INSURANCE GLOSSARY

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50/50 Claim

A term used to describe the situation when both parties involved in an incident are deemed to be partially at fault. When this occurs, both of their insurance companies will contribute toward the cost of the overall claim and both will potentially have their no claims discount prejudiced. This is commonly known as a ‘knock-for-knock claim'.

A

ABI

The Association of British Insurers. It is a market association and its members are insurance companies operating within the UK. It exists to promote the interest of its members in all classes of insurance. It gathers market statistics, issues codes of practice and raises awareness.

Accelerated No Claims Bonus

This term is used by some insurance companies who will offer a shorter contract of insurance (for example 9 months) and at the end of this contract (despite not having been insured for a full year) the policyholder will earn a full 1 years No Claims Discount.

Accessories

Are those items forming part of the vehicle such as the spare wheel, jack, permanently fitted radio etc. Most usually form part of the original vehicle specification, although some are fitted after manufacture.

Affinity Groups

Groups that share a common interest to which individuals can become members (formally or otherwise). They are generally non-governmental and non-commercial. Certain insurance companies will align with affinity groups and offer discounts to members of said group (not a universal market practice).

Aggregators

Are websites that enable a person to gain several quotes for a particular insurance product by only providing their details once (usually on-line). They are most commonly referred to as Price Comparison Websites.

Agreed Value

Instead of a vehicle's value being determined by ‘Market Value' it is instead agreed before the insurance contract is formed and is the amount that will be paid if the vehicle were a total loss. This is common for classic car insurance when finding an average Market Value can be very difficult. Insurance companies often require that the vehicle is valued by a consulting motor engineer, prior to the start of the insurance policy, in order to arrive at the “agreed value”

ABS

Anti-Lock Braking System. If a car fitted with ABS were to brake hard then the system will prevent the wheels from locking (which means the vehicle is much less likely to skid uncontrollably). Most insurance companies' rate more favourably if a vehicle has ABS fitted.

Any Driver Policy

Is a motor insurance policy that permits any person to drive the vehicle (provided they are legally entitled to do so). Such policies are not commonly offered as they expose the insurance company to considerably increased risks compared with restricted driving policies. Any driver policies can include restrictions to reduce the risk such as the inclusion of a minimum age. Insurance policies permitting any driver over 25 are such an example.

ANPR

Automatic Number Plate Recognition. This is a system whereby certain fixed sites and police cars are fitted with cameras linked to the Motor Insurance Database. The cameras take an image of a vehicle's number plate and can immediately inform the police officers whether or not a car has valid insurance in force.

Approved/Authorised Garages

They are trusted to carry out repairs on behalf of the insurance company. The relationship between the insurance company and these trusted garages ensures work is of high standard and negotiated to a competitive hourly rate.

Many insurance companies will apply an additional excess if their authorised repairers aren't used, as these companies are audited and allow the insurance company to control the costs of the claim.

The benefit to the policyholder of using an authorised repairer is the likelihood of preferential treatment and the provision of a courtesy car for the duration of the repair (provided this is included in the policy cover).

B

Breakdown Cover

This is a service that assists motorists whose vehicles have suffered a mechanical failure that leaves their vehicle immobile. A standard motor policy will generally not include it so it is often added as an “extra” cover provided by the intermediary.

Broker

See Intermediary.

Business Use Car Insurance

Is the Class of Use required if the vehicle is driven in connection with business. Business use isn't required if you simply commute to a single place of work. There are 3 levels of business use' cover – depending on exactly what the vehicle is used for.

C

Certificate of Motor Insurance

Is a document, required by law and issued by an insurance company to their policyholder, which provides evidence of motor insurance being in force sufficient to comply with the minimum requirement of the Road Traffic Act. It is the document that a Police Officer will wish to see if a driver is stopped for any reason (particularly after an accident).

When applying for an excise licence for the car at a Post Office (taxing the vehicle) a valid certificate of insurance is one of the documents required to be produced.

The certificate of insurance is such an important document that should a policyholder require to cancel a policy, before the natural expiry date, the insurance company will normally require that the certificate is returned to them before effecting the cancellation.

Class of Use

Is the term in the motor insurance contract that describes what you will actually be permitted to use the vehicle for. The most common use is ‘Social, Domestic and Pleasure'.

Cover

The extent of protection provided under the insurance policy. There are various levels of cover but for motor insurance the three common levels are Comprehensive, Third Party, Fire & Theft, and Third Party Only.

CUE

The Claims Underwriting Exchange. It is a database of insurance claims details provided by most insurance companies. Insurance companies that participate in CUE are able to check the database for any undisclosed claims and to check the status of claims disclosed (are they fault/non-fault?). Use of the database has proved to be a effective tool in the fight against insurance related crime such as the “cash for crash” scams.

Comprehensive Cover

Is commonly the highest level of cover provided by insurance companies and is the only level of cover which provides accidental damage cover for the policyholder's own vehicle. (See also Third Party, Fire & Theft and Third Party Only Cover).

Continuous Insurance Enforcement

Came into force in 2011. It imposes a legal duty to ensure that a vehicle is insured at all times unless it is declared to the Driver and Vehicle Licencing Agency (DVLA) that it is kept off-road and not used on the public highway ( notification of which has to be made to DVLA via a Statutory Off-Road Notice (SORN) either by post or online). The law was introduced to reduce the number of intentional uninsured drivers and has been very successful.

Cooling off Period

Once a policyholder receives their policy documents they have, by law, a period in which they can cancel the policy if, upon consideration, it does not meet their needs. This period is 14 days for motor insurance contracts. Should the policyholder decide to cancel during this 14 day period any premium paid would be refunded (less an amount to cover the time insured and less an administration charge).

Courtesy Cars

Are sometimes provided to the policyholder under the terms of motor insurance policies for the duration of the repair to the policyholder's vehicle. Courtesy cars are generally only available provided the policyholder has their vehicle repaired by the insurance company's Approved/Authorised Repairer and the cars provided tend to be small hatchback types.

Cover Notes

Are forms of temporary certificate. They perform the same function as a certificate of insurance but are valid for much shorter periods (usually 30 days) until the certificate of insurance can be issued. They were once commonly issued when an insurance policy was first taken out and subsequently when any changes were made. Since the advent of certificates being generated by intermediaries online the use of cover notes has greatly diminished.

CU80

Is a common driving licence ‘endorsement' and is defined as the offence of: ‘Using a mobile phone while driving a motor vehicle'. Use is interpreted fairly openly and mobile phone is interpreted to mean any handheld electronic device used for communication.

D

DR10

Is a common driving licence ‘endorsement' and is defined as the offence of: ‘Driving or attempting to drive with alcohol concentration above the legal limit'. This is considered by insurance companies to be one of the more serious convictions and will almost certainly result in higher premiums and sometimes additional restrictions to the cover.

Driving Licences

Are the official documents that state which vehicles a person is permitted to drive and the terms and/or restrictions as to their use of the vehicle.

Driving Licence Endorsements

Are applied to driving licences in order to record motoring convictions. Endorsements will remain on a driving licence for various lengths of time, dependent upon the severity of the conviction. All, and any, convictions should be disclosed when applying for insurance. Should the conviction be “spent” it will be not be taken into account when calculating the policy premium.

Driving Other Cars

Is a feature that is included under some motor insurance policies which allows the policyholder only, to drive vehicles other than the one insured under the policy. The cover that applies to this extension is usually Third Party Only, irrespective of what cover the policyholder has under their own policy.

Only vehicles not owned or registered in the name of the policyholder can be driven under this feature and it only applies in the United Kingdom. It is a common misconception that this is provided on ALL comprehensive policies – this is not the case – always check your policy documents. This feature is not normally provided to policyholders under the age of 25.

Dual Insurance

Occurs when two policies have been set-up to cover the same risk. The practice is frowned upon and in motor insurance it generally happens accidentally (when for instance a policy is automatically renewed at the same time as a new policy is taken out). The common solution is for one policy to remain in force and the other to be cancelled.

Duty of Disclosure

Applies to the ‘proposer', the insurance company, and any intermediary involved in the purchase of the insurance at various stages throughout a policy - most commonly at inception/renewal. All parties are duty bound to disclose all relevant material and all questions must be answered fully, honestly, and without exaggeration.

E

Excess

A contribution by the policyholder to the cost of a claim (usually the first amount of any claim).

Excess Protection Insurance

Is an additional policy that can be purchased alongside a motor insurance policy. These additional policies are designed to reimburse policyholders for the excess that they have to pay in respect of a claim under their motor insurance policy. Premiums for this type of additional policy are usually relatively low.

F

Fault Claim

An accident or loss where the policyholder is considered to be to blame, or where the policyholder's insurance company cannot recover their costs from somebody else. For example, if the policyholder's car is struck whilst parked and the offending vehicle/driver is untraced – this would be a ‘fault claim' for the purpose of insurance.

FCA

The Financial Conduct Authority. It replaced the FSA (Financial Services Authority) in 2013. It regulates those who provide financial services with the aim of protecting and enhancing confidence in the UK Financial system. It is there to ensure the market puts customers' interests at the forefront of their activities and to encourage ethical behaviour at the highest levels of financial service.

Foreign Cover

When motor insurance is extended beyond the Territorial Limits of the United Kingdom it is referred to as Foreign Use. Most commonly this is provided by the issue of a ‘Green Card' which is proof that the insurance provides at least the minimum cover required by law in a nation that has signed up to the Green Card System.

Due to EU Motor Directives all UK car insurance policies must provide the minimum legally required level of cover whilst driving in an EU member state. It therefore is not necessary to obtain a Green Card merely to be legally insured in an EU country if a UK motor insurance policy is in force. However, some insurance companies require the issue of a Green Card if the full policy cover is required whilst abroad (rather than just the legal minimum).

FOS

The Financial Ombudsman Service. It was created to be a mechanism for complaints against businesses that provide financial services, once the complaints procedure of that business has failed to produce results in the eyes of the consumer.

Fronting

Is when a policy containing multiple drivers has the driver that poses the least risk to the insurance company intentionally shown as the ‘main driver' (even though this is not the case) in order to deceive the insurer into providing a lower premium. ‘Fronting' a policy is a form of fraud and is illegal. Fronting, if discovered, can, amongst other consequences, lead to claims being refused.

G

Glass Cover

This relates to separate policies that are available to cover the fixed glass on a vehicle. It is only relevant to those who have purchased ‘Third Party Only' and ‘Third Party, Fire & Theft' policies, as these do not cover this type of damage to the insured vehicle. Comprehensive policies include cover for damage to the insured vehicle, including any fixed glass, so no additional cover is required.

Green Card

Is an internationally recognised certificate of insurance that states that an insurance policy is in force and that it complies with at least the minimum legal motor insurance requirement in nations that are signed up to the Green Card System. The Green Card name is derived from the fact that it was/is printed on green paper. The issue of a Green Card by an insurance company often extends the full policy cover whilst abroad but practice varies so policyholders should always check with their particular company.

Group Rating

All private motor cars are given a Group rating from 1 to 50 by the Association of British Insurers. The ABI arrive at the rating by consideration of many factors such as safety, security, repair costs and ease of repair etc. Thatcham Research in Berkshire provides most of the information in order to arrive at the appropriate grouping and actually hosts the listing of the groupings on their website on behalf of the ABI. The lower the grouping the cheaper the insurance is likely to be.

H

Hazards

Are acts or circumstances which increase the chance of a loss occurring. A common example of a hazard relating to motor insurance is leaving the car doors unlocked (as it increases the chance of theft from (or of) the vehicle occurring).

High Net Worth

A level of cover that is provided to those customers with a high level of personal wealth. This is due to the fact that their vehicles often have very high values and the risk of loss that they present is accordingly increased. Celebrities and other very high-earners are usually the target market for this type of cover.

I

Immobiliser

Is an electronic security device fitted to a vehicle that prevents the engine from running unless the correct key or other ignition activation device is present. This is a security feature and many insurance companies will rate more favourably if one is fitted or may exclude or restrict theft cover if such a device is not fitted.

Imported Vehicles

In the context of motor insurance, imported vehicles are those that were manufactured abroad and not intended for use in the UK. Such vehicles are often left hand drive which creates an additional hazard when driving on UK roads, particularly when overtaking as vision is impaired. As the vehicles were never intended for the UK market they present a unique risk as they may not be manufactured to EU safety standards. Sourcing parts after an accident may be time consuming and costly.

Impounded Vehicles

If a vehicle has been confiscated by the police then the vehicle is said to have been ‘impounded'. A common reason for this is if the vehicle is found to be uninsured. Many insurance companies will not issue insurance that is required to obtain the release of an impounded vehicle.

Anyone seeking insurance in such a situation should be sure to make it clear that the car has been impounded so there is no misunderstanding. Should such information be withheld in order to obtain insurance and is subsequently discovered by the insurance company they may require cancellation of the policy (with the policyholder incurring administration charges).

IN10

Is a common driving licence ‘endorsement' and is defined as the offence of: ‘Using a vehicle uninsured against third party risks'. It is likely a vehicle will be ‘impounded' if found to be uninsured.

Indemnity

Is the legal principle which states that a policyholder should be restored to the same financial position after a loss that they enjoyed immediately prior to the loss.

Intermediary

Also known as an insurance broker, an intermediary is an agent who works on behalf of both insurance companies and consumers. Typically, they are authorised by the FCA. Intermediaries can often place business with many insurance companies and facilitate the placement and purchase of insurance.

Insurable Interest

Is the principle that in order to insure something you must have a financial and/or legal interest in it. Motor insurance companies usually require the person seeking to insure a vehicle to be the registered keeper and owner of the vehicle.

Insurance Groups

See Group Rating.

Insurance Premium

Is the sum of money that the insurance company requires in return for a promise to meet any legitimate claims that are incurred during the period of the insurance policy.

Introductory No Claims Discount/Bonus

There are occasions when insurance companies will allow a new policyholder a no claims discount on a new policy despite them not having earned a ‘No Claims Discount' on a policy in their own name. Practice varies across the industry but it is common for drivers who have driven claim and accident free on company car policies or on their spouse's policy to be allowed such a discount when they wish to take out a policy in their own name.

IPT (Insurance Premium Tax)

Insurance Premium Tax. A tax levied by the Government on insurance premiums which is collected with the premium by insurance companies on behalf of the Government.

L

Legal Costs Cover

See ‘uninsured loss recovery'.

Liability

Insofar as Motor Insurance is concerned, Liability is the policyholder's legal liability to reimburse a third party (or third parties) for any death, bodily injury or damage to their property caused by the use of insured vehicle (i.e. as a result of a fault accident). Provided the vehicle was being driven and used in compliance with policy terms and conditions it is this financial liability that is met by the insurance policy.

Lloyd's of London

Formed in 1688, Lloyd's is an insurance market place from within which Lloyd's Underwriters transact business from both the UK and across the globe.

M

Managing General Agent (MGA)

Managing General Agent -  is an insurance intermediary appointed and authorised by an insurer (underwriter) to accept and administer insurance on their behalf.

Market Value

Most motor insurance policies are “market value policies” in that the amount that would be paid for a vehicle if it was deemed to be a total loss will be the market value less any policy excess. Insurance companies generally employ the services of a qualified consulting motor engineer to assess the market value.

Material Facts

Are facts that are considered to be important by the insurance company when determining whether or not to accept a risk, and at what premium and with what terms.

Medical Expenses

Is a benefit usually provided under comprehensive cover that provides a nominated sum of money towards medical costs incurred following a motor accident.

Medical Conditions

A person seeking motor insurance will be asked to declare any medical condition they may have. Certain conditions will make the driver more of a risk on the road. Of particular interest are the stability of the condition (as rapid deterioration at the wheel could cause accidents) and medication being taken (as some medications can impair the driver's ability).

Mid Term Adjustment

Occurs when the policyholder amends the terms of the contract partway through (i.e. they change their address or vehicle, among other things). Adjustments can be permanent or temporary and can result in an additional premium or a return of premium (depending on how the change affects the risk).

Modifications

Can fall into one of two broad categories: cosmetic (not affecting performance at all) OR performance enhancing. Both need to be disclosed to insurance companies. Insurance vehicle rating groups are based on how the vehicle was when it was manufactured and any changes from that can lead to it being placed in a different group. Statistically, modified vehicles are more likely to be involved in accidents and more likely to be stolen.

Motor Insurance Bureau

Is an organisation funded by compulsory levies on all UK motor insurance companies. Its aims are: to reduce the level and impact of uninsured driving; to compensate victims of uninsured and untraced drivers and to assist UK policyholders with claims that occur abroad. They also operate the UK Green Card system.

Motor Insurance Database (MID)

A database that is used by the police (see ANPR) and the DVLA in order to combat the crime of uninsured driving. All motor insurance companies in the UK are obliged, under MIB rules, to populate the database with details of every vehicle they insure.

This makes the MID a valuable asset and since its formation it has had a massive impact on reducing uninsured driving in the UK. An additional benefit of it being linked to the Driver and Vehicle Licencing Authority (DVLA) is the ability for people to tax their vehicles online, as proof of insurance is provided electronically.

N

Named Driver

Anyone, other than the policyholder, who is named on the certificate of insurance as being allowed to drive the vehicle under the policy of insurance.

Non-Fault Claim

An accident or loss where the policyholder is not considered to be to blame, or where the policyholder and their insurance company can recover costs from somebody else. For example, if a policyholder was struck in the rear whilst stationary at traffic lights and their insurance company paid the claim but recovered all their costs from the third party's insurance company.

No Claims Bonus/Discount

Is a discount that insurance companies give to a policyholder as a reward for their good claims record. If a policy is incepted and then continues until it's expiry date and no claims were incurred (or if a claim was incurred but was non-fault); then the policyholder will gain 1 years no claims discount. Each subsequent claim free year adds another years no claim discount until the maximum is arrived at. Insurance companies have different levels of discount and arrive at their maximum level after a different number of years.

No Claims Discount Protection

Policyholders can sometimes protect their earned no claims discount by the payment of an additional premium. Once such cover is purchased the insurance company will not reduce the no claims discount after an incident that gives rise to a claim.

Insurance companies will normally require policyholders to have earned a minimum number of years No Claims Discount before they will allow protection to be added (4 or 5 is common). Once purchased, Insurance companies will allow a certain number of fault accidents in a certain period of time (2 fault accidents in 3 years is common, but not universal – enquire with your insurance company for more details) without loss of No Claims Discount.

P

Pass-Plus

Is an additional practical driving course taken by new drivers, once they have obtained a full UK licence, to further improve their driving skill. As it is voluntary it shows the insurance company they are attempting to reduce the risk they present and can result in lower premiums.

Period of insurance

The period shown as the effective dates on the policy schedule and any period for which the insurance company accepts renewal of the insurance and for which a Certificate of Insurance is issued.

Peril

Is an event that leads to a loss. Perils can be insured (fire, theft) or not insured (war, earthquake). Sometimes referred to as ‘risks'.

Personal Effects/Belongings

Are items typically found in the vehicle (coats, glasses, CD's etc). Some insurance companies restrict these claims to only apply if there is also an ‘own damage and/or theft' section claim. The amount provided is typically low as it is not intended to leave the insurance company liable to claims for expensive gadgets in the vehicle (these should be insured by a more appropriate policy).

Policyholder

Is the person in whose name an insurance policy is set-up. In motor insurance the policyholder is typically the registered keeper, owner and main-user of the vehicle.

Policy Booklet

This document is the full wording of the insurance policy. It includes general information, conditions, exceptions and advice on how to claim and how to complain. It must be read in conjunction with a policy schedule, usually issued in conjunction with the policy booklet, that indicates by reference to the policy booklet which specific sections apply.

Policy Schedule

This is a document unique to the policyholder that summarises the level of cover provided by the insurance policy. Normally the schedule will contain sections relating to the policyholder's personal details, vehicle details, excess payable etc. The schedule is not a stand-alone policy document and should always be read in conjunction with the policy booklet in order to fully understand all conditions and exclusions.

Proposer

Another term used to describe the person looking to purchase insurance.

Proximate Cause

This is a term used by insurance companies when investigating a claim. In order to determine whether or not the loss which occurred was the logical result of a peril covered under the insurance contract; insurance companies seek to find the proximate cause. For instance if a vehicle window is smashed by a thief, there would be cover for the damage to the car even though the policy cover is third party, fire & theft as the proximate cause would be theft or attempted theft.

However, if the same window under the same policy had been smashed due to a falling object, then the repairs would not be covered under the insurance policy as accidental damage (which is not covered under third party fire and theft policies) would be the proximate cause.

R

Risk

This is a complex term and can have multiple meanings. In relation to insurance, risk is associated with the possibility of an unfortunate occurrence giving rise to a loss.

Road Traffic Act 1988

This is the legislation that governs motor insurance in the UK. The Act makes compulsory a minimum level of motor insurance to compensate innocent victims of motor related accidents. It is therefore a criminal offence to cause or permit a vehicle to be used on a public highway (or other public place) without the minimum insurance cover, required by the Act, being in force. See also Continuous Insurance Enforcement.

S

Social, Domestic and Pleasure

This is a class of use which will cover the insured to drive their vehicle for both social purposes and for commuting to a single place of work. Anything else such as business or delivery use is not covered and requires specific business cover on the policy.

Spent Convictions

Are convictions which, due to the length of time that has elapsed since they were issued, are considered to be no longer relevant. These do not need to be disclosed to the insurance company, even if requested. This is in accordance with the Rehabilitation of Offenders Act 1974 which enabled those found guilty of criminal offences the chance to start afresh. Convictions where the offender has served a custodial sentence of more than 30 months never become spent.

SP30

This is a driving licence endorsement imposed on those drivers who have been caught exceeding the statutory speed limit on a public road. Typically this will result in 3 points and a £60 fine, remaining on the licence for 3 years, but declarable to most insurance companies for up to 5 years.

Statement of Facts

When insurance is bought over the telephone, a statement of facts will be produced detailing the information given by the purchaser at the proposal stage that subsequently forms the basis of the insurance contract. In essence it is a record of all the questions asked and the answers provided thereto.

Statutory off Road Notice (SORN)

This is a legal requirement by the DVLA when a vehicle is not in use and therefore not contributing any vehicle tax nor has any valid insurance policy in place. A vehicle so declared must not be kept or used on a public highway (or other public place).

T

Telematics

Often colloquially referred to as ‘black box' insurance. An increasing number of insurance companies will now fit a telematics device into the insured vehicle in order to monitor driving behaviour, and subsequently reward those drivers who show safe driving traits (once the data is downloaded) with cheaper premiums.

Territorial limits

This commonly encompasses Great Britain including Northern Ireland, The Isle of Man and the Channel Islands. It is often used by the insurance company to define the geographic limits within which the insurance contract is valid.

Terms of Business Agreements

A document that sets down in writing the relationship between the insurance company and the intermediary or the intermediary and the policyholder. Commonly the Terms of Business Agreement will include sections detailing the cancellation procedure and the complaints process.

Thatcham

Is a research organisation founded by the insurance industry in 1969. Its primary focus is to investigate and test vehicle safety and security devices. Many insurance companies now demand a Thatcham approved alarm or immobiliser to be fitted in order for theft risks to be covered. Thatcham is also responsible for the Group Rating system which insurance companies use to form the basis of their premium rates for each individual car.

Third Party

A person with whom a policyholder is involved in an accident (for instance: the driver of a car with which the policyholder's car collides or a pedestrian hit by the policyholder's car).

Third Party Only (TPO)

This is the minimum level of insurance commercially available that vehicle owners must purchase by law. It covers the policyholder's liability for paying third party personal injury and property damage claims that can arise as a result of driving on public roads (or other public place).

Third Party, Fire & Theft (TPFT)

This level of cover adds damage to or loss of the insured vehicle (including fitted accessories and manufacturer's standard fitted audio equipment) by Fire or Theft to Third Party Only cover.

Trackers

This is a security device which, when fitted to a vehicle, enables the owner, via the tracking operator, to determine the precise location of their vehicle using GPS (Global Positioning System) technology. These devices are rarely fitted to vehicles as factory standard and tend to be found most frequently on high value cars, in order to combat the theft risk. The transmitting device when fitted is hidden within the vehicle and usually even the owner is not aware of the location. Tracker signals can be picked up by certain police cars that are fitted with the receiving equipment.

Treating Customers Fairly

This is an important ethical principle originally introduced by the FSA (now FCA) which aims to protect consumers from unfair practices by financial service providers. This is one of many principles aimed at increasing confidence within the financial sector.

TS10

This is the driving conviction added to a driving license of someone caught failing to comply with traffic light signals (I.e. running a red light). In most cases it will result in a £60 fine and 3 points on their licence.

TT99

This is a totting up driving conviction whereby if the licence holder has accumulated 12 points or more on their licence within a three year period they will be liable to be disqualified from driving for a period determined by the courts. Due to the gravity of the offence, it can have a huge impact on the cost of their future motor insurance premiums.

U

Uninsured Losses

These are losses that are not covered under the insurance contract (i.e. damage to clothing or personal effects and loss of earnings resulting from a motor accident). The policyholder will have to recover such losses from the responsible party's insurance company and this can be a protracted affair if the circumstances are not clear cut.

Uninsured Loss Recovery Cover

This is an extra level of insurance that will cover legal expenses, stemming from an accident, for which there is no cover under the motor insurance policy. Typically such cover provides assistance to the policyholder by providing or meeting the cost of legal representation to claim compensation for personal injury, loss of earnings and policy excess. Such cover is normally bought by the insured in combination with the motor insurance policy for a small additional sum but is sometimes provided free by the insurance company as part of their policy or by certain brokers as a free complimentary cover.

Underwriter

The process by which insurance companies select the risks they are happy to accept is referred to as Underwriting and is determined by an Underwriter. An Underwriter will agree to cover a given risk and promise to pay out in the event of a claim in return for a premium payable. The Underwriter will set out the terms and conditions that will apply to the policy.

Utmost Good Faith

This is the principle that governs insurance contracts; it is based on the doctrine that all material facts are required to be disclosed when negotiating a new contract. The proposer and the insurer both need to ensure they have disclosed all information which could affect an insurance policy. It calls for honesty and transparency from all concerned.

V

Voided Cover

A form of cancellation of the policy by the insurance company often having the effect of the contract never having been in force (i.e. void (inoperative) from the start date). Motor insurance can commonly be voided due to non-disclosure of material facts; that had they been known to the insurance company would have rendered the risk unacceptable or as a result of fraud perpetrated during the claims stage. If a contact is declared void then the insurance company has the right to determine from when the voidance takes effect.

W

Write Off (Total Loss)

In the event of serious damage to a vehicle the insurance company will make a judgement as to whether repair of the vehicle is an economic prospect (whether the repair cost will exceed the market value of the vehicle). Should they decide that it is not economic to effect a repair the vehicle will be deemed a total loss.

Any claim will then be settled on the basis of the market value of the vehicle less any excess that is applicable under the policy. When considering seriously damaged vehicles insurance companies are mindful that they need to be confident that the car's structural integrity will not have been compromised by the accident, once all repairs have been completed.