When insuring vehicles, it is useful to know the terminology that insurance companies use concerning their policies. It provides a better understanding of the price and the cover that you are receiving for your money. With van insurance, for instance, it is helpful to know about terms that apply to other policies including motoring ones. Vehicle insurance will have different excesses to household insurance but the meaning of what excess is will still be the same. 

So, in this article, we shall consider the main terminology used when taking out a policy to insure, for example, a van. 

Premium

This is just another name for the cost of your insurance policy. The premium will consider factors such as the size of your vehicle, its engine size, and the extent of your commercial use. For instance, the premium will differ depending on whether you wish to extend the cover to just transporting the tools of your trade to perhaps delivering goods of a higher value. Then, this will be different if you are delivering over a greater distance and traveling more miles during your working day.

Insurance Premium Tax (IPT)

Insurance Premium Tax (IPT) is currently set at a standard rate of 12% in the UK for most car and van policies. It is at a higher rate, that is 20%, for some vehicle insurance, however. Also, travel and electrical appliance insurance has this higher rate applied to it. This should always be factored in when comparing costs.

Unlike VAT, IPT cannot be claimed back through a business, but it is still important to know of its existence because of how it increases premiums. Insurance companies will pay it directly to the government. Life insurance is exempt from the tax.

Excess

This is the amount of the claim that the individual or business will pay. You can have compulsory and voluntary excess. It is a means by which premiums are reduced. The compulsory excess on a policy is fixed but you can often elect, with certain policies, to go for more excess in exchange for less premium, by adding a voluntary excess on top of a compulsory one. It is cost-effective when no claims are made. The bulk of the claim is still covered by the insurance company, and this can be helpful to the sole trader, for example, who will want to keep immediate expenses to a minimum yet not end up going out of business should the worst happen to their van or their tools be stolen.

It should also be noted that the excess applied to replacing damaged or cracked windscreens will be less than that involved in repairing a damaged vehicle. This is useful as it is an event that may well be more likely to occur, yet will still represent a significant cost when a windscreen will not pass the MOT because of the extent or position of the crack.

Comprehensive Cover

This is the best kind of cover because, unlike Third Party Only or Third-Party Fire and Theft, comprehensive coverage pays for the damage to both vehicles involved in an accident no matter who is at fault. Legally, you have to insure for damage to the other vehicle, but it is optional whether you insure your vehicle against such damage occurring. It is a risky strategy because no matter how good a driver you are, accidents can not always be easy to prevent when they can be born out of many unpredictable factors, and sometimes simply back luck. That might be, for example, finding yourself in the wrong place at the wrong time. The likelihood of this is greater for a business that is completing a lot of miles or employs a lot of different staff to drive its vehicles.

There are many more terms used with van, car, and other insurances. You do not have to learn them, but it is useful to look them up as and when required.

To conclude, the terms mentioned above will apply to van insurance as well as other vehicle policies. They are all useful terms that you will come across whether or not you make a claim. So, at least now when you hear them used you will know what they relate to. It is worth exploring the internet for a full list because it will help you to achieve the best price by knowing what exactly you are paying for.