Car Insurance Glossary Of Terms
Please note that these are a general explanation of the meaning of terms used in relation to car insurance. Your insurance provider may use different wording and you should read the terms and conditions of your insurance policy carefully to understand what you are and are not covered for. Refer to the product disclosure statement (PDS) from your provider.
Anti-lock braking system (ABS): A safety system that stops the wheels from locking up when you brake, which decreases the risk of skidding. Also known as an anti-skid brake system.
Agreed value:The sum for which your car is insured, which has been fixed by agreement between the insurer and the car owner. The option for your sum insured is to insure your car for the market value (see ‘market value’ below). Learn more about the difference between agreed value and market value.
Comprehensive:The highest level of insurance policy, which covers your car for damage to other people, damage to the property of others, damage to your own car if it is damaged or lost because of fire or theft, and accidental damage to your own car, regardless of who caused the damage. Comprehensive car insurance also has a range of optional extras, including complimentary replacement vehicles while you can’t drive your own car, and no-excess windscreen replacement if you have a crash. Compare comprehensive car insurance policies on the Canstar website.
Compulsory Third Party (CTP):A compulsory insurance policy that covers you if you injure or kill someone in a motor vehicle accident. The specific conditions on this type of insurance are different from state to state, but it is compulsory to hold CTP in order to register your vehicle. See the section above labelled ‘CTP/Green Slip Insurance in your state or territory’ to see your options.
Excess:The excess is an amount that you pay towards the cost of your claim. You may be able to pay a lower premium if you have a higher excess, but you need to be sure that you could afford to pay the excess unexpectedly in an emergency. There are different types of car insurance excess.
Exclusions:Anything that is not covered by your policy. Exclusions may vary between insurance providers, butfind out the common exclusions here.
Forced entry:Illegal entry into your car which includes illegally using keys or picking locks. It does not include entering your car through an unlocked door, window, or skylight.
Inclusions:Anything that is covered by your policy. When a particular event is listed as being included in your policy, the insurer will cover the whole expense or a listed percentage of the cost involved. Find out what CTP covers here.
Market value:What your car would be worth on the market, or it would cost to replace your vehicle with one of the same make, model, age, and condition as your vehicle was in before the loss or damage. This is one option for your sum insured; the other option is to insure your car for an agreed amount (see ‘agreed value’ above). Learn more about the difference between agreed value and market value.
Nominated driver:When you sign up for insurance, you must advise the insurer who will be listed on your policy as being allowed to drive your car (usually yourself and someone else). These people are the nominated drivers. Other people who drive your car but are not nominated drivers would be required to pay an additional excess if they were in an accident while driving your car.
Premium:The premium is the amount you pay for the cover your insurance policy provides, and may be paid once annually or more frequently (e.g. monthly, fortnightly). Your premium must be paid on time for your car to remain covered.
Third Party Property:This is an insurance policy that covers the cost to repair damage caused by your car to other people’s property. It will also cover your legal costs if they sue you over that damage.
Third Party, Fire and Theft:This is an insurance policy that covers damage to the property of others, and some limited cover for your own car if it is damaged or lost because of fire or theft.
