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Types of car insurance explained

Everyone needs car insurance to drive on public roads, but it’s worth understanding the types of car insurance available so you make the best choice for you. Here we look at the types of car insurance and the options you can choose from.
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Car insurance explained: Different types of car insurance and policy options

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Car insurance costs can influence the type of car you drive and what you use your car for. It's a legal requirement that you have car insurance covering whoever will drive your car and for whatever purpose they will use the car.

What type of car insurance do I need?

Car insurance is a legal requirement – driving without insurance could land you with a big fine, points on your license or even worse.

The main choice you have to make when you buy car insurance is the level of cover. It may be tempting to opt for the lowest level of cover, but sacrificing quality of cover for what you think is a low-price tag might come back to haunt you.

What are the different main types of car insurance?

You can choose from three main types of car insurance cover:

  • Comprehensive, sometimes called fully comprehensive;

  • Third party, fire and theft;

  • Third party only.

What is comprehensive car insurance?

Comprehensive car insurance gives you the highest level of protection available. If your car is damaged, written-off, stolen, vandalised or destroyed in a fire, storms or by flooding you will receive full recompense. Fully comp insurance pays out for damage to your car as well as damage and injury to other people following an incident involving that was your fault. 

Even if you have an accident that was your own fault, you’ll still be able to claim for the cost of repairing your car. 

You can also make a claim if your car is damaged, but you don’t know who is at fault for example when your car is in a public car park or when parked out on the street.

Comprehensive policies may also include a small amount of personal accident insurance and medical expenses insurance covering you or other named drivers.

What is covered in comprehensive car insurance?

Even among comprehensive policies, no two insurance policies are equal. There are numerous elements to a policy that will be different. For example, one policy might offer free repairs if your windscreen is damaged or destroyed, another may charge you an excess. 

Some insurers offer additional extras as part of comprehensive policies, while others won’t unless you pay extra for them. For this reason, it’s best to compare policies, rather than simply their premium price. 

Extra protection might include:

  • Costs of repairing your car due to an accident, even when it’s your fault;

  • Damage to your car, even when you don’t know who caused it;

  • Treatment costs for injuries following an accident for both you and your passengers;

  • Everything you get with Third Party Fire and Theft cover.

What is third party, fire and theft car insurance?

Third party, fire and theft (TPFT) is the next level down from comprehensive car insurance. Unlike comprehensive cover, TPFT won’t cover your car against accidental damage.

What does third party, fire and theft car insurance cover?

Third party, fire and theft (TPFT) covers damage to other vehicles and injuries to other people caused by an accident that’s your fault. If the other driver is to blame, their insurance should cover any damage to your vehicle.

TPFT policies offer:

  • A replacement car if yours is stolen;

  • Cover for your car due to damage caused by theft or attempted theft;

  • Fire damage cover for accidental fires or arson;

  • Compensation if a third party, including your passengers, are injured in an accident.

What is third party only car insurance?

Third party, or third party only (TPO) car insurance is the minimum cover needed to legally drive your car on UK roads. You don’t get cover against fire and theft as with Third party, fire and theft (TPFT). Like TPFT it also doesn’t cover your car for accidental damage – you’ll need to buy comprehensive car insurance to get this.

Remember, TPO car insurance isn’t always the cheapest policy on offer.

What does third party car insurance cover?

Third party only insurance is the most basic level of cover available in the UK. It protects other people, vehicles and property in the event of a car accident that was your fault.

For example, if you drive into the rear of someone’s car, causing damage to the bumper and injuring the driver, your third-party insurance would then cover the cost of the other person’s car as well as their medical expenses.

Any damage to your own car are not covered, but your passengers are covered if they’re injured in the accident.

What are the other types of car insurance?

Here are some other types of car insurance to consider.

Black box car insurance

Black box, or telematics, insurance appeals to young drivers and other higher-risk groups who pay more for standard car insurance. Show you’re a good driver and you should find the cost of your car insurance goes down.

A small device, the black box, is installed out of sight, in your car. This GPS unit measures how fast you drive, when you brake and how sharply, what time of day you drive, how fast you accelerate and how you drive around corners. Some policies include an app for your phone.

If you show you’re a good, safe driver, you should find the cost of your car insurance goes down.

Classic car insurance

If you have an older car that’s mainly used for leisure purposes, classic car insurance could be for you. Any make of car that’s older than ten years can be classified as a classic car, including anything from a Triumph Spitfire to a vintage Porsche.

There can be stricter terms and conditions with this type of policy, including a mileage limit. On the plus side, classic car insurance can work out cheaper than standard car insurance because owners tend to do fewer miles.

Temporary car insurance

Temporary car insurance gives you short-term cover for driving a car. It’s an ideal solution to get you on the road if you’re borrowing a car for a couple of weeks or sharing the driving on a one-off trip.

It could save you money as you only pay for the car insurance you need rather than having to buy annual cover. You can get temporary car insurance instantly from just one hour to 28 days.

How can I get cheaper car insurance?

There are straightforward ways to cut the cost of your car insurance:

Compare quotes

Always compare quotes as you may find you can get the same level of cover and benefits for a lower price from another insurer. That includes when your existing car insurance policy comes up for renewal.

Add a more experienced named driver to your policy

If you’re a younger driver and it’s not that long since you passed your test, you could get cheaper car insurance by adding a named driver to your policy. It should be someone who’s older and more experienced with a good driving record.

Consider your car choice

Car insurance generally costs more for pricier cars, with higher top speeds and more powerful acceleration. Choosing a less sporty car that’s worth less can help you get cheaper car insurance.

Increase your excess

Selecting a higher voluntary excess will cut your car insurance premiums. But remember, it means you’d have to pay more towards the cost of repairing the car if you make a claim.

Pay annually

It works out cheaper to pay annually for your car insurance rather than by monthly instalments. You’re charged interest if you choose to spread the cost over 12 monthly payments so it’s cheaper to pay upfront.

Drive less

When you get a car insurance quote you’ll be asked to estimate your annual mileage. The fewer miles you do, the lower the risk for insurers and the cheaper your car insurance. Make sure you don’t overestimate your mileage.

Get extra security

Beefing up your car’s security can make your car insurance cheaper as it lowers risk:

  • Fitting a Thatcham-approved car alarm or immobiliser can help for older cars – most cars built after 1997 already have these as standard.

  • Install a tracking device to improve the chances of recovery if your car’s stolen.

  • Get a steering wheel lock.

  • Park your car inside a garage at night.

Build up a no-claims bonus

It pays to drive carefully. Your no-claims bonus can go up every year you don’t make a claim, giving you a significant discount on your car insurance.

Think twice before making a claim for minor damage to your car as you might be better off just paying the repair cost yourself.

You could also pay extra to get protected no-claims bonus so you’re allowed to make a certain number of claims before losing your no-claims bonus.

What extras can I add to my car insurance policy?

Some insurers include additional benefits with their comprehensive car insurance policies. With others, you might need to pay extra to get the same benefits.

Shop around to get the best deal for you – it’s best to compare what car insurance policies offer rather than just looking at price alone.

Extra protection might include:

  • Replacement or damage to your car stereo, speakers or sat-nav

  • Cover for personal belongings in the car

  • Vehicle recovery or accident transport

  • Windscreen damage

  • Loss or theft of keys

  • Driving other cars

  • Personal accident cover if you’re injured.

Get a car insurance quote

See a range of car insurance quotes in just a few minutes when you compare with Uswitch


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