What do car insurance terms really mean?


Updated on 15 January 2020 | 0 Comments

Do you understand all the questions you’re asked when you’re applying for car insurance? Our guide will help you avoid invalidating your insurance by answering incorrectly.

You may think you’re a pro at applying for car insurance – after all, you do it every year if you shop around each time.

But however honestly you try to answer the questions, not all of them are clear-cut, and if you inadvertently give the wrong answers your insurer might not pay out if you claim or may even cancel your policy.

Insurance application fraud is a big problem for the insurance industry – it detected 449,000 actual or possible cases in 2017, according to the Association of British Insurers.

People lie about their job or whether they’ve had any motoring convictions to get cheaper insurance, but you may be giving wrong information without even realising it.

Here are some of the most tricky to understand terms and what they mean so you can make sure this doesn’t happen to you.

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Driving incidents

If you’re asked whether you’ve had any accidents, thefts, claims or incidents in the last three or five years, what counts as an ‘incident’?

You should tell the insurer about anything that involved a third party, even if nobody made a claim at the time, as it’s possible one could still be made in future.

However, if you scraped your car on your front garden wall, for example, it’s not worth mentioning.

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Lived continuously in the UK since birth

The insurer will want to know if you have lived abroad for any significant periods, which could be as little as six months. So if you’ve backpacked around Australia for a year you would have to answer ‘no’ to this question.

Matt Oliver, spokesperson for GoCompare, says: ‘The forms you fill in online to get quotes can’t capture the complexity of different situations, so it’s best to call insurers to explain things if you’re in any doubt once you’ve run your quotes on what you think are the right criteria.’

Main driver

This is the person who drives the car most often as they present the highest risk. Your partner may do more mileage if they tend to do any longer weekend journeys but if you are the one driving the car most days, you are the main driver.

Medical conditions or disabilities

You are asked whether you have any medical conditions or disabilities the DVLA needs to know about as this can affect whether you’re allowed to drive.

Your doctor should have told you if any medical conditions you have need to be reported to the DVLA but if you’re unsure check the list on Gov.uk.

Miles your car does a year

This is the mileage you expect to do over the next 12 months, not what you did last year, so only use this figure if nothing is likely to change.

Your MOT certificates are a handy guide as they say how many miles were on the clock at that point.

Modifications

Car modification can affect car insurance (Imag: Shutterstock)

It’s not just performance-related modifications you (or previous owners) have made to your car, like changes to the engine or suspension, that you need to mention.

It’s anything that changes the car from when it was made. This even includes new upholstery or adding a roof rack.   

Registered keeper

This might not be the person who bought the car or the main driver. It’s whoever is stated as the registered keeper on your V5 registration document.

Social, domestic and pleasure only

When you’re asked how you use your car, only choose this option if your car isn’t involved at all in your journey to work. If you drive to the station to get the train every day, this counts as ‘commuting’.

And if you use your car to do your job – to visit clients or different sites, for example – then you must say you use it for business too.

Where the car will be kept overnight

This is where the car is most often. If your car is kept in two different places for equal amounts of time though – you split your time between your house and your partner’s for example – speak to the insurer directly to explain the situation.

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Years of no claims bonus

You can only state the no claims bonus built up by whoever will be the policyholder for the car and you can’t usually use their no claims bonus for more than one car at a time. The exception to this may be multicar policies where each car can earn its own no-claims bonus.  

Oliver adds: ‘As long as you honestly state what you think is correct when you’re applying for insurance you should be OK.

Even if you haven’t disclosed something that would have increased the cost of your insurance, the insurer may still pay your claim if you agree to pay the extra premium.’

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