Insurance and car finance jargon can be confusing, especially for first-time and young drivers. We’ve put together a helpful list of the most confusing terminology, from the definition of excess to the difference between FCA and NCD.
A black box is a small device put into your car to measure factors of your driving such as your acceleration, braking, average speed and distance travelled. This measures the data and gives you a score based on your driving.
Car insurance group
Each car is placed into a category known as an insurance group Group 1 being the cheapest to insure and group 50 is the most expensive. There are multiple factors that determine your car’s insurance group, such as your car’s safety, damage and repair costs and new car value.
A credit score is a rating that shows you how likely you are to be accepted for finance. Your rating is made up of how you’ve handled finances in the past. The higher the rating, the more likely you are to be accepted.
In simple terms, finance is the term to describe borrowing money to pay for your car and paying back the finance company in instalments over a period of time. Having a good credit score increases your chances of being accepted for finance.
A guarantor is someone who formally guarantees to pay the finance if the young driver is unable to make the repayments. Non-payments could affect both of your credit scores and result in repossession of the car.
IPT stands for Insurance Premium Tax. This is a tax that must be added to General Insurance premiums in the UK. All insurance quotes on our website are inclusive of IPT at the current rate set by the Government.
The current rate of IPT is 12%
Alterations made to a car that aren’t the manufacturer’s original specifications. The Modifications can affect the price you are quoted as they could increase the chance of the car being stolen or involved in and accident. Some insurers may not cover certain modifications.
No Claims Discount (NCD) or No Claims Bonus (NCB)
They both mean the same thing! These are a discount offered by insurers for drivers who have not made a claim for a period of time- usually calculated by the number of years you haven’t claimed. The longer you have not made a claim, the higher discount you will receive.
If you fail to tell your insurer knowledge that could impact your premium (e.g. if you’ve had a claim before) this can mean your insurance policy is void. It’s also ground to cancel your policy, or increase your premium.
Personal Contract Purchase
PCP stands for Personal Contract Purchase (or Plan) and you can take this out for 2, 3 or 4 years. You'll pay a deposit and then make monthly payments. Then at the end of the agreement you can either make your final payment and own the car, hand the car back to the finance company or use it as a trade in for your next one.
This is the amount that you pay for your car insurance. You may also see “Gross Premium” mentioned on your insurance documentation. The Gross Premium is the price of your insurance, inclusive of Insurance Premium Tax (IPT).
This is another name for black box technology – more commonly used in the industry than it is used in the public domain.
On our website, when we refer to our “underwriter”, we are talking about the insurance company that are providing your insurance cover. However, an “Underwriter” can also be a job title referring to the individuals that evaluate the risks and determine the premiums offered.
Black box insurance
Black box insurance is an insurance policy that uses a black box to cover you as a provisional or new driver. It’s a popular choice amongst young and new drivers as it offers a cheaper premium. The black box assesses your driving score and offers a cheaper policy for safe driving.
Comprehensive cover or ‘fully comp insurance’ is the highest level of cover. It covers fire and theft, any damage costs on third parties if the accident is deemed your fault while also covering any damage on your vehicle as well!
Full details of cover on all of our Marmalade policies are includes in our Policy Information pages:
Learner Driver Insurance Policy Information
Student Driver Insurance Policy Information
Black Box Insurance Policy Information
Named Young Driver Insurance Policy Information
Excess is the amount of money you must pay towards any insurance claims. Compulsory excess is the amount you must pay which is set by the insurer. Voluntary excess is the amount you are willing to pay on top of your compulsory excess.
Financial Conduct Authority (FCA)
The FCA are an independent non-Government organisation that authorises and regulates any financial services within the UK. In short, they help protect consumer rights and financial markets.
Hire Purchase (HP)
Hire purchase is a type of finance. For our cars, payments are made over a period of 3 to 5 years. At the end of the agreement, there is no large sum or final payment for you to make and the car belongs to you!
The non-renewal of a policy for any reason. This occurs at the end of the policy agreement.
A named driver is someone who is insured to drive the vehicle, in which another person (the main driver) does the majority of the driving.
Non-payment is simply not paying the amount of money you owe. Failure to pay payments can lead to legal action or repossession of your car so make sure to keep on top of your finances!
Pass Plus is a practical scheme to improve young and new driver’s basic skills once they’ve passed their practical test. Drivers get experience by going on motorways, country lanes, rush hour traffic as well as night driving. Some insurers offer a discount for Pass Plus drivers.
The person whose name the policy is issued. This can also be referred to as “the insured”.
Schedule of Insurance
A document that lists the policyholder’s details, the type of insurance cover, the excess amount and sums of cover, i.e. annual mileage, the amount you are covered up to in terms of legal liability, medical expenses etc)
Third Party, Fire & Theft (TPFT)
A type of cover that insures you for injury to someone else and damage to someone else’s car or property, this also covers your own vehicle in the event of theft, attempted theft or fire. It does not cover damage to your own car (which is why we don’t offer this type of cover at Marmalade!).