Car Insurance Glossary

Not too sure what a term means? We’ve put together some of the common terms, jargon and acronyms used in car insurance to help you out!


A sudden, unexpected event; described in this context as a collision or insurance incident.

Agreed Value

A vehicle value agreed upon by both you and the insurer for the purpose of establishing a compensation limit (vehicle write-off). This value is usually fixed until the policy is subject to renewal.

Anti-Theft Device

A device fitted into a vehicle for the purpose of deterring theft and vandalism. E.g. car alarms, keyless entry, starter disablers/immobilisers, motion detectors, parts of the vehicle etched with the Vehicle Identification Number, and recovery systems.

Car Hire Cover

A common coverage component or extra feature of a car insurance policy usually provided in the event of an accident (where the insured vehicle requires a period of repair) or if your car has been stolen. A rental discount may be offered in lieu of complimentary car hire provision.


A legal agreement between two parties promising a certain performance in exchange for a certain consideration. See Policy.


Protection and benefits provided in an insurance contract.


A request or claim for payment made under the terms of an insurance policy to compensate for damage, loss or injury.

Claim Repairs

Vehicle repairs carried out upon lodgement of an insurance claim. In most cases, these repairs will need to be carried out by one of the insurer’s preferred suppliers. Or the supplier must be recognised as a legitimate vehicle repairs provider. Comparative quotes (from more than one repairs provider) may be required by the insurer.

Comprehensive Cover

Extends the benefits of third party property cover to your own vehicle and property, typically covering your car for loss or damage resulting from an accident, fire or theft. It usually includes the costs of emergency repairs, a replacement vehicle, transportation costs and damages caused by uninsured drivers.

Compulsory Third Party Insurance (CTP)

Otherwise known as ‘green slip’ insurance, CTP is required of every registered driver in Australia. It indemnifies drivers who are legally liable for personal injury to another party in the event of a car accident. This can include other drivers, passengers, cyclists and pedestrians.


Loss or harm to a person or property.


A reduction of your premium if you and/or your car satisfy certain conditions, which are likely to reduce the insurer’s losses or expenses.

Driving Record

An official record of your driving history, featuring accidents and offences, kept with your driver’s licence. It used by insurers to verify your policy application and determine your premium.


Usually, a dollar amount you are required to pay upon a claim. The insurer then pays the balance of the loss up to the policy limits.


Additional coverage options, which extend the protection provided by your main policy.

Fire and Theft (Cover)

A common coverage component or extra feature of a car insurance policy compensating you for losses resulting from fire and theft. Limits to property replacement claims may apply.

Green Slip

A generic term, used in New South Wales, for Compulsory Third Party (CTP) insurance. See Compulsory third party insurance.


An organisation that provides insurance.

Legal Liability

A legally enforceable obligation or responsibility you carry for the damage, loss or injury suffered by another person. Typically, the insurer will take on part or all of this liability on behalf of the insured.

Market Value

A vehicle valuation determined by market demand and sales, agreed upon for the purpose of establishing a compensation limit (vehicle write-off). This value takes into account the condition of the car based on its age, make and model.

Motor Vehicle Insurance

A form of insurance that protects against the losses and liabilities that can be incurred as a result of a road accident. A car insurance provider accepts the risk on your behalf and compensates you for the losses you would otherwise pay for yourself in the event of such an accident.

No Claim Bonus

A feature common to comprehensive insurance policies, which rewards you for getting through a year without making a claim. Either your premium is reduced or, if you pay an extra on your premium, you can protect yourself from being penalised for a single, isolated claim. If you do make a claim, your bonus will be reduced; unless the accident is not your fault, in which case your bonus may be left intact.

Nominated (Occasional) Drivers

Persons you nominate as occasional drivers of your vehicle, i.e. not the primary or principal driver of the vehicle.

Personal Injury Cover

A common coverage component of car insurance compensating for medical treatment, lost wages or other accident-related expenses. This coverage is subject to the terms, limits and conditions of your policy contract. See also Compulsory third party insurance.

Personal Property Cover

A common coverage component or extra feature of a car insurance policy compensating for the loss of or damage to personal belongings such as jewellery, cash, mobile phones, etc.


Written documentation representing a contract or agreement between you and the insurer. Includes forms, endorsements, provisions and attachments.

Policy-Comparison Tool

An online facility enabling consumers to compare the cost and features of different insurance policies provided by a range of insurers. An extension of this is a coverage calculator, which matches coverage types to individual drivers (based on the information you provide).


The price of insurance paid for a specified risk for a specified period of time. In exchange for payment of a premium, the insurer promises to reimburse the person for their covered losses.


Refers to a rating system used by insurers to determine the cost of your insurance premium. Your rating can be modified by applying discounts and surcharges based on your personal characteristics (e.g. driving record and claims history).

Replacement Vehicle

A common coverage component or extra feature of a car insurance policy compensating for the cost of a replacement vehicle while yours is under repair or assessment. See also Substitute car (cover).


The chance of suffering a loss, which in this context refers to a loss, damage or injury involving a motor vehicle.

Safety Features

See anti-theft device.

Substitute Car (Cover)

Usually third party property cover for a car you may be driving while yours is under repair. This can be a rental car or vehicle on loan from a repair shop. Your insurer will require notification for this type of cover to apply.

Third Party

Person or entity not party to an agreement but with an interest in the agreement. In this context, the third party is the other person/s affected in a collision.

Third Party Property Cover

Basic third party property coverage protects you against claims for damage that you have caused to another person’s vehicle or property. Subject to conditions, this means that your insurance company will compensate the third parties involved in a collision with you.

Vehicle Identification Number (VIN)

A unique, alpha-numeric combination of 17 characters assigned to every vehicle. It contains encoded details about the vehicle and its origins and is used to deter the modification and re-sale of stolen vehicles. All new vehicles sold in Australia from 1 January 1989 are required to have a VIN (Commonwealth Motor Vehicle Standards Act 1989).

Vehicle Write-Off

As defined by VicRoads:

1. Statutory write-off:

A vehicle that is considered a total loss and so severely damaged that it should not be repaired. Statutory write-offs after 1 May 2002 cannot be re-registered, nor can the VIN be re-used.

2. Repairable write-off:

A vehicle that has been damaged to the extent that its salvage value plus the cost of repairing the vehicle for use on the road is more than its market value (i.e. total loss). Repairable write-offs can be re-registered after the vehicle identify has been verified and the necessary repairs made in accordance with the manufacturer’s standards. Registration will be cancelled once it is entered on the Written-off Vehicles Register.

Windscreen Damage

The Monash Accident Research Centre recognises two typical categories of windscreen damage: sudden impact damage and degradation or wear. The first type is usually included as a common coverage component or extra feature of a car insurance policy.

Young Driver

Drivers under the age of 25 years are regarded as ‘young drivers’ and, perhaps due to their limited experience on the road, considered more likely to make a claim. Higher premiums therefore apply.

Information provided on this page is of a general nature and has been prepared without taking into account your particular objectives, financial situation or needs. Before making a decision regarding purchase of a car insurance product, we recommend you consider the relevant Product Disclosure Statement and assess whether the selected car insurance product is appropriate to your circumstances.