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Third party insurance: jargon buster

Considering taking out a third party insurance policy? This is a basic legal requirement for any vehicle in the UK that is not registered as off the road and stored on private property. However, policy wording and conditions can be notoriously difficult to understand. Read on for a comprehensive jargon buster.

Accident - this is usually taken to mean the unexpected and unintended event that causes injury to the third party. The accident must be your fault to be covered by third party insurance. If you have an accident involving an uninsured driver and that driver is at fault, your insurance will not cover repairs or damages to your vehicle.

Benefits - this is the amount of money that is paid out by the insurer to the third party in the event of injury or disablement as a result of an accident.

Excess - this is the amount that you must pay before the insurer will pay out. For example, if you have an excess of £500 and you need to make a claim for £2,000, you will pay £500 and your insurer will pay £1,500. The excess depends on the type of policy you take out. In general you can lower premiums by agreeing to pay a higher excess.

Indemnity - this is the technical term for an insurance pay out. It is the amount that allows you to compensate the third party for their financial losses.

Injury - this is defined as a physical bodily injury caused to a third party by accidental means. Under this definition the injury is sustained solely from the accident.

Third Party - in insurance jargon the first party is the insurance company and the second party is the policy holder. A third party is the individual claiming against the insured person.

Third party liability - this is the liability of the insured party to those who are not involved in the contract of insurance and are not employees of the insured.

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