Car insurance can be thought of as the pain to the pleasure of getting behind the wheel of your own car. It’s not something we think about too much, if at all, before embarking on the exciting journey of buying a car. Yet it’s a must.
You must have car insurance if you drive a car on public roads. It is a legal requirement and anyone who drives without insurance faces a £300 fine and six points on their licence. Should they cause an accident, in which someone is injured, the consequences could be even worse.
The only choice you have to make is the level of car insurance cover you want to have.
With so many different types of policies available choosing car insurance can be overwhelming.
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 later on.
For this reason, it’s important you understand the different types of car insurance available to help you find which car insurance policy is best for you.
There is a choice of cover levels you can pick from, which are:
Third party, fire and theft
Third party only
Comprehensive car insurance does what it says on the tin. It offers the most thorough 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. It pays out for damage and injury to other people following an incident involving your car.
Even if you have an accident due to your own fault, you’ll still be able to claim for the cost of treating your injuries, 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.
Aside from all the claims-related protections, which are comforting to know you have, there are some advantages that just make life easier. For instance, you’ll typically be able to drive other people's car with their permission.
However, the protection offered under your car insurance policy might be restricted to that of a third-party cover, meaning only injury and damage to other people and their property is protected.
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:
Replacement of loss or damage to the car stereo, speakers or sat-nav
Personal belongings that are in the car
Vehicle recovery or accident transport, and
Loss or theft of keys
You may find that your cover is affected if you don’t use an approved repairer. For example, some insurers limit the windscreen cover or don’t provide a courtesy car while yours is being fixed if you don’t use the approved repairer.
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. Add to this the fact that the level of cover is so thorough and it’s reasonable to assume that comprehensive car insurance costs more than other types of policy. But that’s often not the case because:
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.
Third party, fire and theft (TPFT) is the next level down from comprehensive car insurance.
What TPFT policies offers is:
A replacement car if yours is stolen
Repair to the car and fixed belongings, such as the stereo following damage caused by theft or an attempted theft
Fire damage to the car whether accidental fires or as a result of arson
Compensation if a third party, including your passengers, are injured in an accident involving your car
Third party, fire and theft only covers damage to other vehicles involved in an incident caused by you while driving. 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:
Your car makes and model
Your claims history
Where you live
There are potential benefits you’ll miss out on if you decide against buying a comprehensive policy:
Cover for damage to your own car
Pay-out for a replacement car if yours is written off
Third party, or third party only (TPO) insurance is the minimum cover needed to legally drive your car on UK roads. Like the other level of covers you can add a named driver to the policy, but they would only be entitled to the same level of protection as the registered owner.
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.
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.
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 - 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. As with TPFT, you’d need comprehensive car insurance to receive this level of cover.
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
You should only consider buying third party cover if a thorough search of car insurance policies reveals this is the cheapest option available and you can’t afford to spend anything more on cover.
Third party only insurance may be very basic and not offer any direct protection to you or your car, but it’ll at least mean you are road legal.
If you’ve got third party, fire and theft or third party only car insurance, you can’t claim for your damages if you’re 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
If you are only planning on borrowing a car you can also compare quotes for short-term or temporary car insurance.
Given the many factors insurers take into account when coming up with a premium, there are no shortage of ways to shave a little off the quotes you can expect to get. Here are some to conjure with:
Experienced drivers who have a good driving record tend to get a good deal on their insurance.
If you’re not an experienced driver you can cut car insurance costs by adding a named driver who is older and more experienced to the policy.
Once you have a few years under your belt you could see how much the cost of insurance in your own name is, as road experience and age are important factors when setting insurance premiums.
The type of car you drive, it’s top speed, security and other features, plus its value all playing a big part in increasing the cost of your insurance.
Keep your car simple, avoid adding modifications and ensure valuables are out of sight. You want your car to blend in to the background, not stand out.
This can 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. is the total excess is what you would have to pay if you ever have to claim.
Pay for your insurance in one go if you can. Spreading the cost of your car insurance over 12 monthly payments may seem cheaper, but you’ll be paying interest on top of the amount you pay towards your car insurance premium.
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 keep your mileage low but be realistic.
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.
Black box, or telematics, insurance can help reduce your car insurance over a period of time.
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 black box insurance policies include an app that you can access on your phone. Drive safely and you may be rewarded with cheaper monthly premiums.
You don’t need to own a car to get car insurance. Unlike a conventional car insurance policy, with a non-owner policy you won’t build up a no claims bonus. What it does mean is you can drive someone else’s car, as long as you have their permission.