What your car insurance covers can vary hugely depending on what type of policy you have. Usually, car insurance covers your vehicle for any damage caused in an accident or crash, whether to your vehicle or another, plus damage to the property of other drivers, and finally personal injury.
It can also be extended to cover breakdown costs, medical assistance that may be needed and theft or damage to personal belongings stored in the car. There are 3 main types of car insurance
We’ll now explain what each type of car insurance means in turn.
Comprehensive car insurance (sometimes known as ‘fully comp’) is widely thought of as the best level of cover. It covers not only damage to your own vehicle but also any damage suffered by others, and from any cause including accident, fire and theft.
This is a better standard of protection than ‘Third Party’ or ‘Third Party, Fire and Theft’ car insurance.
One thing to watch for though is that comprehensive car insurance often contains a lot of different clauses and not all policies are the same. For example, some need the policyholder to be driving the vehicle for a claim to be valid, while others do not. If you are buying your car through a car finance company, most require that you have fully comprehensive car insurance.
That’s why it is so important to thoroughly read the terms and conditions of your insurance policy, so you’re fully aware of what it includes and what it doesn’t include.
Third party car insurance is the lowest level available and covers damage caused by you or one of your passengers to other drivers and their vehicles, as well as objects such as lampposts and walls. This type of car insurance does not cover the cost of damage to your own car, meaning you’ll have to pay for any damage you need to repair.
The Third Party, Fire and Theft policy is the same as Third Party cover, except it also pays to replace or repair your car if it is stolen or damaged in a fire. It is often taken out by those that only want Third Party insurance (i.e. they don’t want to cover damage to their own vehicle), but they want a greater layer of protection in case of accidents or incidents out of their control.
If your vehicle is relatively cheap or old, it could be a good idea to look into Third Party, Fire and Theft Insurance as it is often a lot cheaper than fully comprehensive cover.
The type of car insurance you need depends on your personal circumstances, your car and other factors which can affect the cost of your premium.. You should consider the value of your car, the area in which you live, your financial situation and the potential risk of an accident when deciding on the type of car insurance right for you.
You are not obliged to have comprehensive car insurance, but some drivers like the peace of mind of the additional level of cover which most policies offer. Comprehensive car insurance policies also sometimes offer additional attractive benefits such as breakdown cover, so it’s worth comparing a number of car insurance quotes to find the right fit for you.
Comprehensive car insurance may offer you more cover than the other car insurance types, but it doesn’t necessarily mean that you can drive any car. This is a common misconception so you shouldn’t presume that you are covered to drive any other car. Each policy will differ so it’s worth checking this carefully.
Third party car insurance is not always necessarily the cheapest cover you can get. You can sometimes get more cover for less money, so it’s always worth checking and comparing the various types.
There are a number of other types of car insurance which are more specialist –
Car collision insurance is a type of car insurance in the US – it does not exist in the UK market.
There isn’t a right or wrong type of car insurance to have if you have bad credit, you simply need to consider your personal circumstances, compare quotes and read the terms and conditions carefully to understand which policy is right for you.