terminology.
Don't be intimidated by the jargon. The world of car insurance and used cars is awash with acronyms and money-speak but a little explanation can go a long way in breaking down the terminology associated car insurance. What at first might appear complicated and confusing can be made relatively straightforward.
Here are a few explanations of expressions commonly encountered.
ABI (Association of British Insurers) group is the body that assign cars to one of twenty groups. Cars in the highest groups, typically high performance models are likely to cost insurers the most in insurance claims. - Ratings depend mostly on the engine size and weight of the car, but can also factor in other things such as cost of replacement parts and the probability of theft.
Your car will be given a specific ranking based on the level of risk involved with each car type and model.
According to the ABI, the cost of motor vehicle repairs accounts for over fifty percent of all the settlements in motor insurance claims, so it's no surprise that repair costs feature strongly in how the groups are defined.
Approved repairer - Repairers recommended by your insurers. A garage approved by the insurance company to carry out a high standard of workmanship.
Comprehensive cover - The most complete level of car insurance cover, usually covering 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
Policy features vary between insurers so always check them closely before committing. Have a look at car insurance providers such as Yes Insurance.
DOC cover - Otherwise known as Driving Other Cars. Not always included as a standard policy feature, so make sure you're covered before driving someone else's car. Even when it is included, you usually only get third party only cover.
Excess - An amount paid by you towards a claim. Most policies have a compulsory excess and a voluntary excess, which you can vary. Changing your voluntary excess level is a way to alter your premium. It means you can choose to take some of the risk by paying a higher percentage of any claim. The more risk you assume in the form of a higher excess, the lower premium.
Fault/no-fault claim - A no-fault claim is when the insurer can recover the costs from someone else.
A fault claim is if they cannot recover the costs regardless of whether the accident was your fault. Remember, if your car is hit by someone else - even while parked - and they cannot be traced, this counts as a fault claim.
Indemnity - Insurance policyholders are put in the same financial position after a loss as they were immediately 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.
IPT (Insurance Premium Tax) - A Government tax charged as a percentage of car insurance premiums. The tax is included in the price of your car insurance premium.
Loss adjuster - Independent professional appointed by the insurer to negotiate claims payment and investigate the legitimacy of claims.
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