UK Car Insurance - Car Insurance Policy Types

Buying car insurance is a legal requirement for any vehicle which is kept on the street, on a driveway or in a garage – provided you don’t have permission to keep it uninsured and off the road.
But although cover is mandatory, you do have a choice in the kind of policy you buy. Here are details of the three types of cover available: third-party, third party, fire and theft, and comprehensive.

When you search for a car insurance quote, it could be worth checking the price of each type before making a final decision. The kind of policy you choose could affect the size of the premiums you pay – but make sure you are comfortable with the level of cover you are afforded. If you need to make a claim, buying a lower level of protection could turn out to be a false economy.

Third-party only policies

The reason motor cover is required by law is so that other road users are protected from any damage you may cause. (The law is not quite so concerned with the damage you inflict on yourself or your own vehicle.) The most basic type of motor policy is third-party only cover, and it provides this minimum protection – against damage you are responsible for – to other people, their vehicles and their property.

In theory, third-party policies should be the cheapest, but do not automatically assume this will be the case: when you shop around, compare the costs for different types of policy. It could be that extra cover may not cost much more. So if you are in an accident that is your fault, your third-party policy will pay for the cost of repairing any other vehicles, and also for medical treatment costs or legal claims against you.

But it won’t insure you for repairs needed to your own car, or any of your own medical expenses. Nor will you be covered if your vehicle is stolen.
And if you’re involved in an accident where the fault can not be attributed, you will also be unable to claim. If your vehicle is not worth much, you could be tempted to opt for third-party cover – but bear in mind this would leave you without insurance against injuries you yourself sustain.

Third-party, fire and theft

As the name suggests, this offers the same cover as third party but also pays out if your car is stolen or damaged by fire. This type of policy is likely to be more expensive than third-party only, but if your car is not worth much you may be willing to do without the fire and theft cover – especially when you consider you’ll always have to pay something towards any claim in the form of an excess.

Comprehensive car insurance

This type of policy will cover you for damage caused to your own vehicle, as well as to other road users, even if an accident is your fault or if blame can’t be attributed.
You are also covered for fire and theft. You might expect comprehensive policies to be the most expensive type of cover, but this is not necessarily the case.
Some insurers have reported that higher-risk drivers – such as the under-25s – are more likely to choose third-party policies. As a result, the risk associated with this type of cover – and therefore its price – has been rising in relation to comprehensive cover.

Despite its name, comprehensive insurance may not cover you against every eventuality. For example, you may need to pay extra for breakdown insurance, or to ensure that you get a courtesy car if your own vehicle needs to be repaired.

Saving money on cover

Choosing a lower level of protection is not the only way to reduce the premiums you pay (and, as mentioned above, you should bear in mind that comprehensive policies are not always the most expensive). There are a number of other steps you can take to cut the cost of insurance without reducing the amount of cover you have:

• Reduce the excess you pay. You can cut your premiums by opting for a larger voluntary excess – so if you agree to pay the first £250 of any claim rather than just the first £100, your policy will cost less.
• Beef up your security. If your car is fitted with an alarm or immobiliser, it should be harder to steal. This should lead to a lower cost of cover.
• Add a named driver. If you are relatively inexperienced on the roads, this is probably making your insurance more expensive. By adding a more experienced named driver, such as a parent, to the policy, you could see premiums fall.