🚗 Car Insurance Glossary
A complete guide to car insurance terminology across the US, UK, Canada, and Australia.
A
Accident Benefits (Canada): Coverage that provides medical care, income replacement, and other benefits after a car accident, regardless of who was at fault. Required in no-fault provinces like Ontario.
Accident Forgiveness (US/Canada): A program where your first at-fault accident does not increase your premium. Not all insurers offer it.
Agreed Value (Australia/UK): A fixed amount you and the insurer agree your car is worth. If the car is written off, you receive this amount minus your excess. Usually costs more than market value.
Annual Premium: The total amount you pay per year for your car insurance policy, before any discounts.
B
Black Box Insurance (UK): Also called telematics insurance. A device installed in your car (or an app) that monitors your driving behaviour — speed, braking, cornering, time of day. Safer driving = lower premiums. Very popular with young drivers.
Bodily Injury Liability (US): Covers medical expenses for other people injured in an accident you cause. Required in most states.
C
CTP (Australia): Compulsory Third Party insurance. Covers injury to other people in a car accident. Included in your vehicle registration (rego) in NSW, QLD, SA, WA, TAS, NT, ACT. In VIC, it's the TAC charge.
Collision Coverage (US/Canada): Covers damage to your car from hitting another vehicle or object, regardless of fault.
Comprehensive Coverage (US/Canada): Covers damage to your car from non-collision events — theft, vandalism, fire, flood, hail, hitting an animal. Usually optional.
Comprehensive Insurance (UK/Australia): The highest level of cover. Includes damage to other cars (third party) AND damage to your own car from any cause.
D
DCPD (Canada): Direct Compensation Property Damage — a no-fault system where you claim from your own insurer for vehicle damage, even if the other driver caused the accident. Used in Ontario, New Brunswick, Nova Scotia, PEI, Newfoundland.
Deductible (US/Canada): The amount you pay out of pocket before insurance kicks in. Higher deductible = lower premium. Called "excess" in the UK and Australia.
Defensive Driving Discount (US): A discount for completing an approved defensive driving course. Often available for drivers over 55.
E
Excess (UK/Australia): The amount you pay toward a claim. Compulsory excess is set by the insurer. Voluntary excess you choose to lower your premium. In the UK, young drivers often have higher compulsory excess.
Excess Waiver (Australia): An optional add-on that waives your excess in certain situations, like if the accident was not your fault.
F
FR-44 (US): A certificate of financial responsibility required in Florida and Virginia for drivers with serious violations (like DUI). Similar to SR-22 but with higher minimum liability limits.
Full Coverage: Not a legal term. Usually means liability + collision + comprehensive + any state-required additional coverages.
G
GAP Insurance (US/UK): Guaranteed Asset Protection — covers the difference between what you owe on your car loan and the car's actual cash value if it's written off.
Green Slip (Australia): Another name for CTP insurance in New South Wales. You must buy a green slip before you can register your car.
Group Rating (UK): UK cars are sorted into 50 insurance groups. Lower group = cheaper insurance. Based on cost, repair time, performance, parts availability, and claim history.
I
ICBC (Canada): Insurance Corporation of British Columbia — the provincial government insurer running BC's basic auto insurance program.
Income Protection (UK/Australia): An add-on that covers your lost income if you can't work due to injuries from a car accident.
L
Liability Insurance: Covers damage you cause to other people or their property. Required everywhere, but minimum amounts vary.
Lienholder: The lender financing your car. They usually require you to carry collision and comprehensive coverage.
Loss of Use (US/Canada): Coverage for a rental car while your vehicle is being repaired after a covered claim.
M
Market Value (Australia/UK): The current value of your car at the time of the claim. Depends on age, condition, mileage, and market demand. Usually cheaper than agreed value but riskier if values drop.
MedPay (US): Medical Payments coverage that pays for medical expenses for you and your passengers after an accident, regardless of fault.
MPI (Canada): Manitoba Public Insurance — the public auto insurer in Manitoba.
Multi-Car Insurance: A single policy covering multiple vehicles on the same property. Common in the UK.
N
Named Driver (UK): A person listed on someone else's car insurance policy who is allowed to drive that car. Fronting (making someone the main driver when they're not) is illegal.
No Claims Bonus (UK/Australia): A discount on your premium for every year you do not make a claim. Protected NCB means you pay a small fee to keep it after a claim.
No-Fault Insurance (US/Canada): A system where your own insurance pays for your injuries regardless of who caused the accident. Common in no-fault US states and Ontario.
P
PIP (US): Personal Injury Protection — similar to MedPay but more comprehensive, covering lost wages, rehabilitation, and essential services. Required in no-fault states.
Property Damage Liability: Covers damage your car causes to other people's property (buildings, fences, other vehicles).
R
Rental Reimbursement: Coverage that pays for a rental car while your vehicle is being repaired after a covered claim.
Roadside Assistance: An add-on that covers towing, flat tires, jump starts, lockouts, and fuel delivery.
S
SEF Endorsements (Canada): Standard Endorsement Forms that modify your auto insurance policy. Examples: SEF 19 (agreed value), SEF 20 (loss of use), SEF 43 (waiver of depreciation).
SGI (Canada): Saskatchewan Government Insurance — the public insurer in Saskatchewan.
SR-22 (US): A certificate proving you carry the minimum required liability insurance. Required for high-risk drivers (DUI, multiple tickets, driving without insurance).
T
Telematics (US/UK): Insurance based on actual driving data collected through a device or smartphone app. Can save safe drivers money. Also called usage-based insurance in the US.
Third Party Only (UK/Other): The minimum legal cover. Covers damage to other people and their property but NOT damage to your own car.
Third Party Fire & Theft (TPFT) (UK): Third party cover plus protection if your car is stolen or damaged by fire.
TPD (Australia): Total and Permanent Disability — a type of cover often included with superannuation that pays out if you become permanently disabled.
U
Underinsured Motorist Coverage (US): Covers your expenses when the at-fault driver has insurance but not enough to cover all your costs.
Uninsured Motorist Coverage (US): Covers your medical bills and car repairs when hit by a driver without insurance.
Usage-Based Insurance (US): Insurance where your premium is based on how much and how well you drive. See also telematics.
V
Voluntary Excess (UK/Australia): An additional excess you choose on top of the compulsory excess. Choosing a higher voluntary excess lowers your premium.
W
Write-Off (UK/Australia): When the cost of repairing your car exceeds its value. Categories in the UK: N (repairable), S (structural damage), A (scrap only), B (break for parts).