Types of car insurance

If you’re looking for car insurance, you might assume that a third-party policy will be the cheapest. This isn’t always the case. It’s worth comparing all your car insurance options to find the deal that’s right for you.

If you’re looking for car insurance, you might assume that a third-party policy will be the cheapest. This isn’t always the case. It’s worth comparing all your car insurance options to find the deal that’s right for you.

Kate Hughes
Insurance expert
7
minute read
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Posted 24 JANUARY 2020 Last Updated 1 DECEMBER 2021

What are the different types of car insurance?

There are three main types of car insurance: 

Third party – all drivers are legally required to have at least third-party car insurance. This type of protection offers cover if you damage someone else’s car or injure another person, but it won’t cover injuries to you or damage to your car.

Third party, fire and theft – this type of cover includes everything from a standard third-party policy, but also protects you for fire damage and/or theft of your vehicle. Fire damage includes deliberate acts like arson, as well as accidental fires.

Fully comprehensive – often referred to as ‘fully comp’, this offers the highest level of protection. Fully comprehensive car insurance covers you and other drivers for injury compensation, as well as damage, fire and theft of your own vehicle and those belonging to other drivers - whether the accident is your fault or not.

Third party insurance

Third party insurance is the minimum level of insurance you need by law. You’d expect third party only insurance to be the cheapest option as it offers the least protection of all the types of cover available, so you might be surprised to learn otherwise. 

Third party insurance typically covers

  • Damage to someone else’s car  or property
  • Injury you may cause to others
  • Injury to your passengers during an accident  

Third party insurance doesn’t cover: 

  • You
  • Your car

Watch out: if your car is stolen or damaged in an accident or a fire, you’ll have to pay to replace it. And bear in mind that your policy won’t cover you if you’re injured in an accident.

Third party, fire and theft insurance

Third party fire and theft insurance covers everything a third party car insurance policy does, but with added protection against fire and theft. It’s useful if you’re looking for more than just the bare minimum of cover or if you live in an area that’s considered high risk for crime. It’s worth noting that damage caused by attempted theft  may not be covered by some policies, so think carefully about what you might need. 

Third party, fire and theft insurance typically covers: 

  • Damage to someone else’s car or property
  • Injury you may cause to others
  • Injury to your passengers during an accident
  • Fire damage**
  • Theft (and possibly damage caused by attempted theft)** 

**After paying any agreed compulsory and voluntary excess

Third party, fire and theft insurance doesn’t cover: 

  • You
  • Your car (except for fire damage and theft) 

Watch out: bear in mind that this type of car insurance won’t cover your car for accidental damage.

Fully comprehensive 

Fully comprehensive car insurance offers the highest level of cover available. If you have a new or expensive car, or often travel with expensive tech or belongings in your car, this could be the type of policy for you. 

Fully comprehensive insurance typically covers: 

  • Damage to someone else’s car or property
  • Injury you may cause to others
  • Injury to your passengers during an accident
  • Fire damage**
  • Theft (and possibly damage caused by attempted theft)**
  • Chipping/scratching**
  • Malicious damage and vandalism**
  • Accidental damage to your car**  

**After paying any agreed compulsory and voluntary excess

Watch out: comprehensive car insurance doesn’t necessarily mean everything. Extras like a courtesy car, windscreen cover and personal belongings (like a sat nav) might not be covered by your policy. 

Also, it may not always cover personal injury you cause to yourself, so remember to check all these details with each insurance provider when you get a quote. Even with fully comprehensive insurance, there are still extras you can pay for to give you cover in certain situations not covered as standard.

Are there any other types of car insurance?  

While the three main types of car insurance offer various levels of protection, there are several other types of cover, as well as extras, which can help cover a wide range of situations: 

Other types of cover 

  • Telematics insurance – also known as ‘black box’ insurance, this type of cover sees your car fitted with a device (some providers use an app) that monitors your driving. If you prove you’re a safe driver, it can lead to cheaper car insurance. This is particularly popular with younger drivers, who normally face more expensive premiums and are looking for ways to cut their costs.
  • European driving insurance – if you’re planning on driving abroad, you need to make sure you’re covered in your chosen destination.
  • Classic car insurance – if you’re the proud owner of a classic car model, this type of cover is specific to you. Classic cars are usually driven far less and are often looked after well, so this insurance takes that into account. Specialist car insurance providers typically have a better understanding and appreciation of vintage, performance, or modified or imported vehicles, and have policies tailored to the specific requirements of car insurance for more unusual vehicles.

Extras

These can be added to your car insurance policy at an additional cost.

  • Breakdown cover – a common extra to standard car insurance. If your car breaks down, breakdown cover can have it picked up and taken for repairs.
  • Personal accident cover – often included with comprehensive policies, this type of insurance can offer compensation if someone is seriously injured or killed in a car accident.
  • Motor legal protection – if you’re involved in an accident and want to take legal action against another driver, or need legal protection if someone takes action against you, this type of cover can take care of expenses.
  • Courtesy car – if your car is damaged in an accident, a courtesy car will be provided to get you back on the road while your car is repaired.
  • No claims discount protection – a long-earned no claims discount can save you money each year on your car insurance. If you’d like to protect your discount, you can add it as an extra to most car insurance policies.
  • Windscreen cover – a broken or chipped windscreen is a common type of car damage, which is often nobody’s fault. The cost of repairing or replacing a windscreen can be expensive. You may find windscreen cover as part of a fully comprehensive policy, but it’s important to check and consider including it, if not.
  • Lost keys cover – with electronic keys more common than ever, the cost of losing your car keys can be very expensive. If your keys are lost or stolen, you can cover the costs of replacing and reprogramming them

What affects the cost of car insurance?

The cost of car insurance is affected by lots of different factors: 

Always check the policy details carefully as car insurance providers don’t always consider the same circumstances in the same way. What may be acceptable under the criteria of one car insurance provider could be considered too high a risk to be insured at all by another, or may come with a hefty hike in premium.

Which type of car insurance is the cheapest?

Don’t assume that the insurance policy that works perfectly for your best mate, colleague or parents’ needs, wants and vehicle will suit you by default because you’re the same age, drive the same car or do the same kind of job.

The cheapest car insurance will depend on your personal circumstances – and it won’t always be third party insurance. You’d be forgiven for thinking that comprehensive car insurance is going to be the most expensive level of cover because of what it includes. But you might be surprised to hear that’s not the case for the average quote on our site.

The average comprehensive policy premium with Compare the Market is £531^^. But the average third party, fire and theft policy is just over £902^^^. For third party - the minimum level of cover - the average price was £1,433^^^^, more than twice the cost of comprehensive. 

This is because insurance providers know that drivers who take out third party policies are generally higher risk drivers, such as young drivers or drivers with convictions, compared to those with comprehensive insurance. 

Beware of making assumptions about how your circumstances might affect your premium calculations. For example, many people believe that being able to tick the box indicating they store their car in a garage will lower their quote, because this could make their car more secure. 

However, the opposite can sometimes be true because some car insurance providers will take into account the risk of damaging the vehicle getting it into and out of the garage.

^^51% of people could achieve a quote of £530.88 per year for their fully comprehensive car insurance based on Compare the Market data in October, 2021.
^^^51% of people could achieve a quote of £901.35 per year for their third party fire and theft car insurance based on Compare the Market data in October, 2021.

^^^^ 51% of people could achieve a quote of £1,432.86 per year for their third party car insurance based on Compare the Market data in October, 2021.

How can I find car insurance that’s right for me?

You can find the car insurance policy that’s right for you by comparing quotes from multiple insurance providers.

Our price comparison service is an effective way to compare a variety of insurance providers and get an overview of deals on the market.

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