Types of car insurance

What type of car insurance you go for will depend on your budget and the level of cover you need. We explain the different types and what they have to offer.

What type of car insurance you go for will depend on your budget and the level of cover you need. We explain the different types and what they have to offer.

Kate Hughes
Insurance expert
7
minute read
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Last Updated 11 AUGUST 2022

What are the different types of car insurance?

There are three main types of car insurance available: third party, third party, fire and theft, and fully comprehensive. It’s worth comparing all your car insurance options to find the deal that’s right for you.

Third party – every driver is legally required to have at least third party car insurance. This covers you if you damage someone else’s car or injure another person. But it won’t cover any injuries to you, or damage to your own car.

Third party, fire and theft – this gives you everything you’d expect from a standard third party policy, but also protects you if your car is stolen, or damaged by fire. Fire damage includes deliberate acts, such as arson, as well as accidental fires.

Fully comprehensive – often referred to as ‘fully comp’, this gives you the highest level of protection.  

Those are the basics. Now, let’s look in more detail at how these different types of car insurance work.

Third party insurance

Third party insurance is the minimum level of insurance the law allows. You’d expect third party only insurance to be the cheapest, as it offers you the least protection, so you might be surprised to learn that this isn’t necessarily the case. This is because third party insurance is often used by motorists who insurance providers see as risky, including young drivers and drivers with convictions. This pushes up the price.

Third party insurance typically covers

  • Damage to someone else’s car  or property
  • Injury you 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 a collision or fire, you’ll have to cover the cost of replacing it yourself. And if you’re injured in an accident, your policy won’t cover you.

Third party, fire and theft insurance

Third party fire and theft insurance offers everything you’d get with a third party car insurance policy, but with added protection against fire and theft. This is useful if you want more than the bare minimum of cover, or live in an area with high crime rates. It’s worth noting though, that some policies won’t cover damage caused by attempted theft, so check your policy carefully.

Third party, fire and theft insurance typically covers: 

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

*After you pay your excess

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

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

Watch out: bear in mind that you won’t be covered for accidental damage.

Fully comprehensive 

Fully comprehensive car insurance gives you the highest level of cover. If you’re looking for peace of mind or have a new or expensive car, this could be the right policy for you. 

Fully comprehensive insurance typically covers: 

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

*After you pay your excess

Watch out: comprehensive car insurance doesn’t necessarily mean everything. Your policy may or may not include features like a courtesy car, windscreen cover and cover for personal belongings, like a handbag or laptop. However, you should be able to add these as extras. 

Your policy may not cover personal injury if the accident is your fault, so always check the small print when you get a quote. If your policy doesn’t cover certain situations as standard, you can typically pay to add them as extras.

Additional types of car insurance 

The three main types of car insurance give you varying levels of protection, but there are a few other, more specific, types of insurance you may want to look into: 

Telematics insurance

Also known as ‘black box’ insurance. Your insurance provider will fit your car with a device that monitors your driving. If you can prove you’re a safe driver, you’ll often get cheaper car insurance. This type of policy is popular with younger drivers who normally face expensive premiums.

European driving insurance

Planning on driving abroad? You’ll need to make sure you have the cover you need for your chosen destination.

Classic car insurance

If you’re the proud owner of a classic car, this one’s for you. Classic cars are typically looked after well and driven less, so this insurance takes that into account. Specialist car insurance providers tend to know more about vintage, performance, or modified vehicles and can offer you tailored policies.

Car insurance extras you can add to your policy 

You should be able to add these to your car insurance policy for a fee. 

  • Breakdown cover
    This is a common add-on to standard car insurance and means you won’t be left stranded if your car breaks down.
  • Personal accident cover
    Often included with comprehensive policies, this can pay out 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 someone takes action against you, this can cover your expenses.
  • Courtesy car cover
    If you’re in an accident, you’ll receive a courtesy car to get you back on the road until your own car is repaired.
  • No claims discount protection
    Building your no claims discount can save you significant chunks of money on your car insurance. You can protect that discount by adding this to your policy.
  • Windscreen cover 
    It’s not uncommon to break or chip your windscreen, but replacing it can be expensive. Windscreen cover is sometimes included in a fully comprehensive policy, but you’ll need to read the small print and check.
  • Lost keys cover
    With electronic keys more common than ever, replacing lost sets can be expensive. This way you’ll be covered if your car keys are lost or stolen.

Which type of car insurance is the cheapest? 

Don’t assume that the policy that works for your colleague or best mate will be right for you, just because you’re the same age, drive the same car or do the same kind of job.

The cheapest car insurance you can get will depend on your circumstances. You’d be forgiven for assuming that comprehensive car insurance is the most expensive, so you may be surprised to hear that this isn’t the case for the average quote on our site.

The average comprehensive policy premium with Compare the Market is £535[1]. But the average third party, fire and theft policy is £804[2]. For third party (the minimum level of cover) the average price was £1,202[3]. 

[1] 51% of our customers were quoted less than £534.62 for their fully comprehensive car insurance in June 2022.

[2]51% of our customers were quoted less than £803.30 for their third party fire and theft car insurance in June 2022.

[3] 51% of our customers were quoted less than £1,201.75 for their third party car insurance in June 2022.

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