Types of car insurance

Fully comprehensive and third-party cover explained

Every driver must have a valid car insurance policy for the car they're driving – that part's clear. Yet there are three main types to choose from, which can complicate your decision. This short guide explains the differences so you can decide which is best for you. 

What are the different types of car insurance?

Car insurance is a legal requirement, so all drivers must have a policy in place. Yet the type you opt for is down to you.

There are many factors that will affect how much you pay for your policy, and our full guide to cheap car insurance covers them in more detail. But if you're looking for a quick guide that explains the three main types of car insurance then read on – we've summarised them below...

Types of car insurance compared

Reason to claim Type of policy and what it typically covers
Third party Third party, fire and theft Fully comprehensive
You cause damage to another person's car or property
You injure another person
Your car is damaged due to fire
Your car is stolen
Your car is damaged by an accident you caused
You're injured by an accident you caused

Third-party insurance

This is the most basic policy and provides cover should you injure anyone or damage their car or property following a road accident. However, you won't be able to claim for any repairs to, or the replacement of, your own car – or for any injury caused to yourself. 

Third-party, fire and theft insurance

As above, plus you'll be able to claim if your car is damaged or written off following a fire, or if your car is stolen. Though again, you won't be covered for any of the costs of repairing or replacing your own car or if you're injured.  

Read more about third-party, fire and theft insurance

Fully comprehensive insurance

Often referred to as 'fully comp', you get third-party, fire and theft cover as above, plus if you caused an accident you can claim for costs of repair or replacing your car. 

The name can be slightly misleading though, as no insurance policy covers every scenario, so always check the terms and policy wording carefully before signing up. For example, 'theft' might include items inside your car as well as the car itself, but only if you purchase an optional extra. 

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What's the cheapest type of car insurance policy?

This isn't an easy question to answer, as there's no one-size-fits-all rule. The cost of car insurance is calculated by each insurer based on many factors, all to work out how much of a risk it thinks you are. 

The riskier you appear, the more likely the insurer thinks you'll be to make a claim – which it will then have to fork out to pay. For example, a driver who has caused two accidents in the last three years and has an expensive, fast car will pay more than someone who can prove they've been accident-free for years and drives a smaller runaround.

The type of policy you choose will also affect the price. You might expect third-party insurance to work out the cheapest (as it offers the lowest level of cover) – but car insurance isn't always that straightforward. In fact, choosing fully comprehensive insurance can be seen by certain insurers as the more responsible, lower-risk option, so it's often cheaper than opting for third-party.

The only way to know for sure is to use trial and error when getting quotes: get a quote for third-party, then third-party, fire and theft and finally fully comprehensive. You can then see which is cheapest and, if it's not fully comp, which level suits you the best.

All policies have an excess you'll need to pay

When buying a policy, you'll need to select the amount you'd be willing to contribute in the event of a claim – known as the voluntary excess. For example, if you set your excess as £400 and your car was later damaged in an accident and a garage had quoted £1,500 to repair it, you'd pay the first £400 with your insurer covering the rest.

Choosing a high voluntary excess will usually mean cheaper prices, as it could indicate that you're someone who is less likely to claim (or if you do then the insurer has less to pay). 

However, remember that if you do need to claim, you'll need to be able to come up with the cash to pay it. It's also worth noting that some insurers have compulsory excesses in addition to the voluntary one you've set. So using the example above, a policy with a £250 compulsory excess plus a £400 voluntary excess would set you back £650 per claim (if your claim is for a lower amount than that you'll be better off paying the bill yourself). 

How to get cheap car insurance

We've a whole host of car insurance top tips and tricks to get cheap cover. Below is a quick round-up of where we'd suggest you head to next to get a policy... 

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