Guide to insurance jargon

Complex wording, technical language, acronyms — the insurance industry is notorious for jargon. And we think it’s time to make things a little clearer.

So in alphabetical order, here’s a list of the top insurance jargon terms and what they mean.

Claims Lag

The time it takes to report a claim to your insurer.

Claims Reserve

The estimated cost of settling a claim.

Credit Hire

If you’re involved in an incident and the other driver’s car is damaged, this is the amount needed to pay for their replacement vehicle.

(The daily rates for credit hire are high, so this can form a large part of your overall claim costs.)


The amount you’ll need to pay towards the first part of your claim.


This is a measure of the potential risk faced by an insurance company. For example, an insured vehicle is an exposure.


In insurance terms, this is an agreement between you and your insurer. It usually states that you’ll be compensated if you suffer any damages or losses in an incident.

Insurers settle claims under various indemnity codes. Contractual Insurer is the most common one — it’s when indemnity has been granted and all claims will be settled.

Another important indemnity code is Road Traffic Act Insurer. This is typically when indemnity hasn’t been granted, but your insurer still has an obligation under the Road Traffic Act to settle innocent third party claims.

Loss Ratio

Cost of any claims divided by premiums paid to insurer.


The legal process of investigating a disputed insurance or liability claim. Insurance litigation is dealt with in the civil claims court.

MOJ Portal

The Ministry of Justice (MOJ) claims portal is an online service used by solicitors, insurers and administrators to manage claims below £25k in value. Claims can be submitted, accepted, rejected or moved to settlement within one online hub.

OIC Portal

The Official Injury Claim (OIC) portal allows individuals to make their own personal injury claims up to a value of £5k, rather than having to hire a legal representative. Its aim is to reduce injury claims and encourage rehabilitation.


This stands for policyholder — the person insured by an insurance provider.


This is the amount you’ve paid for your policy, including any taxes.


An insurer who covers the risk of exposure for another insurer.

For example, we cover our own claims up to £1m. Our reinsurer covers anything between £1m and £2m. There will usually be a cap on the exposure, which could also be shared by other insurers.


Money set aside by an insurance company to pay for any future claims. It’s sometimes referred to as a Claims Reserve or Loss Reserve.

Total incurred

The combined total amount of the reserve and the amount paid for a claim.


This stands for third party — the other driver or vehicle involved in a road traffic incident.


This one stands for third party administrator — an external company that handles claims on behalf of the insurer.

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