Types of car insurance

The type of car insurance you choose will depend on several factors, including your budget and the level of cover you need. We explain the different types of car insurance and what they have to offer.

Written by

Julie Daniels

Motor insurance expert

Last Updated

16 AUGUST 2024

7 min read

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 comprehensive.

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.

Comprehensive – this gives you the highest level of protection. It covers you and your car, as well as damage and injury to someone else if you’re involved in a collision.

Third-party insurance

Third-party insurance is the minimum level of insurance required by law. You’d expect it to be the cheapest, as it offers you the least protection, but this isn’t necessarily the case.

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 won’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 or repairing it yourself. And if you’re injured in an accident, third-party insurance won’t cover you.

Third-party, fire and theft insurance

This 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 minimum level of cover, or live in an area with high crime rates.

It’s worth noting 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).

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

You
Your car (except for fire damage and theft)
Theft caused by careless behaviour
Accidental damage.

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

Comprehensive insurance

Comprehensive car insurance gives you the highest level of cover. It offers protection for you and your car if you’re involved in an accident, no matter who is at fault. If you’re looking for peace of mind or have a new or expensive car, this could be the right policy for you.

Comprehensive insurance typically covers:

Accidental damage to your car
Damage to someone else’s car or property
Injuries you cause to yourself, passengers or other drivers
Fire damage
Theft (and possibly damage caused by attempted theft)
Chips, scratches and dents to your car
Malicious damage and vandalism.

Comprehensive insurance won’t cover:

Theft caused by careless behaviour
Damage or injuries caused when driving under the influence of alcohol or drugs
Driving without a valid licence.

Watch out: comprehensive car insurance doesn’t necessarily cover everything. Your policy may or may not include a courtesy car, windscreen cover and cover for personal belongings, for example. However, you should be able to add extra cover for an additional cost.

Your policy may not cover personal injury if the accident is your fault, so check the small print when you get a quote.

What car insurance do I need?

The right type of car insurance policy for you will be one that gives you the level of cover you need at a price you can afford.

You might be happy with insurance that just covers the bare minimum, although you face paying out of your own pocket if something happens to your car that you’re not covered for.

If, however, you want the highest level of protection, you can tailor comprehensive cover to meet your requirements, adding features such as legal protection or breakdown cover.

Additional car insurance options

There are a few other, more specific, car insurance options you may want to look into. These come with different levels of cover – for example, you can get comprehensive telematics insurance.

Telematics insurance

Also known as ‘black box’ insurance, this monitors your driving through a small device fitted to your vehicle. If you can prove you’re a safe driver, you could get cheaper car insurance at renewal time, although there’s no guarantee. And of course, if you don’t drive well you could be charged more. This type of car insurance 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. Most car insurance policies include European cover for a specified number of days as standard, but this may only be third-party cover.

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.

Electric car insurance

In addition to providing regular cover, this insurance comes with protection specifically aimed at electric vehicles. For instance, batteries and charging cables will be covered.

Temporary car insurance

Short-term cover can be handy if you only need a policy to cover you for a few hours, days or weeks. It allows you to drive a vehicle you’re not already insured to drive, so you could use it to borrow a friend or family member’s car.

Pay-as-you-go car insurance

You only pay for the mileage you cover, along with a monthly or yearly charge that covers the car against damage or theft while it’s parked. The less you drive, the less you pay for insurance.

Learner driver car insurance

If you have a provisional licence, this covers you while you’re practising driving in a friend or family member’s car. You won’t need it while you’re learning with a professional instructor as they’ll have their own insurance.

Business car insurance

You’ll need this if you use your car for work-related activities beyond commuting. For example, if you’re travelling between job sites or regularly visiting clients.

Multi-car insurance

This can be a good option for multi-car households as insurance providers will often give you a discount if you insure two or more cars under one policy.

Compare the Market doesn’t offer a comparison service for multi-car insurance.

Car insurance extras you can add to your policy

No matter which type of car insurance coverage you choose, you’ll be able to add extras to your car insurance policy for a fee.

Breakdown cover
Offers assistance if your car breaks down.
Personal accident cover
Often included with comprehensive policies, this offers cover if you or a passenger are hurt in an accident.
Motor legal protection
If you’re involved in an accident that wasn’t your fault and you want to take legal action against another driver, or someone takes action against you, this could help cover your expenses.
Courtesy car cover
Gives you a replacement car while yours is being repaired.
No claims discount protection
Building your no claims discount can save you money when you renew your car insurance. You can protect that discount by adding this to your policy.
Windscreen cover
Covers repairing or replacing a damaged windscreen.
Lost keys cover
Offers cover if your car keys are lost or stolen.

All these add-ons will come with restrictions and exclusions. Check your policy carefully to make sure you understand what’s covered and that you have the cover you need.

Which type of car insurance is the cheapest?

You might assume that third-party insurance is the cheapest as it offers the least protection. But that’s not always the case.

Customers who compared quotes with us were quoted £810^[1] per year for comprehensive insurance, £1,413^[2] for third-party, fire and theft and £1,942^[3] for third-party insurance (the minimum level of cover).

But the price of your car insurance isn’t just based on the type of policy you choose. Other factors come into play, including:

Your age, occupation and driving history
Where you live and park your car overnight
How many years of no claims you have
Named drivers added to your policy
The amount of voluntary excess you choose
Your annual mileage
The make and model of your car
Your car’s security features.

The cheapest car insurance you can get will depend on your circumstances and how much of a risk insurance providers consider you to be.

^[1]51% of our customers were quoted less than £809.45 for their comprehensive car insurance in June 2024.

^[2]51% of our customers were quoted less than £1,412.29 for their third party fire and theft car insurance in June 2024.

^[3]51% of our customers were quoted less than £1,941.84 per year for their third party car insurance in June 2024.

Frequently asked questions

When is car insurance required?

By law, you must have insurance to drive your vehicle on UK roads. You must also have insurance if you park your car on the street or your driveway, or in your garage.

The only exception is if you register your vehicle as off the road with a SORN (Statutory Off Road Notification). By doing this, you won’t need to insure or tax your car, but you’ll need to keep it on private land and it won’t be covered if it’s damaged or stolen.

What is a car insurance compulsory excess?

A compulsory excess is a fixed amount you have to pay towards a claim, set by your insurance provider.

In addition to the compulsory excess, you’ll also have to pay a voluntary excess – which you agree to when you take out your policy. Typically, the higher your voluntary excess, the cheaper your premium could be.