Car Insurance Types

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

  • Third Party
  • Third party, Fire and Theft
  • Comprehensive

We’ll now explain what each type of car insurance means in turn.

Types of car insurance policy

Comprehensive Car Insurance

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

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.

Third Party, Fire and Theft Car Insurance

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.

Car insurance types FAQs

What type of car insurance do I need?

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.

Do I need comprehensive car insurance?

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.

Does comprehensive car insurance mean I can drive any car?

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.

Is third party car insurance cheaper?

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.

Are there other types of car insurance?

There are a number of other types of car insurance which are more specialist –

  • Multicar insurance – if multiple vehicles are registered at the same address and have policies with the same provider, they are often rewarded with a discount.
  • Classic car insurance – specialist cover tailored to the needs of vintage vehicles.
  • Temporary car insurance – short term insurance, usually limited to up to 28 days of cover.
  • Extended cover car insurance – some car insurance policies offer extended cover, most frequently to cover the policy holder whilst driving abroad.
What is car collision insurance?

Car collision insurance is a type of car insurance in the US – it does not exist in the UK market.

What is the best type of car insurance if I have bad credit?

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.