Insurance terms explained

One of the more exciting features of being insured is the process of making a claim. The majority of people come to this point in the worst frame of mind. Something bad has happened. Loss or damage has been sustained. Then they read the policy and discover their claim may not be quite as straightforward as they had expected. Or they make the claim and then a friendly claims adjuster points out the wording in the policy. There may not be anything you can do about the wording in a policy. Before you buy, it's take it or leave it. But if you know what problems can arise, it gives you a list of things to avoid.

As an example, take the question of "intentional" damage. Cover is almost always excluded. We all know that taking a blunt instrument to the poor vehicle when it will not start on a cold morning is our own problem. If we damage our vehicle, it's our responsibility to repair it (or not, as the case may be). But what is "intentional" damage? This is you taking a chance. Suppose you are in a hurry and decide your vehicle will fit through that gap. Well, we all learn from our mistakes. Except we were prepared to run the risk. We took the risk the gap would not be wide enough. Had we not intended to take the risk, we would have stopped. Continuing produced intentional damage. Now you see the danger. Whether you can claim for a lot of different accidents is going to depend on an interpretation of your "intentions".

Then we get into the minefield that is the "livery" exception. The rule is a simple one. If people pay you to transport them or to move their goods, you are expected to buy a commercial policy. So when are you a "professional" driver and when are you a friend who takes a few dollars towards the cost of the gas driving a neighbor down to the mall? It's all a question of fact and degree. The more often you do it and expect payment, the more commercial it gets. There's no black and white test, although it would be obvious if you advertised your services on Craigslist. All we can say with certainty is that car pooling is usually friends.

On a parallel track lending or borrowing vehicles can get you into trouble. Always make absolutely certain your own policy covers another driver or that your own policy covers you when you drive someone else's vehicle with their permission. If your own policy does not cover the situation, get confirmation from the other driver or owner that there's a valid policy protecting you.

Buying insurance is more than getting car insurance quotes and picking the cheapest. It's possible you could be lucky with the policy or even more lucky never to have an accident. But, if the worst happens and a claim is necessary, it's always better to be prepared. So, when you get the car insurance quotes, read the policies that go with them to find the best combination of good cover and low premium rates. That way you will have valid cover against the most common situations in which losses can arise.