The 3 types of car insurance explained

Your car insurance FAQs answered.

What are the different types of car insurance you can choose from? What sort of extras can you add to a car insurance policy? And which type of car insurance is the cheapest?

We’ve got the answers to all of that and more below. 

What are the 3 main types of car insurance?

Generally speaking, there are three car insurance coverage types to choose from. These are:

  • Third-party-only
  • Third-party, fire, and theft
  • Comprehensive

Let’s take a look at each of these in a little more detail. 

1. Third-party-only car insurance

Third-party car insurance (sometimes called third-party-only insurance, or TPO) is the minimum level of cover required to drive legally in the UK. If you have third-party cover, it means that, in the event of an accident, you’ll be covered for any damage caused to another person’s vehicle if the accident was your fault. 

You’ll also be covered for any personal injury claims from the driver or passengers involved (either in your car or the other driver’s car). So long as your insurance is valid and up to date, your insurer will pay out compensation to the other party or parties involved in the accident. 

However, third-party insurance does not cover damage to your vehicle. And if you’re also injured in the accident, you may have to pay for your own medical costs.

Read more: What does third-party insurance cover? 

2. Third party, fire, and theft car insurance

The next level up from TPO is third-party, fire, and theft (TPFT). It includes everything covered by third-party-only insurance, plus cover for your vehicle if it’s damaged by fire or stolen. 

However, just like TPO insurance, TPFT won’t cover your car for accidental damage. If you’re in an accident that’s your fault, you’ll have to fork out for your vehicle’s repair costs, as well as any personal medical expenses if you get injured.

3. Comprehensive car insurance

Finally, the broadest level of cover you can get for your vehicle is comprehensive car insurance (also referred to as “fully comprehensive” or “fully comp”). It pays out if you damage your car or someone else’s car, or injure yourself or someone else in an accident.

What else does comprehensive insurance cover? 

Comprehensive car insurance policies can vary from one provider to the next. But in general, if you take out fully comp cover, you should be protected against the following: 

  • Accidental damage to your car
  • Accidental damage to someone else’s car
  • Injuries to you or other people involved in an accident
  • Damage to other people’s property caused by an accident
  • Theft or fire damage to your car
  • Damaged or stolen personal belongings in your car at the time of an accident or theft 

Read more: What is comprehensive insurance?

Car insurance extras you can add to your policy

Although many car insurance policies offer a wide range of features as standard, you may need to pay extra for certain beneficial add-ons. These can include:

Always double-check with your insurer to understand what is and isn’t included in your policy.

Does having comprehensive coverage mean I can drive any car?

No. In order to drive someone else’s car, you’ll need “driving other cars (DOC) insurance.” This is usually only available as an add-on for comprehensive car insurance policies. 

If you have this cover in place, you can drive another car without being a named driver or needing to buy temporary cover. You just need to ensure that the vehicle is covered by an existing insurance policy and that you have permission to drive it.

Other types of car insurance

Beyond the three main types of car insurance, there are a few specialist and specific insurance policies you may want to consider. These include:

  • Electric car insurance: Just like any other car, electric vehicles need to be insured before they can be driven on UK roads. However, choosing dedicated electric car insurance can give you peace of mind that your policy caters to your vehicle, covering EV-related features such as the battery and charging cables. 
  • Telematics insurance: Also referred to as “black box” insurance, telematics is a technology that gathers data about a driver’s behaviour, such as their speed and how quickly they brake. Insurers can then use the information to determine how well the vehicle is being driven. In short, if the data proves you’re a safe driver, it can lower the cost of your car insurance premiums. This type of policy is popular with younger drivers who may otherwise face expensive car insurance costs. 
  • Classic car insurance: Classic and vintage car insurance works differently from standard motor insurance policies, as it’s specifically designed to provide coverage for vintage, collectable, or classic cars. These policies consider the unique characteristics and value of classic cars, as well as the driving habits of their owners.

What type of car insurance is the cheapest?

It depends! Sometimes, third-party-only works out cheaper as it’s the minimum level of cover required. However, because it’s also popular with younger drivers (who are statistically more likely to have an accident), many insurance providers see third-party-only insurance as the riskier option and instead price it higher.

So, you might find that if you shop around, you’ll get a comprehensive quote that’s similar to (or even cheaper than) a third-party quote. 

And it’s not just your age that will determine how much you pay for car insurance. Whether you’re searching for fully comp or third-party, the following will likely affect the price:

  • How much you drive: The more miles you drive each year, the more likely you’ll need to make a claim. 
  • Your vehicle’s make and model: High-performance cars with powerful engines could make you a riskier driver in the eyes of some insurers. 
  • Previous driving convictions: If you’ve been caught speeding or driving under the influence, your car insurance premiums will increase. 

Remember, even if third-party cover is the cheaper option now, it could still cost you more in the long run if you get into an accident and have to pay for your own repair costs.

Is it cheaper to pay for car insurance monthly or annually?

Paying for your insurance annually in one lump sum is almost always cheaper.

That’s because, if you choose to make monthly payments, you enter into a credit agreement with the insurer. This means you have to pay interest on top of your insurance payments, which can drive up the cost.

What is car insurance compulsory excess?

If you have an accident and need to make a claim, most insurers will require you to pay a certain amount of money towards your vehicle repair costs. This is called the excess and has two parts: compulsory and voluntary.

  • The compulsory excess is set by your insurer when you take out the insurance policy. You have to pay this to make your claim, whether you were at fault or not. If you’re a new or young driver, or you drive a powerful or expensive vehicle, you may have to pay a higher compulsory excess. It all depends on your age, driving history, claim history, and vehicle type. 
  • The voluntary excess is the amount you’re willing to pay towards a claim. You choose this when you take out your policy. You may want to set your voluntary excess a bit higher when you take out your car insurance policy to help reduce the overall cost of your premium. Just keep in mind that if you do have an accident, the combined compulsory and voluntary excess could be expensive.

Example: If you make a claim for £1,000 worth of damage following an accident and your compulsory excess is £300 and your voluntary excess is £200, you’ll need to pay £500 towards the repair costs. Your insurer will pick up the bill for the remaining £500.

Note: If you have an accident and you weren’t at fault, your insurer might waive the excess when you make a claim because they can recoup the repair costs from the other driver’s insurance policy. Always double-check the fine print before making a claim. 

In summary: Which type of car insurance is best?

The best type of car insurance will largely depend on your circumstances and your budget. 

For example, if you’re driving a brand-new car, a comprehensive car insurance policy gives you complete peace of mind that you’re covered no matter what happens. If you get into an accident, you can make a claim whether it was your fault or not. Or, if you return to your car and find it’s been damaged or broken into, your insurance company should cover the cost of repairs and payout for anything that’s been taken. 

On the other hand, third-party-only cover can be a good idea if your vehicle isn’t worth a lot, as the cost to fix your car following an accident could be similar to simply replacing it. 

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