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Types of Car Insurance

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.

Daniel Hutson
From the Motor team
5
minute read
posted 2 APRIL 2020

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 can cover damages to others, but not yourself.

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 the theft of your vehicle. Fire damage includes both deliberate acts like arson, as well as accidental fires.

Fully comprehensive – 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 both your own vehicle, as well as 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: in the event that your car is stolen or damaged in an accident or a fire, you’ll have to pay to replace it. Also take note 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 such as a courtesy car, windscreen cover and personal belongings (like a sat nav) might not be covered by your policy. Furthermore, 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.

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 you for 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) which monitors your driving. If you prove you’re a safe driver, it can lead to cheaper car insurance. This is more popular with younger drivers, who normally face more expensive premiums, and are looking for ways to cut their costs down
  • 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. These types of cars are usually driven far less, and are often looked after well, so this insurance will take that into account.

Extras

  • Breakdown cover – a common extra to standard car insurance, if your car breaks down, breakdown cover can have your car picked up and taken for repairs
  • Personal accident cover – often included with comprehensive policies, if someone is seriously injured or killed in a car accident, this type of insurance can provide compensation
  • 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 involved in an accident and damaged, a courtesy car will be provided, allowing you to get back on the road as quickly as possible, while yours is repaired.
  • No claims discount protection – a long-earned no claims discount can save you a lot of money each year on your car insurance. If you’d like to protect that, you can add it as an extra to most car insurance policies. That way, you don’t have to worry about even more expenses, if you have an accident.
  • Windscreen cover – a common type of damage to your car, which is often nobody’s fault, the cost of repairing or replacing a windscreen can be expensive. You may find this as part of a fully comprehensive policy, but it’s important to check and consider including, 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:

  • Your age – younger drivers are typically the most expensive to insure
  • Your previous driving experience – if you’re a new driver, have previous driving convictions or don’t have a no claims bonus, you’ll be regarded as a higher risk to insurance providers, who will then charge more to cover you
  • Where you live
  • The make and model of your car - the more powerful your car, the more you can expect to pay
  • The car’s insurance group – car models are split among 50 car insurance groups. The cheapest cars to insure are often found in group one.
  • How much your car is worth 
  • How many miles a year you drive

Which type of car insurance is the cheapest?

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 £654^^. But the average third party, fire and theft policy is just over £1,040^^^. For third party, the minimum level of cover, the average price was £1,825, 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. 

^^50% of people could achieve a quote of £654.00 per year for their fully comprehensive car insurance based on Compare the Market data in February 2020.
^^^50% of people could achieve a quote of £1,040.00 per year for their third party fire and theft car insurance based on Compare the Market data in February 2020.
^^^^50% of people could achieve a quote of £1,825.00 per year for their third party car insurance based on Compare the Market data in February 2020.

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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