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Types of car insurance

Find out about the three different types of car insurance cover to help decide which one is suitable for you

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Driving in the UK on a non-UK licenceCar insurance explained: Different types of car insurance and policy options

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What car insurance do I need?

If you drive a car you must have car insurance. It is a legal requirement. Anyone who drives without insurance faces a fine and even disqualification. 

The only choice you have to make is the level of car insurance cover you want to have. 

What type of car insurance do I need?

With so many different types of policies available choosing car insurance can be overwhelming.

It may be tempting to opt for the cheapest policy, but you may end up sacrificing quality of cover for a low-price tag which might give you an unwelcome and expensive shock later on

It’s important you understand the different types of car insurance available to help you find which car insurance policy is best for you

What are the three types of car insurance?

There are three types of cover you can choose:

  • comprehensive

  • third party only

  • third party, fire and theft

What is third party only car insurance?

Third party, or third party only (TPO) insurance is the minimum cover needed to legally drive your car on UK roads,

Third party only car insurance is not always the cheapest policy on offer.

  • 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 of people you have hurt

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

What’s not included in third party only insurance

  • 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 will not 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

What does third party cover?

Third party only insurance protects other people, vehicles and property in the event of a car accident that was your fault:

  • for example - 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 or any injuries you suffer are not covered. For that, you need comprehensive car insurance cover.

About third party cover

  • it is the most basic form of car insurance cover and is a legal requirement to drive on UK roads

  • third-party only cover is the best way to ensure that, if someone suffers a road accident that isn’t their fault, their costs can be recuperated

  • although it is the most basic type of cover third party car insurance is not always the cheapest cover

What does third-party car insurance cost?

There is a price difference between the different types of car insurance cover but it is not always in the way you would expect.

Many people often opt for TPO or TPFT policies because they consider them to be cheaper than comprehensive cover.

This isn’t always true. In fact, you may find some cases where comprehensive insurance works out to be as cheap as TPFT.

Is third party cover cheaper?

Third party cover is not always cheaper. Although comprehensive insurance includes more cover, many insurers offer it for the same price or even cheaper than third party, fire and theft policies.

Why third-party insurance can be more expensive

Third party policies used to be cheaper, but many young and new drivers tended to purchase them. These are higher risk drivers who make a disproportionate number of claims compared to other drivers.

This meant insurers deem third party and third party, fire and theft policies as higher risk and premiums for this type of cover increased

Third party, fire and theft policies can be often more expensive than comprehensive policies for some drivers, even though they include less cover. 

Should I take-out third-party insurance?

  • if your car is older or a car that’s relatively cheap to repair – then third-party cover might be suitable

  • if you have a new car worth thousands of pounds having third party cover might mean you can’t afford to replace your car if you have an accident that’s your fault

Third party insurance and uninsured drivers

If you’ve got third party only or third party, fire and theft car insurance, you can’t claim for your damages if you are hit by an uninsured driver, but you might be able to a claim via the Motor Insurers’ Bureau, MIB 

  • MIB was set up to help the victims of uninsured and untraced motorists

  • MIB is funded by insurance companies

  • funding MIB means uninsured drivers push up the cost of car insurance

What is third-party fire and theft cover?

What is the difference between third party cover and third-party fire and theft cover?

Third-party, fire and theft (TPFT) also lets you claim for things you cannot on a third-party only policy such as:

  • replacing your car if it’s stolen

  • damage as the result of an attempted theft for example a stolen stereo system or windscreen

  • fire damage to the car whether accidental fires or as a result of arson

  • to claim for arson, you need a crime reference number 

Does third party, fire and theft insurance cover accidents?

Yes, but it still only covers damage to another vehicle if you are at fault. 

If the other driver is at fault their insurance should cover any damage to your vehicle.

Prices for third party, fire and theft cover will differ as insurers rate all drivers on a number of factors and calculate their premiums that way. 

These factors include:

  • driving experience

  • your car makes and model

  • your claims history 

  • where you live

  • possibly your occupation

What you won’t get with third party or third-party fire and theft cover

There are potential benefits you may miss out on when you decide against a comprehensive policy:

  • cover for damage to your own car

  • pay-out for a replacement car if yours is written off

  • medical expenses

  • breakdown cover

  • windscreen cover

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What is comprehensive car insurance cover?

Comprehensive insurance offers the most significant level of cover and will pay out for repair or replacement of your vehicle even if you are involved in an accident that was your fault.

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 cover even allows 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

What does a fully comprehensive cover include?

Comprehensive car insurance is the only type of policy that will pay out for the repair or replacement of your vehicle in the case of an accident that was your fault.

  • 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

Should I take out fully comprehensive car insurance?

Many people choose comprehensive cover to protect their investment, as repairing or replacing their vehicle could put them out of pocket. You might want to consider fully comprehensive cover if:

  • you have a brand-new car

  • you have a vintage or classic car worth more than £15,000

  • you need to be able to drive other people’s cars – but usually you’ll only have third party cover, which means you have no cover if you damage the car you’re driving

Are all fully comprehensive car insurance policies the same?

Even among comprehensive policies, no two insurance policies are equal. 

Some insurers offer additional extras as part of comprehensive policies, while other extra services will be subject to a charge. 

When taking out a fully comprehensive policy you will need to compare car insurance features.

Extras might include:

  • car stereo, speakers or sat-nav

  • personal belongings that are in the car

  • vehicle recovery or accident transport, and

  • windscreen damage and loss or theft of keys

Will I get a courtesy car with fully comprehensive car insurance? 

This means you have something to drive while your car is being repaired, but you might only get it if you use an approved repairer. 

Check how long you can keep the car – some insurers limit this cover to between up to 21 days.

Do I have to use a specific repairer with fully comprehensive car insurance? 

You may find that your cover is affected if you don’t use an approved repairer. For example, some insurers limit the windscreen cover if you don’t use the approved repairer.

Can I add named drivers to fully comprehensive car insurance? 

You may be able to add a driver without an extra charge. A named driver is an additional person who is able to drive the car under the same policy.

How much does comprehensive cover cost?

Like all car insurance policies, the price of comprehensive insurance is based on many factors including the type of car you drive, your driving experience, no claims bonus, and your history of claims and convictions.

Is comprehensive cover more expensive than third party insurance?

You might assume that comprehensive car insurance costs more than other types of policy, but that’s often not the case. 

  • third party insurance was historically the cheapest type of cover to purchase, but this led to many higher risk drivers taking out third party insurance to keep their costs down

  • as these higher risk drivers made a disproportionately high number of claims on their policies, third party premiums increased — meaning comprehensive insurance is often the cheaper option, especially for drivers deemed to be a high risk

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Should I choose comprehensive car insurance?

Even if a comprehensive policy costs you more in premiums, it could provide better value in the long run. 

Paying for repairs 

If you opt for a lower level of cover and are involved in an accident, you could have to pay for any repairs to your own car yourself, or even pay to replace it if it’s irreparably damaged. 

No fault cover

With comprehensive cover you can claim for damage to your car even if you’re involved in an accident was your fault, and your insurer will pay you the market value for your car if it’s written off or stolen.

Paying an excess

It’s also important to remember that you will have to pay an excess if you need to make a claim. Some insurers will reduce the cost of your premium if you opt to pay a higher excess in the event of a claim, but remember that you will need to pay this amount in the event of a claim, so make sure you opt for a realistic amount of voluntary excess.

How can I pay cheaper comprehensive car insurance?

Be older and more experienced

Experienced drivers and have a good driving record can still get a good deal on their insurance.

Drivers under 25, women and men, pay far more than drivers 25 and over.

If you are not an experienced driver you can cut car insurance costs by adding a named driver who is older and more experienced to the policy. 

The type of car you drive

Having a car with is the type of car you drive, with the car’s speed, security features, and value all playing a big part.

Increase your voluntary excess 

This will result in a cheaper monthly premium. Before you take out car insurance make sure you can afford any voluntary excess. This excess is in addition to the compulsory excess set by your insurance provider. This is what you would have to pay if you ever have to claim. Pay upfront 

Pay for your insurance in one go if you can. Spreading the cost of your car insurance over 12 payments, monthly, may seem cheaper but remember you will be paying interest on top of the amount you pay towards your car insurance premium.    Drive less

Limiting your miles makes you less of an insurance risk. Simply because you are reducing your risk of having an accident. When you take out your car insurance policy the insurer always asks for an estimate of your maximum annual mileage. You need to try and you’re your mileage low, although you need to be realistic as to how much you will drive. Extra security

Having an alarm or immobiliser is considered a theft deterrent and by deterring car thieves you can reduce your car insurance. Not all insurers will offer this, so check first.

Consider black box or telematics insurance Black box, or telematics, insurance can help reduce your car insurance over a period of time. 

A small device, the black box is installed in your car. 

  • this then measures how fast you driver, when you brake, what time of day you drive how fast you accelerate and how you drive around corners

  • some black boxes include an app which you can access on your phone

  • if you drive safely you may be rewarded with cheaper monthly premiums

Reduce the cost of car insurance when you don’t own a car

You don’t need to own a car to get car insurance. Unlike a full car insurance policy, you won’t build up a no claims bonus, but it does mean you can drive someone else’s car, as long as you have their permission. If you are only planning on borrowing a car you can also compare quotes for short-term or temporary car insurance

If you need to insure several cars search for multi-car insurance policies.

Multi insurance might also be suitable:

  • if you own more than one car

  • if you’re a family with more than one driver

  • if you’re a couple with more than one vehicle 

Get a car insurance quote

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