Your Basic Guide to Insurance Policy Jargon
Car insurance is the bane of every driver’s life. Yes it is important and could be potentially life changing in the event of an accident. However, it can be ridiculously expensive and difficult to understand! This is especially true for younger drivers. If you’re looking for first time car insurance, there are many things you need to consider. Understanding basic insurance policy jargon is essential to ensuring you are getting the right policy to fit your needs.
ABI – Association of British Insurers
When shopping for car insurance you’ll often find ‘ABI’ included in their company description. Basically it means that the insurer is a member of the Association of British Insurers. They are part of a group rating panel who recommend the insurance group rating for all new cars that are developed in the UK. It isn’t compulsory for insurers to be part a member and it is worth noting that it isn’t a regulatory body.
Cover
One thing you’ll notice is there are different types of cover available. Comprehensive cover is one type that is often recommended. The AA has given a good description of what comprehensive cover actually is but, put simply, it is the highest level of insurance available and it covers most things you’ll encounter. ‘Third party’ insures you for damage you may cause to others – the minimum cover required – while ‘third party, fire and theft’ pays out to others involved in an accident while also protecting you for loss or damage caused by fire or theft.
Excess
All insurance policies require you to pay an excess. This is an upfront sum of money that you agree to pay before your insurer steps in to help. It doesn’t matter who is to blame in the event of an accident, you will always need to pay the excess. The amount you need to pay will vary depending upon a number of factors including the make and model of your car, its age and your driving experience. Some insurers allow you to set your own excess level. The more excess you agree to pay, the lower your premiums will be since you’re agreeing to foot a higher proportion of the bill yourself.
No Claims Bonus
Most insurers tend to offer a no claims bonus. As featured on the Diamond website, your no claims bonus can be used to help you gain lower premiums in the future. It is built up over the years and only applies if you don’t make a claim. So if you’re a careful driver, you will benefit in the long term.
Personal Injury Cover
It is easy to assume that personal injury cover would protect you entirely in the event of an accident. The insurer pays out if you suffer a serious injury after an accident. What you need to understand is that there is usually a maximum limit and it might not be as high as you think. Additional cover is offered at an extra cost.
This is a small selection of the most common jargon you’ll encounter. Familiarise yourself with these terms as soon as possible. It’s the ideal next thing to learn after you’ve reviewed and passed the theory test as you start to think about purchasing your first car.
