What types of car insurance are there?
If you use your car on roads or in public places, it is a legal requirement in the UK to have car insurance in place for your vehicle. The minimum level of insurance cover you can have is third party car insurance.
Third party car insurance
In the event of an accident where you are at fault, third party insurance covers damage or injury to the other person, their vehicle and their property. Any damage caused to your person, vehicle, or property will not be covered under a third party policy.
Because of the very limited protection provided by third party car insurance, these policies are often cheaper than other forms of car insurance in the UK.
Third party, fire and theft car insurance
This type of insurance covers the same risks as third party car insurance (i.e. damage or injury to the other person, their vehicle or their property) but also covers the costs involved with:
- Replacing your car in the event of theft
- Damage caused to your car by an attempted theft (for example, broken windows or locks)
- Fire damage to your car
Comprehensive car insurance
This type of insurance covers the same risks as third party insurance and third party, fire and theft car insurance, but it also covers all damage to your own car, the other person’s car, and personal injury to both parties in the event of an accident. Essentially, in the event of an accident where you are at fault, a comprehensive policy will cover all damage to both your vehicle, and the other person’s vehicle.
Under a comprehensive policy, the insurer will pay to replace your car if it's written off (damaged beyond economical repair) following an accident. The final settlement amount you receive will be equal to the current market value of your car, taking wear and tear into account, rather than the amount you initially paid for it.
A comprehensive insurance policy will also usually include the following types of cover as standard (but not always, so you should check with your insurance provider to be sure):
- European cover (cover for driving in a European country for a specified number of days per year)
- Audio equipment (such as a built-in stereo)
- Personal belongings (left inside the vehicle)
- Windscreen repair
A comprehensive policy is often the most expensive form of car insurance because it covers a larger number of risks than other policy types.