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Car insurance has its own language. This glossary explains every term you need to know, from excess to no claims bonus. Use this guide before you compare car insurance quotes to make sure you know exactly what you're buying.
26 November 2025
Car insurance has its own language. This glossary explains every term you need to know, from excess to no claims bonus. Understanding these words helps you compare policies properly and avoid surprises. Use this guide before you compare car insurance quotes to make sure you know exactly what you're buying.
A no claims bonus can reduce your car insurance premium by up to 60% after five claim-free years, according to the Association of British Insurers (ABI).
The average UK car insurance premium was £562 in Q2 2025, according to ABI data, though young drivers aged 17-20 typically pay around £1,800 per year.
All cars in the UK are placed into one of 50 insurance groups, with group 1 being the cheapest to insure and group 50 the most expensive.
Car insurance is a legal requirement in the UK that provides financial protection when you drive. In exchange for paying a premium, your insurer agrees to cover certain costs if you have an accident, your car is stolen, or you damage someone else's property. UK law requires all drivers to have at least third-party insurance.
Accidental Damage
Accidental Damage refers to any sudden and unforseen harm to your vehicle that is not the result of wear and tear.
Actual Cash Value (ACV)
What your car is worth at the time of a claim, considering depreciation. If your car is written off, this is typically what your insurer will pay you.
Annual Premium
The total amount you pay for your car insurance each year. You can usually pay monthly, but this often costs more due to interest charges.
At-Fault Claim
A claim where you are considered responsible for the incident. This typically affects your no claims bonus and may increase future premiums.
Black Box Insurance
Also called telematics insurance. A device fitted to your car monitors how you drive. Good driving can lead to lower premiums, making it popular with young drivers.
Breakdown Cover
An optional add-on that provides roadside assistance if your car breaks down. Not included in standard car insurance policies.
Broker
An independent intermediary who arranges and sells insurance on behalf of different insurers. They can help you find the best deal across multiple providers.
Certificate of Motor Insurance
A legal document proving you have valid car insurance. You must be able to produce this if asked by police.
Claim
A request to your insurer to pay for damage, injury or loss covered by your policy. Making a claim may affect your no claims bonus.
Comprehensive Cover
The highest level of car insurance. Covers damage to your own vehicle plus third-party claims, theft, fire, and vandalism. Despite the name, it's often not the most expensive option.
Compulsory Excess
The fixed amount your insurer requires you to pay towards any claim. You cannot change this amount.
Conviction Code
A four-digit code on your driving licence showing any motoring offences. For example, SP30 means speeding. You must declare these when getting quotes.
Cover Note
Temporary proof of insurance while your full policy documents are being prepared. Usually valid for 30 days.
Driving Other Cars (DOC)
Cover that lets you drive other people's cars with their permission. Usually only included in comprehensive policies and often restricted to third party only cover.
DVLA
The Driver and Vehicle Licensing Agency. They manage driving licences and vehicle registrations in the UK.
Excess
The amount you must pay towards any claim before your insurer pays the rest. Made up of compulsory excess (set by insurer) plus voluntary excess (chosen by you). Higher excess usually means lower premiums.
Exclusions
Situations or types of damage your policy does not cover. Always check these carefully before buying. Common exclusions include driving under the influence and using your car for purposes not declared on your policy.
Fault Claim
Any claim where your insurer cannot recover costs from another party. This affects your record even if the accident wasn't your fault.
Financial Conduct Authority (FCA)
The UK's financial watchdog that regulates insurance companies. All legitimate insurers must be FCA authorised.
Gap Insurance
Covers the difference between what your insurer pays if your car is written off and what you still owe on finance. Useful for new cars that depreciate quickly.
Green Card
A document proving your UK car insurance meets minimum requirements for driving in certain countries outside the EU.
Immobiliser
An electronic security device that prevents your car from starting without the correct key. Having one fitted can reduce your premium.
Insurance Group
A rating from 1 to 50 assigned to every car model. Lower groups are cheaper to insure. Groups are set by Thatcham Research based on repair costs, performance, and security features.
Insurance Premium Tax (IPT)
A government tax included in your insurance premium. Currently 12% of the premium amount.
Main Driver
The person who drives the vehicle most often. This must be stated accurately on your policy. Falsely claiming a lower-risk driver is the main driver is called 'fronting' and is insurance fraud.
Market Value
The amount your car could be sold for immediately before an incident. This is what insurers typically pay if your car is written off.
MID (Motor Insurance Database)
A central database of all insured vehicles in the UK. Police use this to check if cars are insured. Insurers must update it within 14 days of cover starting.
Modifications
Any changes to your vehicle that differ from the factory standard, such as alloy wheels, body kits, or engine upgrades. You must declare all modifications as they can affect your premium.
Motor Insurers' Bureau (MIB)
An organisation that compensates victims of accidents caused by uninsured or untraced drivers. Funded by a levy on all UK motor insurers.
Named Driver
An additional person listed on your policy who is allowed to drive your car. Adding experienced drivers can sometimes reduce premiums for young drivers.
No Claims Bonus (NCB)
A discount on your premium earned by not making claims. According to the ABI, discounts can reach up to 30% after one year and up to 60% after five years. Some insurers offer even higher discounts.
No Claims Bonus Protection
An optional add-on that lets you make a limited number of claims without losing your bonus. However, your overall premium may still increase after a claim.
Non-Fault Claim
A claim where your insurer can recover all costs from the other party. This typically does not affect your no claims bonus.
Policyholder
The person who owns the insurance policy. They are responsible for paying premiums and keeping details up to date.
Premium
The amount you pay for your insurance. Can be paid annually or monthly (monthly usually costs more due to interest).
Protected No Claims Bonus
See 'No Claims Bonus Protection' above.
Renewal
When your policy ends and you're invited to continue for another year. Always compare quotes before renewing as you may find a better deal elsewhere.
Risk Address
The address where your car is usually kept overnight. This affects your premium as some areas have higher crime or accident rates.
SORN (Statutory Off-Road Notification)
A declaration that your vehicle is not being used on public roads. You do not need insurance for a vehicle with a SORN, but you cannot drive it.
Social, Domestic and Pleasure (SDP)
The most basic class of use, covering personal journeys only. Does not include commuting or business use.
Telematics
Technology that monitors your driving habits through a black box, smartphone app, or plug-in device. Good driving can earn discounts. Popular with young drivers seeking to prove they are safe.
Third Party
Any person other than you or your insurer involved in a claim. In car insurance, this typically means other drivers, passengers, or pedestrians.
Third Party Only (TPO)
The minimum legal level of cover in the UK. Covers damage and injury you cause to others but not to yourself or your car.
Third Party Fire and Theft (TPFT)
Mid-level cover. Includes third party cover plus protection if your car is stolen or damaged by fire.
Total Loss
When your car is damaged beyond economical repair or the repair cost exceeds the car's value. Also called being 'written off'.
Tracker
A device that helps locate your car if stolen. Having one fitted may reduce your premium.
Underwriter
The company or person who assesses risk and decides whether to offer cover and at what price.
Uninsured Driver
Someone driving without valid insurance. According to the MIB, there are around 300,000 uninsured vehicles on UK roads every day. If hit by one, you can claim through the MIB.
Voluntary Excess
An amount you choose to pay towards claims on top of the compulsory excess. Increasing this can lower your premium, but you'll pay more if you claim.
Windscreen Cover
Cover for repair or replacement of your windscreen. Often included in comprehensive policies but may have a separate excess.
Write-Off
A vehicle damaged so badly that repair is uneconomical or impossible. Categories range from A (scrap only) to S (repairable but structurally damaged) and N (repairable, non-structural damage).
Young drivers typically face higher premiums due to inexperience. According to GoCompare, the average cost of car insurance for a 17-year-old was £1,959 in 2024. Here are key terms that can help reduce costs:
• Black Box/Telematics: Prove you're a safe driver and earn discounts
• Insurance Groups: Choose a car in groups 1-10 for cheaper cover
• Named Driver: Adding an experienced driver may reduce your premium
• Voluntary Excess: Increase this carefully to lower premiums (but make sure you can afford it)
• Pass Plus: Some insurers offer discounts if you've completed this course
Now you understand the language of car insurance, you're ready to compare quotes with confidence. Use the comparison tool to check prices from over 130 UK insurers in minutes.
Compare car insurance quotes now via brumble.co.uk/car-insurance
Association of British Insurers (ABI) - No Claims Bonus Information: https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/motor-insurance/how-to-cut-the-cost-of-motor-insurance/no-claims-bonuses-and-discounts/
Association of British Insurers (ABI) - Motor Premiums Q2 2025: https://www.abi.org.uk/news/news-articles/2025/7/motor-premiums-fall---but-repair-and-theft-costs-keep-revving-up-claims/
RAC - Car Insurance Glossary of Terms: https://www.rac.co.uk/insurance/car-insurance/guides/glossary-of-terms
GoCompare - Cost of Getting on the Road 2024: https://www.gocompare.com/car-insurance/guide/the-cost-of-getting-on-the-road/
MoneySuperMarket - Car Insurance Groups Explained: https://www.moneysupermarket.com/car-insurance/groups/
Motor Insurers' Bureau (MIB) - Uninsured Driving Statistics: https://insurance-edge.net/2024/06/24/estimated-300k-uninsured-drivers-on-uk-roads-each-day-says-mib/
Thatcham Research - Insurance Group Ratings: https://www.rac.co.uk/drive/advice/buying-and-selling-guides/car-insurance-groups-explained/
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