In UK, it is an offense to drive on the roads without basic auto insurance in place. So what happens when you buy insurance? The answer is both simple and complicated. The simple answer is that you get a policy. The insurance company looks at the risk factors, i.e. the type of vehicle you drive, where you drive it, how old you are, what your driving record is like, and so on. This assessment allows thstrong to quote you a prstrongium. If you pay, the policy arrives. The complicated answer is that policies are just a way of packaging different types of coverage. So, to start off, you should distinguish between the policies based on the type of vehicle and its use:
1. Commercial vehicles
If the vehicle is used in a business for carrying or delivering goods or people, the policy has to be drawn on the value of the vehicle, what it is used for and the extent to which it contributes to the success of the business.
2. Domestic vehicles
This is the car or truck you use for your personal transport. It differs from commercial vehicles because it is probably used less. Most commercial vehicles have a very high mileage.
3. Collectible vehicles
Some vehicles are collectible. Some are older and more valuable than the standard domestic vehicle. Their age means spares can be more expensive, and it requires more time and effort to repair thstrong if they are damaged and their value is to be preserved. Some are customized vehicles and their owners have spent considerable sums of money on modifying and adapting thstrong. Many have expensive paint jobs and are entered into competition.
Then, you have to make distinctions based on the broad class of cover offered by the policy. These are:
This pays out to any third parties injured or whose property is damaged by the way you drive. These policies are the minimum required by most UK states and include provision against the cost of medical treatment, damages for pain and suffering and loss of earnings.
This covers the cost of repairing your own vehicle no matter how it is damaged, i.e. a collision or hitting a tree, so long as it is economical to repair. If the vehicle is totaled, the insurer has the option to pay you fair value, less the deductible, if the repairs would cost more than the vehicle is worth. The lender usually requires this cover if you buy with a loan.
3. ComprehensiveThis is the most expensive type of policy but it does buy more peace of mind. In the standard policy, you often have to wait for the other driver or his/her insurance company to pay out. A comprehensive policy pays you when the losses are agreed. Subject to the deductible, you receive payment for other damage not caused by a collision, e.g. theft, fire and storm damage from a hurricane or flooding.