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Car Insurance - Terms Explained

When it comes to car insurance, the acronyms and jargon can be slightly baffling. If you don’t know your third party from your fully comp, or your TPFT from your IPT, don’t worry. This simple A-Z guide is designed to help demystify car insurance terms, so you know what you are paying for.

ABI

The Association of British Insurers (ABI) is a membership body that many insurers are a part of, but which is not compulsory or regulatory.

Approved repairer

If you have ever been involved in an incident and made an insurance claim, you will know it is not as easy as popping to your favourite local garage – your insurer will usually require you to use an approved repairer. If it’s a minor repair, it may be worth getting your local garage to give you a quote before you go through insurance.

DOC

Driving other cars (DOC) may or may not be allowed on your policy, so double check before you drive another vehicle. Also bear in mind that, if you are covered, it is likely to be third party.

Fault claim

If you make an insurance claim where you are deemed to be at fault, or another person can’t be blamed (e.g. if your vehicle is hit while parked up so you don’t know who did it), it will still be considered a fault claim.

Non-fault claim

If the cost of a claim is covered by another insurer, it is considered a non-fault claim.

Fully comp

If you are fully comp, then you have the most comprehensive insurance cover, which means you should be covered for injuries to yourself and others and damage, loss or theft of your property and that of others.

Indemnity

This means that, as an insurance policy holder, when you experience a claim, you won’t lose out financially – you won’t make any money, either. Basically, you will be in the same financial situation after your incident as you were before it.

IPT

Insurance Premium Tax is paid on all insurance premiums, including car insurance, and is covered in your premium cost.

Insured value

The insurance value isn’t about how much something is worth to you, it is about how much the insurers value it to be worth. It contributes to the point at which your vehicle will become a write off, and how much you will be given to replace that vehicle.

NCD

The holy grail of a driver is the No Claims Discount. For every year that you drive without making a claim, you will generally get a better insurance deal.

TPO

Third Party Only insurance means that if you are responsible for damage, theft, loss or injury to anyone or anything other than yourself and your own property, their costs will be covered – but not your own.

TPFT

Third party, fire and theft insurance is the same as TPO, but you are covered for fire and theft – providing you are not at fault.

Underwriter

An underwriter decides your level of risk and calculates your premium accordingly.

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