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Getting the right insurance can be a battle. If you're confused by cancellation clauses or perplexed by premiums, we're here to help.
In the second of our week of features on car insurance Alex Eckford explains the meanings of some insurance terms.
ABI
The Association of British Insurers - a financial services trade association consisting of 95 per cent of UK insurance companies.
Accident insurance
Insurance for certain injuries, including paralysis, loss of limbs or eyesight.
Amortise
To reduce a debt by paying small regular amounts.
Applied or nominal interest rate
The rate used to calculate interest.
Arbitration
A procedure where two parties come to a solution that is satisfactory to both of them.
Arrears
Money which is already owed and needs to be paid. You may forfeit your insurance if you don’t keep up payments.
Cancellation clause
The clause in an insurance contract which allows the insured party to leave the agreement before it runs out.
CII
The Chartered Insurance Institute – the governing body for the insurance industry.
Disclosure
To reveal information to the insurance company – failure to do so may result in you voiding your contract and losing out on payments.
Excess
The amount you have to pay in the event of a claim. For example, if the insurance pays out £500 and the excess is £100, you will only get £400.
Exclusions
Instances and items not covered by your insurance policy.
GAP insurance
Protection which insures car owners for the difference between what they would owe on a vehicle and what an insurance company says it's worth. Also known as GAP coverage and loan/lease payoff coverage.
Income protection insurance
Protection against not being able to pay premiums due to loss of income.
Insurance Group
The category into which your car falls, and is therefore reflected in premium costs. In the UK the rating is from one to 20.
No Claims Bonus
A reward given to drivers who haven't made a claim on their insurance during their policy period. The bonus is translated into a saving on each successive year's premium.
Policy exclusions
The items not covered by your insurance policy.
Premium
The amount of money you'll have to pay to obtain insurance.
Quotation
The figure given by an insurance company for costs.
Third Party Insurance
Cover intended to protect other people, but not your property. If your car is stolen and you don’t have only have third party insurance, you won’t get a penny.
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