Car Insurance for Beginner: Common Terms for Car Insurance (Part 4)
As you explore car insurance, researching, comparing, purchasing, renewing, or claiming, you'll come across many terms. Our glossary of common car insurance terms simplifies these for easier understanding, helping you make informed decisions.
Please note, these explanations are simplified for clarity and are not legal definitions.
Common Terms for Car Insurance
"Agreed Value"
The amount agreed upon by both the car owner and the insurer, based on the car’s model and year.
“Authorised driver”
A person you have permitted to use your car, and they are covered with the insurance policy that goes along with it.
"Add-ons"
Additional protection you can purchase to enhance the protection provided by your car insurance policy.
“Betterment”
Cost associated with replacing old parts on your car when they are more than 5 years old.
“Compensation for Assessed Repair Time (CART)”
A type of compensation for when an insured’s car is being assessed for repair and cannot be used.
“Compensation for Loss of Use (CLU)”
A type of compensation for when an insured’s car is repaired after a crash and cannot be used.
“Comprehensive coverage”
Car insurance plan that protects your car from both own damages and damages caused to third parties.
“Deductible”
Also known as ‘excess’. It is the amount of money you, the policyholder, are responsible for paying before your insurance company pays out on a claim. This can be worth up to 10% of what is already covered.
“Endorsement”
Changes or updates made to a car insurance policy after it has been issued that alter its original terms or coverage.
“Legal Liability to and of Passengers (LLTP)”
A protection for you from the claims of your passenger if you caused an accident.
“Legal Liability of a Passenger (LLOP)”
A protection for you from the claims of others if your passenger causes an accident.
“Market value”
The amount based on the value of the car at the time of purchasing insurance.
“No-Claim Discount (NCD)”
Also known as ‘No-Claim Bonus (NCB)’. It is a type of discount if no claims were made during your coverage period.
“Personal Accident Cover (PA Cover)”
A protection for the car owner or driver if they suffer permanent disabilities or die while driving the insured car.
“Policyholder”
The person who purchased the insurance policy.
“Premium”
A fixed amount that you pay monthly or annually to the insurer for coverage on your car.
“Special perils”
An insurance add-on that protects your car against loss or damage caused by natural disasters such as floods, storms, landslides, etc.
“Sum insured”
The maximum amount the insurer will pay if your insured car gets damaged or lost.
“Third-party”
A person or entity that is affected in an accident. They are not involved with the policy agreement, but they are interested in the outcome of the agreement.
“Third-party coverage”
Car insurance plan that offers protection for third-party injury or death, along with coverage for damage to their property.
