Here are some commonly used terms in the car insurance industry, to help you
understand what is meant when you come across them, either in your quote or
policy, or in your personal dealings with insurance companies.
Commission
A part of your insurance premium that is paid to the insurance broker who
arranged your insurance policy. In terms of the law, this commission needs to be
openly declared to you.
Comprehensive cover
This is the most encompassing type of car insurance policy. It typically covers
all forms of accidental damage, fire, theft, hijacking and vandalism.
Policy term
The duration of time for which your insurance policy is in force.
Premium
A set monthly amount that you have agreed to pay in terms of your policy, that
entitles you to a certain agreed amount of cover.
Policy lapse
If you do not pay your premiums on time, your policy will lapse - in other words
it will be cancelled by the insurer and you will be notified.
Excess
An amount that constitutes a portion of an insurance claim that you are liable
for as the policy holder - the insurer will subtract this amount from the amount
you claim. Excess amounts are specified and agreed upfront, and appear in your
policy document.
Settlement
The amount that your insurer pays you as a result of a claim.
No-claim bonus
A reward that is given to you by your insurer if you have not had to claim for a
certain period of time (usually 3 - 5 years). This can be in the form of a
cash-back bonus, or reduced premiums.
Effective date or inception date
The date on which you policy takes effect and you are covered by it.
Named driver
The person that you specify as the main driver of your car for insurance
purposes.
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