Accident / incident

An unexpected, unforeseeable incident.

Agreed value

An agreed upon amount determined between yourself and your insurer that your car is covered for during the length of your policy.

Your insurer may not offer an agreed value policy unless you meet certain conditions, for example, if the vehicle is a certain age, or has existing damage.

Anti-theft device

A device that hinders thieves from steeling or vandalising your vehicle. For example, you could install an immobiliser that keeps the car from being turned on unless a unique identification code is passed from the car keys to your vehicle. Installing a device such as this may result in a discount to your car insurance premium, depending on your insurer.

At fault claim

If you were involved in an accident, and it occurred as a result of something you did, then you will need to make an at fault claim. If you have comprehensive cover, your insurer should still pay for both your repairs and those of however many other parties are involved. This may negatively affect your monthly premium, as you are now considered a riskier driver to insure.

In any instance where you cannot name the at-fault party (i.e. another driver/person who is to blame for the accident/incident), you’ll need to make an at-fault claim and pay an excess. An example of this would be if a tree branch falls and damages your windshield – there’s no third party to name as ‘at fault’. This is sometimes waived in times of catastrophe (for example, a natural disaster).

Car hire cover

If your car is stolen, your insurer may offer you – for a period until your old one is found (or replaced/your claim is paid out) – a hire car. This way, your life isn’t totally disrupted for several weeks. If a hire car isn’t available, the insurer may give you money to cover your transportation expenses. This feature isn’t available with all policies, in all circumstances.

Claim

A claim is an application to your car insurer to fulfil their obligations as outlined in your policy. So if you are in an accident and your vehicle is damaged, and the terms and conditions of your policy dictate that your insurer must pay for the repair costs, a claim gets that process started.

If you have a preferred repairer that usually handles servicing and repairs for your vehicle, you should know that your insurer most likely operates through their own preferred suppliers, although perhaps not exclusively so.

Comprehensive cover

Comprehensive car insurance covers the cost of damage to you or by you, in the event of an accident. That means regardless of who is at fault, your repair costs are still covered – although you may still need to pay an excess. It also covers fire damage, theft, and may also include other extras or benefits – up to a certain limit, as listed in your product disclosure statement. If you take out a comprehensive car insurance policy, you are likely to be very well protected (financially) on Australian roads.

Compulsory third party insurance (CTP)

CTP Insurance (also known as Green Slip cover in NSW), is held by every driver in Australia. It provides you legal indemnity in the event you injure someone when driving and are at fault. In QLD, NSW and the ACT, you can choose which CTP provider you want to be covered by. In every other state and territory in the country, you cannot.

Cooling-off period

The period following the purchase of a policy in which you can still receive a refund of what you originally paid if you decide to withdraw your interest, provided you haven’t already made a claim.

Discount

Discounts (i.e. cheaper prices for insurance) apply to customers that meet certain requirements, especially those who lower/minimise their ‘risk profile’. For example, drivers who don’t drive much may qualify for a low-kilometre policy, and pensioners qualify for their own specialised policy – both of which contain discounts because of the reduced risk of these types of drivers.

Driving record / claims history

Your driving record refers to both your at fault accident record and any other driving offences. This is what your insurer will find relevant in calculating your car insurance premium.

Duty of disclosure

A contract is an agreement between the insurer and insured that covers ‘the risk’ (i.e. the likelihood of you having to claim). You have a duty to your insurance company when signing up to tell them information relevant to that risk. That means if you have, for example,

  • a history of claiming on a previous insurance policy,
  • a relevant medical condition (e.g. epilepsy, a history of strokes),
  • a relevant criminal conviction (e.g. speeding offences),
  • vehicle modifications,

…or anything else relevant to your cover (e.g. your garage doesn’t lock), you must tell your insurer when taking out a policy.  Your insurer will most likely ask you the relevant questions when you’re signing up, so just be honest. If you fail to provide all pertinent information, or mislead your insurer about certain things, your insurer will not honour your claim.

Excess (or policy excess)

An excess payment may need to be made when you make an at-fault insurance claim before it can be processed. The amount owed will differ depending on your policy.

Extras / benefits

Some policy-holders enjoy ‘benefits’ for the car insurance they have, which improves the protection your policy affords you. For some, it’s bundled roadside assistance membership. For others, its baby seat replacement cover. Extras and benefits differ from policy to policy, which is just one more reason why it pays to shop around each year.

Listed driver / nominated (or named) drivers

A listed driver is someone who you have nominated to your insurer to be covered by your policy for a specific vehicle – typically, anyone who you live with that’s likely to drive the car during the term of your policy. You can name multiple drivers on your car insurance policy, if you require. This way, if you have a whole family of drivers, they’ll all be covered when driving the car. It does, however, mean that the premium may go up – depending on the risk profiles of each family member, which varies based on age, claims history, etc.

Market value

Market value is what it costs to replace your vehicle with the same model and make, and of comparable condition and age. Essentially, it means what your car is worth in the market is the limit of what you’d receive back from an insurer.

Modification

Alterations to your vehicle in an effort to change how fast it is or how it handles are considered modifications. Some modifications will increase your monthly premium, as greater speed means greater risk to the insurer.

New car replacement

You will receive a replacement vehicle of similar make and model in the event your car is written off, as opposed to a simple cash payout.

No claim discount (or bonus)

If you do not make an insurance claim over the life of your policy, your insurer may offer you a no claims discount (sometimes called an NCD) when it’s time to renew your policy. If you don’t claim for multiple years, the savings may compound. While this can be pretty great for some drivers, just make sure a new policy doesn’t end up giving you more (or at least comparable) cover for less money.

No fault accident

A no fault accident is where your insurer dictates the third party (i.e. the other driver/s) was at fault. You must provide your insurer with their details, so make sure you collect them at the time of the incident.

Personal injury cover

CTP insurance covers the costs if you injure someone else in an accident, but not yourself. For that, you’ll need to find a policy that includes personal injury cover.

Premium

The cost you pay to maintain your car insurance. You can usually pay fortnightly, monthly, or annually.

Rating

Insurers will rate you based on your claims history, and this affects how much you pay. If you are claim free for many years (disregarding claims where you were not at fault), you’ll eventually achieve ‘Rating 1’. If you then have to claim (and are at fault), you may go down a rating (i.e. Rating 2, all the way down to Rating 6). Some insurers offer ‘Rating 1 for life’ if you take out a policy with them while holding a Rating 1. This can mean you will be classed as a rating 1 driver no matter how many claims you make in the future.

Regular driver

The driver who uses the insured vehicle most throughout the term of the insurance policy is known as the regular driver.

Repairable write off

Some written off vehicles can be repaired, inspected to ensure they’re roadworthy, and then re-registered. However, it will never hold the same value again, due to the fact it has a history as a repairable write off. You can sometimes organise with your insurer to keep your vehicle if it’s a repairable write off.

Replacement vehicle

If you source a vehicle to drive whilst yours is being repaired, you will receive compensation from your insurer for that period. You will, however, need to let your insurer know you’re doing this.

Risk

Risk is a common insurance term. In relation to car insurance, it’s defined as the likelihood of a policy-holder (i.e. a driver) making a claim that results in the insurer needing to pay out the claim. The insurance policy covers this risk. If that likelihood is low, then you are a low risk driver, and will therefore be a more attractive prospect to insure. Furthermore, you may attract a cheaper premium.

Safety features

Airbags, antilock brakes, parking sensors – all these things are considered safety features, because they actively work to keep you safe while you’re behind the wheel of your car.

Sum insured

The total amount of money your vehicle is insured for. You cannot receive in excess of this amount when claiming.

Third party

A third party is the other individual/s involved in your claim (i.e. the other drivers on the road). An uninsured third party driver is someone without their own insurance policy to cover the damages to your car. You can take out a policy that will cover your repair costs in these circumstances, such as comprehensive cover.

Third party property cover

This covers the repair costs if you are at fault and damage someone else’s car, or someone’s property. It generally does not cover the repair costs of your own vehicle.

Third party fire and theft

Third Party Fire & Theft provides coverage if you damage someone else’s car or property (and are at fault), as well as if your car is damaged by fire, or stolen – although be mindful that you can only claim up to a certain amount.

Vehicle identification number (VIN)

A vehicle identification number is unique to each vehicle. You should run a car history report (PPRS, or REVs check) on any second hand vehicle you consider purchasing, to make sure it is not under encumbrance (i.e. the vehicle hasn’t been paid off), been written off in the past, or stolen. Your car’s VIN can be found inside your car door, and on your registration.

Write off (or total loss)

A vehicle is written off when the insurer deems it too expensive to repair. It doesn’t necessarily mean it’s unrepairable. In the instance where your vehicle is written off and you have a comprehensive policy, you will be paid out or receive a similar vehicle.

Valuables

Anything of value inside the car, for example if you left a wallet or handbag on the seat.

Young driver

A young driver is typically classified as being under the age of 25 (or 30, even under 40, depending on the policy). Inexperienced drivers are statistically more likely to claim on their car insurance policy than experienced drivers. Because of this, insurers charge higher premiums for young drivers to compensate for the additional risk they’re taking on.