The A-Z Motor Insurance Guide.

When looking into buying motor insurance it can be a bit daunting when you come across all the terminology involved. So we have compiled a guide to insurance terminology.

Click on the relevant letter that the term or word begins with and find out what it means.

C

Capacity

Capacity is the limit of an insurer in respect of the full limit of the amount of business that it can write. The Financial Services Authority looks at companies to ensure that they have adequate reserves to be able to cover the risks they are insuring against.

Certificate

The document that is issued by insurers to demonstrate that an insurance policy is in place.

Claim

A policyholder who has suffered a loss on an insured item can make a claim to have it replaced under the terms of their insurance policy.

Commercial Business

A company or organisation would take out a commercial policy to cover their business. This would include fleet policies for motor businesses. Mostly, these policies are weighed towards liability.

Commission

Independent intermediaries/brokers/agents earn commission from insurance companies for selling their policies.

Comprehensive Insurance

This type of insurance is most commonly associated with motor insurance and covers a number of types of damage or loss.

Condition

An important part of an insurance policy is the condition. This is the part that declares the rules that must be followed for the cover in the policy to be valid. One example of this could be taking due care to look after your property by making sure you lock the doors before you leave the house unattended.

Consequential Loss

This is insurance covering the loss of profits of a business resulting from an insured event (also known as Business Interruption).

Contents Policy

An insurance policy that covers the contents within a home or building against risks.

Contribution

The principle of contribution applies where a risk is insured twice or more, for example on a travel and household policy, and the two insurers concerned may share the cost of any claim. This means that an individual cannot claim twice on two policies for the same loss which would contravene a key principle of insurance which is that the insured cannot be better off following a loss and claim.

Cover Note

When taking out an insurance policy a cover note is usually sent out. This is a temporary policy of cover until the actual certificate is issued. Normally issued at the beginning of a policies cover period when the insurer may be awaiting proof of no claims or other issues prior to the full policy being issued.

Critical Illness Insurance

A policy which pays a lump sum on the diagnosis the covered having various life-threatening illnesses that will have been covered and specified in the policy.