Default
Default is a term that refers to the failure of making payments as agreed to in a contract. When you take out car insurance you (the insured) enter into a contract with the Insurance Company. It will be one of the terms of the contract that you pay monthly premiums to the Insurance Company and in return they promise to provide insurance cover for your car. When you fail to make the premium payments at the dates and for the amount stipulated you have defaulted on the contract.
Usually you will be allowed 7 days after the due date in which to make the outstanding payment; this is called the grace period. After this time you will have no insurance cover which a very dangerous position to place yourself in. Defaulting on your payments give the Insurance Company the right to cancel your contract.
The term default is also used in another context in car insurance. When the contract stipulate that items such as car radio’s or other sound equipment is not covered by default it means that it is not an automatic or preset option but that you need to take out additional insurance to cover those specified items.