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The financial world is full of words or terms that are used all the time, but many of us might not be quite sure what exactly they mean.
This can be especially true when it comes to car insurance policy small print, which is often filled with jargon that you don’t really see anywhere else.
However, it can be really useful to familiarise yourself with these terms so that you know what to look for in a policy, and don’t get caught out when making a claim.
Here’s our glossary of some car insurance terms that you might be uncertain about.
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Act of God
This refers to any event that might result in an insurance claim that is not the fault of an individual and could not have realistically been predicted or accounted for example, a tree falling on your car.
It’s considered quite a vague and archaic term these days, so you’re unlikely to find it in a new insurance policy. Always check the specific wording used in a policy when it comes to natural disasters, unfavourable weather, and anything else outside of your control, to find out whether you can make a claim or not.
Black box
Black box car insurance is a special kind of policy in which your car is fitted with a device that monitors your driving and feeds the information it collects back to your insurer. This is also sometimes known as telematics insurance.
The idea is that if you show yourself to be a safe driver, your insurer may offer you lower premiums when you renew your insurance, as they will consider you less at risk of getting into an accident.
The black box collects data such as your speed, how you take turns, your braking, and what times you tend to drive to calculate an overall score. Some insurers also include an app connected to the black box which will offer you feedback on your driving.
Research from Uswitch found that “black box” was one of the most-searched car insurance terms in the UK, despite over one million drivers owning a black box policy.
Black box insurance is generally aimed at younger drivers, and some insurers offer them exclusively to drivers under 25. However, if you are a new driver or are getting back on the road after a long time, you could consider seeking out a company that offers black box policies to all ages in order to refine your driving and cut down your premiums. Find out more in our article What is black box car insurance?
Classic car
In most cases, when we talk about classic cars our mind turns to a vintage model. But for insurance purposes, a classic car tends to mean that a vehicle:
- Is over 15 years old
- Has fewer than 5,000 miles on it
- Is kept in mint condition
- Is used as a second car
So a car from the 2000s could technically qualify as a classic car.
Insurance on a classic car tends to be much cheaper than on a normal car, but you’ll have to keep it locked up in a garage and continue to use it sparingly to qualify for the best rates.
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Whether you’re buying a new car or looking to get new car insurance, Saga offers three Comprehensive cover levels, which are all Defaqto 5 Star rated. Saga Plus comes with a 2-year fixed price, if nothing changes. 99% of claims paid in 2025. Trusted by over 1 million drivers.
Comprehensive car insurance
Comprehensive car insurance is the broadest level of standard cover you can get on your car.
It typically covers:
- Damage to your car or another vehicle, regardless of who was at fault
- Injuries either to you or another person
- Fire damage to your car
- Malicious or accidental damage to your car
- Theft/damage caused by attempted theft
Learn more about the three main levels of car cover in our article What are the different types of car insurance?
Courtesy car
Some insurance policies include courtesy car cover, either as part of a comprehensive policy or as an optional paid extra. If you have this as part of your policy, then you will have a paid-for replacement vehicle – a courtesy car – to use if an accident or event renders your usual vehicle unusable.
This car is included under your existing insurance, so you don’t need to get another policy for it, and you can use it until your usual vehicle is fixed.
DVLA
The Driver and Vehicle Licensing Agency (DVLA) is an organisation sponsored by the Department for Transport that maintains a database of all drivers in Great Britain and of vehicles in the United Kingdom (in Northern Ireland, licensing is handled by the Driver and Vehicle Agency). When you first get or renew your licence in Great Britain, or register your vehicle anywhere in the UK, this is done through the DVLA.
Excess
When you make an insurance claim, you will have to make a payment towards it called an excess, no matter which (if any) party is to blame for what happened.
A compulsory excess is set by your provider based on your driving history, your vehicle and anyone else named on your driving policy. It can’t be changed.
A voluntary excess is any additional money you can pay on top of the compulsory excess, and you can choose the amount when you take out the policy. Generally, if you agree to pay a higher voluntary excess, your insurance premiums will be cheaper, and vice versa.
You can choose to insure your excess if you wish, either as part of your car insurance or as a standalone policy. While this means more premiums to pay, it also means you will get your excess back (subject to a certain upper limit) if you have to make a claim.
Market Value
This is the price for which a car could be sold at a dealership, taking into account its model, age, mileage, condition, etc. If a car is written off due to an accident or damage, then the market value is calculated based on what the car would have fetched just before the event occurred.
Saga Car Insurance is a Which? Best Buy
Saga Plus and Saga Select cover levels top the Which? Best Buy car insurance comparison table. Saga Standard is up there too, so you know whichever you choose, you’re making a great choice.
Mileage
Mileage simply refers to the number of miles a car has been driven under its own power. You can check the mileage of a vehicle by referring to its service records and MOT history.
Insurers use mileage to calculate premiums. Leoni Moninska, insurance expert at Uswitch, said: “If you have high annual mileage, you can typically expect to pay a higher premium on any car insurance policy. This is because the more you drive, the more likely you are to be in an accident and make a claim on your car insurance.”
No-claims bonus
If you go a certain amount of time without making a claim on your insurance, you can receive a discount on your premiums when you renew. This is known as a no-claims bonus. It’s similar to a black box policy, in that it’s a bit like a reward for safe driving.
You can opt to protect your bonus as an insurance add-on, which will preserve some or all of your discount even if you have to make a claim.
Premium(s)
Your premiums are simply the amounts you have to pay for your insurance policy. These are calculated mainly based on your car and driving history, but there are lots of little ways you can reduce them. Read more in our article 10 practical tips to reduce your car insurance premiums.
While many people choose to pay their premiums month to month, it can actually be better value to pay yearly – find out why in our article Should I pay my car insurance premiums monthly or annually?
SORN
SORN stands for Statutory Off Road Notification, and you’ll need to apply for one for any vehicle that you do not intend to drive and is not kept on a public road. This is so that you will no longer have to pay tax or insurance on it, and any months of tax you have already paid can be refunded. Find out how to register your vehicle as off the road on GOV.UK.
Third-party car insurance
As opposed to comprehensive car insurance, third-party car insurance is the most basic level of standard car cover. It covers damages to other vehicles and personal injury claims against you if the incident in question was your fault. Some property damage may also be covered, depending on the policy.
However, this level of insurance does not cover damage to your own vehicle (if the incident was your fault), or protect your car if it is stolen or damaged in other ways. Read more in our article What are the different types of car insurance?
Saga Car Insurance is a Which? Best Buy
Saga Plus and Saga Select cover levels top the Which? Best Buy car insurance comparison table. Saga Standard is up there too, so you know whichever you choose, you’re making a great choice.
Write-off
Uswitch found that ‘write-off’ was the most-searched for car insurance term in the UK by a considerable margin.
A write-off is what happens when your vehicle is damaged so badly that your insurer estimates that repairing it would cost more than the value of the vehicle itself. Usually, if your car is written off, then ownership transfers to your insurance provider, who will compensate you with the car’s market value and then decide what to do with the car (such as scrap it or sell any working parts).
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Saga Car Insurance is a Which? Best Buy
Saga Plus and Saga Select cover levels top the Which? Best Buy car insurance comparison table. Saga Standard is up there too, so you know whichever you choose, you’re making a great choice.
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