Overview

Car insurance coverage and policies are the same whether purchased from on or offline insurance companies directly or with the assistance of a broker. They key is ensuring that you have adequate cover to meet your needs without paying over the top for the privilege of good insurance.

The path to getting the best coverage for your money begins by understanding the types of coverage on offer, and gaining an understanding of the key words that most auto insurance companies and sites are likely to use.

There are three types of coverage and a handful of terms that you should aim to understand to ensure you get the lowest car insurance quote without cutting back on the coverage you need.

AAIS - Common abbreviation for Automobile Association Insurance Services Limited, the division of The AA that provides insurance services.

Act of God - An event beyond the control of individuals. Depending on the terms of a policy, Acts of God may or may not be covered by insurance. See also Force Majeure.

Any Driver - Term for a car insurance policy that covers yourself and 'any driver' who you may allow to use it. You do not have to provide details of additional drivers for an 'any driver' policy. Often, 'any driver' policies are more expensive than policies that have named drivers because the insurance company doesn't know the details of everyone who may drive your car. Some 'any driver' policies are specified as 'any driver over 25' or 'any driver over 35'.

Betterment - If repairing your vehicle following an accident would cause it to be in better condition than it was before the incident, your insurance provider might ask you to contribute to the cost. An example is if the repair is being made to a part of the car that was previously damaged but not repaired.

Broker - An intermediary who provides advice, quotations and policies from a variety of different insurance companies. Brokers should be registered with the FSA (you can check this at www.fsa.gov.uk/register) and make money by receiving a commission on policies they sell.

Business use - One of the four standard 'types of use' insurance companies use to class what you do with your vehicle. 'Business use' covers the car for driving required in connection with your job. For example 'business use' covers you if you travel between multiple sites for work.

Caveat Emptor - Latin for 'buyer beware'.

Certificate of Motor Insurance - This is the official document your insurer will provide you with as proof that you have a current, valid policy that complies with legal requirements. You need to present this when taxing your vehicle and for various other official purposes.

Claim - The process of recovering funds from your insurer following an incident. Generally you contact your insurance company who supply you with a form to complete the details of the damage, the insurance company then uses those details to determine a settlement.

Commercial traveling - One of the four standard 'types of use', covers a car which is used for things such as door-to-door sales or by a traveling sales rep.

Commuting - One of the four standard 'types of use', covering your car for the purposes of driving back and forth to a single, permanent place of work. Policies will usually class travel between your home and a station where the car is parked during your onward journey, as 'commuting'.

Conditions - The terms of a policy which set out rules you are obligated to follow, such as reporting claims promptly.

Endorsement - A written amendment that becomes part of your car insurance policy is known as an endorsement.

Excess - This is the amount you as the policyholder agree to pay in the event of a claim. Many policies have an excess payable as standard, others allow customers to declare a voluntary excess in exchange for a reduction in premium.

Fault - A claim where the insurer is unable to recover all losses is recorded as a fault claim, regardless of who caused the claim to be raised.

Force Majeure - French for 'greater force' commonly used to refer to extraordinary events beyond the control of individuals. Depending on the terms of a policy, Force Majeure events may or may not be covered. See also Act of God.

Fully Comprehensive (Comp) - This is the most thorough type of car insurance, offering all the benefits of TPFT, as well as: cover for damage to your vehicle, its contents and yourself. Most comp policies will also offer third-party coverage if you're driving another person's car.

Green card - a document issued for drivers traveling abroad as evidence that they have adequate insurance as required by the country they're visiting. This document is not required for European travel as minimum legal cover is automatically included in UK car insurance policies.

IAM (Institute of advanced motoring) - An independent road safety organisation which offers drivers a more advanced driving test. Passing the IAM test can bring a reduction in car insurance premiums.

Indemnity - the principle of insurance that returns the insured party to the same financial position after a loss as they were immediately before it.

Insurable interest - the principle of insurance stating that a person may only seek insurance if they stand to suffer a financial loss from events covered by the policy.

Insurance premium tax (IPT) - The government charges tax on insurance at a different rate, this is referred to as the insurance premium tax or IPT.

Insurer - The company providing your insurance cover is the 'insurer'.

Knock-for-knock - An insurance industry agreement under which the insurer pays for damages to its policy holder's car, regardless of which driver is to blame in an incident, so long as the policy covers damage to the policyholder's vehicle.

Learner - Drivers who hold a provisional license from the DVLA are commonly referred to as learners.

LEC (Legal Expenses Cover) - This is the blanket term car insurers use to cover drivers for items which aren't dealt with by ordinary auto insurance policies. Such things include: legal advice, costs and expenses pertaining to personal injury claims and other uninsured losses.

Liability - The legal term for the responsibility you have for causing loss to someone else by injuring them or damaging their property.

License types - Your license type makes a significant difference to the cost of your car insurance. Those holding a provisional license can get insurance, but premiums are often expensive. Also, for those with a full license, passing a Pass Plus or IAM test can further reduce your premium.

Main Driver - The 'main driver' is the person who uses the car most, not necessarily the owner.

Market Value - The cost of replacing your car. This is based on the specifics of your car and what a similar vehicle is worth at the time of making your claim.

Material Facts - Any factor that might affect the insurer's decision to provide cover must be brought to your insurance company's attention. The law states that you must advise your insurer of any material fact, from modifying your car to gaining points on your license. Failure to do so may result in claims being denied. See also UGF.

Modifications - All changes made to your car since its original production count as modifications. This includes body kits, alloy wheels, changes to the engine and even some interior modifications. Insurers will expect you to disclose fully the details of any such modifications and they may affect your premium.

Named Driver - Drivers specifically identified on the insurance policy documents are 'named drivers'. Generally, policies with 'named' drivers are cheaper than 'any driver' policies because the insurance company knows all the details of everyone who will be driving the vehicle and charges a premium according to that information.

No Claim Discount (No Claims Bonus) - Discount insurers give you for making no claims during the previous insurance year. Most companies offer a cumulative no claims bonus, and many allow you to protect this once it has reached a specified level (ie five years).

No Fault Claim - A claim for damages where the insurer is able to recover all of their costs.

Permitted Driver - A driver who is named in addition to the policy holder may be referred to as a 'permitted driver'.

Policy - This is the document detailing the contract between you and your insurance company.

Policy Commencement - This is the date your car insurance cover is valid from.

Policyholder - The person that an insurance policy is issued to is the policy holder.

Premium - This is the payment you make to your insurance provider in return for cover. Premiums are usually paid on a monthly or annual basis.

Public Liability - This is the element of insurance that covers your legal liability for injury or damage caused to others and their property.

RAC - Common abbreviation for Royal Automobile Club, which was founded in 1897. The RAC is one of the UK's leading roadside assistance companies, providing breakdown cover, insurance and driving instruction.

Renewal Notice - Letter sent to the policy holder from the insurance provider offering to extend the period existing insurance cover is valid for and stating the premium.

SDP (Social, Domestic and Pleasure) - This is the type of use that covers normal day-to-day driving that most people do: going to the shops, going to and from work, visiting friends and relatives, etc.

Settlement - This is the term used to refer to a payout offered by the insurer. Accepting a settlement effectively closes your claim.

Subrogation - After your insurance company settles a claim with you, they will seek to recover the costs from the person responsible or their insurer. In order to do this, they will require you to transfer your rights to the claim against the other driver to them. This transfer is called 'subrogation'.

Sum insured - This is the maximum amount that your insurance company will pay for a claim, including if the car is written off.

TCF (Treats Customers Fairly) - A term coined by the FSA and often used by consumer groups to rate the clarity, courtesy and efficiency of insurance providers.

Temporary Driver - A driver may be added to a car insurance policy for a short amount of time (usually 30 days). Temporary drivers may specify a different 'type of use' for the vehicle and are generally underwritten in the same way as any other additional driver.

Territorial Limits - The geographical area in which your policy is valid. Most UK car insurance policies are valid for travel throughout Europe.

TPO (Third party only) - This is the most basic level of car insurance. It provides coverage for injuries to third parties and damages to third party property; liability cover for your passengers.

TPFT (Third Party Fire & Theft) - This is the middle level of car insurance coverage. It provides the same aspects of coverage as TPO, and also includes cover for your car in the event of fire, theft/attempted theft/taking without consent of the vehicle and usually covers car accessories as well.

Uberrima Fides - Latin for 'utmost good faith'. The term is used in some insurance documentation, referring to the notion that the insurer provides the insured party with a policy at a premium based on the facts being presented truthfully - breach of this principle may lead to the insurer canceling the policy.

ULR (Uninsured Loss Recovery) - this is the traditional means insured drivers use to protect themselves against uninsured motorists or hit-and-run incidents. This cover is included as standard or as an option. See also LEC (legal expenses cover).

Underinsurance - this is the term for having insufficient coverage against the maximum possible loss/damage.

Underwriter - Underwriters weigh the risks you pose, based on the information you provide on your insurance application.

Use Types - There are four standard 'types of use' that car insurers in the UK use: SDP (social, domestic and pleasure), Commuting, Business Use, and Commercial Traveling

UGF (Utmost Good Faith) - the principle of insurance which requires you to give all relevant information to the insurer. See also Uberrima Fides.

Voluntary Excess - sometimes car insurers allow you to specify an additional amount, beyond the excess your policy mandates, which you will pay in the event of a claim. A voluntary excess can reduce your car insurance premium.

Write Off - If your insurer decides that your car is not repairable after an accident (or if the vehicle is not recovered after theft), the car is written off. This could be because repair is cost prohibitive or unsafe.

Young Driver - generally insurance companies class drivers under 25 as 'young' drivers. Often, younger drivers pay higher premiums as they pose a greater risk to insurers; however, many companies are now offering special discounts for students and other young drivers getting insured online.