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People moan that they take a long time to pay out on claims. To be honest when I had to claim (highway insured driver crashed in to me plus I'm covered by them) it did take a fair while but had courtesy car for the whole time.
There's no period of grace it's just the DVLA are always behind processing things.
ANPR (automatic number plate recognition) vans at the side of the road will scan your no plate and check for tax, insurance etc and if you don't have any a policeman further up the road will pull you over.