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Car insurance explained: Different types of car insurance and policy options

Written by Kasey Cassells, Senior content editor

14 March 2019

With so many different types of car insurance and policies available, getting it right is very important. It may be tempting to opt for the cheapest policy, but sacrificing quality of cover for a low price tag might give you an unwelcome and expensive shock later on.

Driving in the UK on a non-UK licence

This guide will help you understand the different types of car insurance available to help you find which car insurance policy is best for you.

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What is third party car insurance?

Third party insurance is the minimum cover needed to legally drive your car on UK roads but against all logic it is not always the cheapest policy on offer.

What does third party insurance cover?

  • If you have an accident, third party car insurance will cover any damage to the other vehicles as well as treatment costs related to injuries.

  • Your passengers will also be compensated if they sustain any injuries in the accident.

What’s not included?

  • If you are responsible for an accident and your car gets damaged, you will have to pay for the repairs as third party insurance will not usually cover it.

  • You will also not be covered for any injuries you endure.

  • If your car is damaged or stolen you won’t be compensated. If this level of cover is important to you and you live in a high risk area, then you may want to choose a third party fire and theft policy instead.

The reason that this type of car insurance policy is not always the cheapest is because they are usually chosen by young, inexperienced drivers and those who drive very cheap cars. The risk profile of this group is higher as it is assumed that they don't take care of their cars, or guard against causing accidents. This is why it is so important to look at both types of car insurance because you may find that you can get greater cover for less.

What is comprehensive car insurance?

A fully comprehensive policy offers the widest protection among all types of car insurance policies.

What does comprehensive car insurance cover?

  • Even if you have an accident due to your own fault, you will still be able to claim for the cost of treating your injuries, repairing your car.

  • This is in addition to any third parties being compensated.

  • You might be able to drive other people's car with their permission. But the protection offered under your car insurance policy might be restricted to that of a third party cover.

  • Some covers even allow people to drive hired cars while extending protection.

Every policy will vary and so make sure you check the policy details thoroughly before signing up.

It is a good idea to choose a fully comprehensive cover if your car costs more than £1,500. Insurers usually insist on fully comprehensive insurance for expensive cars.

Do not assume that fully comprehensive cover will be more expensive than third-party insurance. Against all logic, the opposite is true in many cases.

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