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Like any financial product, car insurance can be a minefield of difficult terminology. Here is the second half of the motor insurance jargon buster with a few explanations of expressions commonly encountered.
Material fact - Any information that may influence either an insurer's decision to offer you cover or the premium they charge for it. Failure to disclose material could invalidate a policy, such as driving convictions.
No-claims bonus (NCB) - For each year you hold a policy without making a claim you are entitled to a year's no-claims bonus, subject to a maximum (usually up to 5 years). This reward reduces the cost of your car insurance premium for the following year and range from 30% for one claim free year up to 60% or more after four or five years. Also referred to as a no-claims discount (NCD).
S,D&P - Social Domestic & Pleasure. Describes how you use your car. Social, Domestic and Pleasure covers you for your everyday journeys. If you use your car to get to and from work you need commuting. If you use your car in connection with business you need to state on your application personal business use.
Settlement - What an insurer pays out for a claim.
TPO - Third Party Only. Whether you have a brand new car from a local dealer or have recently bought a used car through on online finder such as fish4, TPO is the basic insurance requirement by law. 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
Third party, fire and theft (TPFT) - 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.
Under-insurance - When the policy limit is lower than the replacement value of an item. For example insuring your car for £8,000 when the car is worth £10,000. In the case of partial damage, insurance companies will almost always scale down claims in proportion to the underinsurance.
Uninsured losses - are any losses not covered by your insurance policy. Examples include your policy excess, any out-of-pocket expenses following an accident such as loss of earnings even compensation for an injury suffered in an accident.
ULR cover - Uninsured loss recovery - better known as legal expenses cover, which you can add on to your motor insurance policy.
Uninsured losses - Where an accident is a third party's fault and there are things not covered by your policy such as hire charges your insurer may offer you assistance in recovering these uninsured losses from the third party.
Underwriter - They say the basis of insurance is a difference of opinion between you and the insurance company. Your opinion is that at some point you will probably have an accident. The car insurance company believes you probably won't. The insurance company is willing to take your money to prove you wrong. The job of the underwriter is to decide whether to accept you as an insurance risk and then calculate your car insurance premium.
Whatever policy you choose it's worth doing a bit of research to find the best quote for you. In the last few years the Internet has revolutionised the car insurance industry with everyone from established insurance companies like Yes and Directline to supermarkets like Asda offering online insurance quotes - shop around and should find something suitable. It's well worth checking out comparison sites like Beatthatquote which can help to speed up the otherwise fairly laborious task of finding the best car insurance deal. Canny shoppers would also do well to look out for special deals and promotional offers - sign up for car insurance online with the Co-operative bank for instance and you'll get a free Tom Tom.
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