a-z of car insurance terms you need to know


Annual mileage

An estimate of the number of miles you expect to drive during the year you are insured. This includes all and any trips you make such as commutes, holidays, and regular journeys e.g. to the supermarket.

Association of British Insurers

A trade association made up of various insurance providers in the UK. It is not a regulatory body and therefore membership is not mandatory.

Approved repairer

For repairs covered by your insurance policy, your insurer will approve selected garages at which you can get your car serviced.


Black Box

Also referred to as ‘Telematics’, a black box is a small device that will be installed into your car to measure your driving, including acceleration, braking and turning. This can be added to your insurance policy to lower the cost of your premiums and also provide added security benefits.

Breakdown cover

When selecting your insurance policy, you will usually be asked whether you want to add on breakdown cover, which will allow you to get roadside assistance should you break down. Some packages (usually more expensive) will include home call outs if your car won’t start at home.


Brokers act as the middleman between insurance companies and their customers. They will communicate with a number of insurers on your behalf to find you the best deal.


Certificate of insurance

A certificate to show that your car has been insured. Your certificate will either be paper or electronic.

Cover Note

In the time between applying for insurance and receiving your certificate of insurance, you can request a temporary cover note from your insurer to explain that your car has valid insurance.

Comprehensive insurance

A type of insurance policy that provides third-party cover for fire and theft (TPFT) in addition to any damage to your own car in the event of an accident.

Courtesy car

Some comprehensive policies will include a courtesy car which is a car loaned to you to use whilst yours is being repaired in a garage. This means that the garage at which your car is being repaired needs to be preapproved by your insurer.


Driving other cars (DOC)

Some, but not all comprehensive policies will allow you to drive other people’s cars. The policyholder is the only person permitted to do so and the cover is limited to third party only. Other restrictions may also apply such as your age, location and the vehicle and it is supposed to only be used in emergencies.

DVLA conviction code

A code of four figures that represent certain driving offences such as SP30 (speeding in a built-up area), TS10 (traffic signals offence), IN10 (driving without insurance). The full list of codes can be found on the Gov.uk website.



Excess is the amount of money you will have to pay out if you make a claim before your insurer makes their payout to you. There are two types, compulsory and voluntary.

  • Compulsory excess – this is the amount that you are obliged to pay and will vary based on your age, driving experience and vehicle.
  • Voluntary excess – this is the amount you will choose (when you are applying for your insurance) and is added to your compulsory excess. Generally, the higher you set your voluntary excess, the lower your premium tends to be as in the event of a claim, your insurer will not have to pay as much. Therefore, how much you set generally indicates how likely you think you are to make a claim.


Fault /non-fault claim

  • A non-fault claim is where your insurer has not had to pay out for your claim and all costs have been covered by a third party or their insurer e.g. if you are in an accident and the other driver accepts blame, so their insurer pays out for the damage instead.
  • A fault claim is simply when your insurer has had to pay out when you made a claim. In this instance, fault and blame is not the same thing and a fault claim does not mean that the basis for the claim was your fault. For example, the claim could be based on circumstances that were not your fault or if fault could not be determined such as in a hit and run where the details of the other driver are not known.

Financial Conduct Authority (FCA)

A financial regulatory body that is independent of the UK government that works to protect consumer rights by ensuring that any companies offering financial services are acting in accordance with regulations. Motorly.com is authorised and regulated by the FCA.


Green Card

An internationally recognised document that provides proof of insurance within Europe. It is not always needed however having one when you go abroad will make things much easier should you get into an accident and have to make a claim.



A security device that prevents a car from being started unless it has been deactivated by a key or fob. This means that if your car gets broken into, the thief will not be able to drive it away.


A car that is made abroad and then imported into the country. An import can be either ‘parallel’ or ‘grey’.

  • A parallel import is a car made overseas that matches UK specifications
  • A grey import is a car that has been made overseas and come into the UK but has not been approved by the EU. These are much harder to insure as they may require specialist parts that are not sourced within the UK.


The concept that if something has been stolen, lost, or damaged, the owner of that asset will maintain the same financial position that they were in prior to the theft, loss or damage.

Institute of Advanced Motoring (IAM)

A body that provides advanced training to drivers after they have passed their test.

Insurable interest

Anybody that owns or partly owns an asset that is being insured has an insurable interest in it. E.g. if you are buying your car on finance, both you and the lender have insurable interest on that car.

Insurance Premium Tax (IPT)

A tax placed on general insurance premiums. This is included in the cost of your car insurance premiums.

Insured Value

The full amount that your insurer will pay out if your car is damaged beyond repair; either equal to the amount the vehicle was said to be worth when you took out the policy or the current market value of the vehicle at the time of the claim (whichever is lowest).



The two main types of driving license are provisional and full.

  • A provisional license is given to a person learning to drive, which permits them to drive with an experienced driver or qualified driving instructor whilst they are learning.
  • A full license is what you will receive once you have passed your practical test so that you are allowed to drive unaccompanied.


Main driver

The primary driver of the car. This can be a different person to whoever owns or bought the vehicle.

Material Fact

Any piece of information that could affect an insurer’s decision to provide you with cover. This includes any information that could indicate to an insurer, how much of a risk they perceive you to be. As such, you must inform your insurer of any material facts as a matter of law.


Any kind of change that you or somebody else makes to your car that could affect the way it performs such as suspension alterations, tinted windows etc. You must inform your insurer of any modifications you make.

Motor Insurance Bureau (MIB)

A body that helps compensate people who are involved in accidents with uninsured drivers or who are unable to get expenses back from their insurer.


No Claims Bonus (NCB)

Each successive year that you go without making a claim on your insurance will get you a discount on your premiums for subsequent policy terms. This is known as a no claims bonus; usually, you will lose some of your NCB if you ever have to make a claim.


Owner and registered keeper

A car’s owner is the one who bought it. A car’s registered keeper is the one that uses it the most regularly (this can be the same person or two separate people).


Pass Plus

An additional qualification that can be taken by new drivers and that provides extra guidance for things like driving in the dark, on motorways and other scenarios that are not covered by the practical driving test. Sometimes, having a pass plus can get you a bit of a discount on your premiums.


Any motoring conviction that you are found committing will translate into points that go onto your driving license. The severity of the offence will equate to a certain number of points. You must inform your insurer of any points you acquire, which may increase the cost of your premiums.

Policy Term

The period of time that your car insurance policy is valid for. This is usually 12 months.

Pro rata rates

If a policy gets cancelled midway through its policy term, you might only be charged for the amount of time you were covered for, and not the full term.

Protected no claims bonus

A method of safeguarding your no claims bonus by paying an extra amount on top of your insurance premiums. This allows your no claims bonus to remain in tact even if you make a claim however it might not prevent your premium increasing after you make a claim.


Quote Expiry

The amount of time for which an insurance quote remains valid, which will vary between different insurers.


Registered Keeper

See owner and registered keeper

Renewal notice

When your policy reaches the end of its term, it will automatically renew unless you notify your insurer that you do not want to take out cover with them for the following year. To remind you that your policy is about to renew, your insurer will contact you within the final month (around 3 or 4 weeks before the end of your term) so that you can shop around for a new deal should you wish to.


When you are provided with a quote for an insurance policy, several factors will have been taken into account to calculate the cost of your premiums. Variables such as your vehicle, where you live, your age, driving experience and claims history will all influence how much you pay. This is known as a risk profile and helps the insurer decide how likely you are to make a claim.

Road Traffic Act (RTA)

The purpose of the Road Traffic Act is to govern all car insurance in the UK and to ensure that innocent people involved in car accidents are not unfairly left short of money.



See Black box

Thatcham Device

An immobiliser or alarm device made or approved by the security company Thatcham Security.

Third party, fire and theft (TPFT)

Under this type of insurance policy, you will be covered if you cause harm to somebody else or damage to another car or property. You will be also insured in the event that your own car is stolen, broken into and subsequently damaged, or damaged by a fire.

Third Party only (TPO)

The most basic form of cover that drivers can get in the UK and usually the cheapest. Third Party only insurance will cover any damage/ injury to other vehicles and people in the event of an accident that was your fault. You won’t be able to get financial cover if you or your car suffers damage /injury as a result of the accident.


A security device that helps police locate a car in the event that it has been stolen. Some black boxes will have a tracker device built in.


Uninsured Losses

Losses that are not covered by your policy e.g. your policy excess and any other expenses incurred by you as a result of an accident such as compensation for a resulting injury or a loss of earnings should you need to take time off work.

Uninsured loss recovery (ULR)

If you are involved in an accident with an uninsured driver, ULR will help protect you against the financial losses that you could incur. Sometimes this will be included in your policy and sometimes you will have to add it on as an extra.

Use types

The ways in which you will use your car. The more use types you select, the more likely you will be deemed to be in an accident. The use types include,

  • Social, domestic and pleasure
  • Commuting
  • Business use
  • Commercial travelling


The person who decides whether to accept you for an insurance policy and how much your insurance premium will be based on your risk profile.


    Over 4 Years

    Best available rate
    XX% APR
    Total cost of credit
    Total repayment
    XX Monthly Payments of

    motorly is a credit broker, not a lender. Rates start from 6.9% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £5,500 over 48 months with a representative APR of 22.9% the amount payable would be £287 a month, with a total cost of credit of £1406 and a total amount payable of £6906.