Car Insurance Jargon Explained
Trying to sort out your car insurance every year can be a minefield, what with terms like compulsory excess, voluntary excess and fronting bouncing around the place, so our handy jargon-buster should see you through the minefield.
Act of God
Determines an event or claim that is outside the human sphere of influence, like a tree falling onto a car or a flood caused by a river bursting its banks damaging the vehicle.
Your insurance provider will have a list of garages/body shops that it recommends for repair work in the event of a claim. You don’t have to use an approved repairer but, if you don’t, you might get hit with an extra cost from your insurance company.
Certificate of insurance
This is the document that shows the car has been insured. It lists everything you could want to know about the policy: the car’s owner, any named drivers, which car is covered, address details and the level of cover plus class of use details (social, domestic and pleasure, commuting or business use).
Simply, when you’ve had an accident or damage to your car and you ring up your insurance provider to sort out the repair work, the claim is the name for the formal application from you for the company’s services.
Class of use
There are three main ones. Social, domestic and pleasure is self-explanatory and means you won’t use the car for anything related to your employment, instead just using it as a personal set of wheels to get you around and about in your daily life. If you use your car to get to your place of work, but not FOR your work, then you need to have commuting as your class of use. Business use is a step up from here, as it means your car is also used for your day job (i.e., if you’re a salesperson travelling the length and breadth of the country and the car you use to get to appointments is your own).
The highest level of cover available. It insures your car for any damages, as well as any third parties involved in an accident or claim. It is not a 100 per cent given, but if you have comprehensive insurance then you are usually automatically insured and therefore legally covered to drive any other vehicle, PROVIDED you have that vehicle’s owner’s express permission to do so – and, please bear in mind, if this is the case then you will only be covered third party on the other vehicle, under your own insurance policy.
There are two types of excess, voluntary and compulsory. The latter of these does what it says on the tin: it’s a fee, usually of a few hundred Euro, which you MUST pay in the event of a claim. So if, for example, you are requesting that €2,000 of repair work needs to be carried out to your car, then your insurance provider will request that you pay €300 (or whatever the company’s compulsory excess is) and it will foot the bill for the other €1,700. A voluntary excess is one you can set yourself and the higher you set it, the lower your premium will be; this will be payable to the insurance company in the same way as a compulsory excess in the event of a claim.
A previous accident or loss (claim) on your insurance policy in which you were to blame e.g., you bashed your car into a tree with no other vehicles involved and made a claim on your insurance. The more fault claims you have, the higher your insurance premium will be.
This is fraud. It is a trick used by younger, less experienced drivers in order to get lower car premiums. In essence, an older, more experienced person is put forward as the main user/driver of the vehicle, with the younger, less experienced person on as a named driver, when in actual fact it is the younger driver who will be using the car most (or all) of the time. This is an illegal practice and if you get caught doing it, you’ll be in much deeper financial trouble than if you just pay the proper premium in the first place.
Ensures that the policyholder is totally financially covered in the event of a claim, so that you will be in the same financial position once a claim is resolved as you were in before your car was damaged.
Market value (or Open Market Selling Price)
This is a pre-determined figure for what it would cost to replace your car with one of a near-identical age, condition and mileage, in the event your car is written off.
This is someone, not the main policyholder, who is also named on the insurance policy as being legally entitled to drive the car in question. It is often your spouse or partner, or a dependent (but watch out for fronting, see above). They will enjoy the same level of cover as the main policyholder (i.e., comprehensive if the policy is comprehensive), but if they’re higher-risk drivers or there’s a lot of them on the policy, adding named drivers will push your premium upwards by a significant degree.
Known as an NCB and sometimes also called a no-claims discount (NCD). If you have been a good, safe driver and you have a year or several years of incident-free motoring behind you, meaning you’ve never made a claim against an insurance company, then your chosen insurance provider will apply a weighted discount to your latest policy to recognise this. The more years you can build up, the bigger the discount will be – hence why older, more experienced drivers with clean insurance records are given the lowest insurance premiums by providers. You can pay a small extra fee on each policy to protect your NCB, which means you are allowed one (or sometimes two) fault claims in a year or two years, without losing the NCB you have accrued next time around.
A claim on an insurance policy that wasn’t your fault. In more legal terms, it means your provider can recover the total cost of a claim from the person (or third party) whose fault the claim was. An example would be someone running into the back of you in traffic and admitting liability; you would go through your own insurance company to get your car repaired, but your provider would get the repair costs back in full from the insurance company that covers the driver who went into the back of you.
This details the more financial side of the insurance cover, like how much the premium for the year was and the period of insurance.
The main user and usually the owner of the car being insured, and the person who pays the premium to the insurance provider.
The annual cost of your car insurance. The premium is affected by many factors, like your past driving record and claims history, the type and value of the vehicle you’re attempting to insure (cheaper, lower-powered cars cost less to insure than more expensive, high-performance vehicles), where you live, where the car will be kept overnight, any additional security measures you will fit to the car to prevent it being stolen and so on. You can pay the premium in one lump sum at the time of renewal, or you can pay it by monthly instalments (but this normally makes the annual fee slightly higher than paying via lump sum).
After each 12 months of car insurance, you need to renew it to continue cover. Staying with the same company normally sees your renewal fee for the next year of cover come down, while the provider will simply use your details from the last year of cover (unless you instruct them otherwise) and you don’t have to fill in loads of forms as a result.
Third party insurance
The most basic level of cover, it is the minimum required by law for you to drive on public roads. It will yield the cheapest insurance premium but that’s because it will only pay for damages to the other vehicle(s) involved in any claim, or any damaged property belonging to other people (third parties), rather than any damage to your own car. So if you drive with TP and end up hitting a few parked cars, you’ll be paying for the repairs to your own vehicle at great cost. It also doesn’t cover loss in the event of fire or theft, sooooo…
Third party, fire and theft cover
Mid-level cover and adds fire damage and theft to your package. So if your car gets nicked off your driveway while you’re sleeping, or it catches fire, your insurance company will pay out for repairs or replacement. This still doesn’t cover you for accident damage that is your fault, though.
A posh name for the people who give the ‘yay/nay’ decision on whether to provide cover for a given person to the insurance providers. The underwriters create policies and cover, and decide whether a person is a reasonable risk and worth insuring. The underwriter also works out the cost of premiums based on all the customer information provided to them by the insurance provider.
Uninsured loss recovery
If a third party causes you to generate a claim that was their fault, uninsured loss recovery allows the recovery of uninsured losses (such as the policy excess you’d have to pay to your provider get your car repaired) from the third party.
In the event of severe damage to your car, your insurance company may write it off. This is basically worked out on its value versus the cost of repair, and it’s a roughly 50 per cent ratio – so, for example, if your car were worth €10,000 and it was damaged to the extent that €6,000 of repairs were needed to get it back to the condition it was in prior to the claim, then your insurance provider would deem it uneconomical to repair on a financial basis and the car would be written off, with you receiving its full value through your policy.