What car insurance cover should you get?

If you want to drive a car on a public road in the UK car insurance is a legal requirement; anyone who drives without car insurance faces a fine and possible disqualification.

Whether you intend to drive your own car, or hire or borrow a car to drive in, you will need to have a minimum level of car insurance cover that pays out if you cause injury to - or damage the property of - other people. 

This basic level of cover is known as third party only, but there are other levels of cover available, including fully comprehensive and third-party fire and theft.

Having to decide what level of cover you require can be overwhelming, so we’ve put together this guide to help you work out what type of car insurance is best for you and your needs.

Do I need car insurance?

Each year in the UK more than 130 people are killed and 26,000 are left injured as a result of uninsured and untraced drivers; this is nearly one in every five road traffic collisions.

The Motor Insurers’ Bureau, which is funded by insurers and ultimately consumers to provide financial support to victims of uninsured and untraced collisions, paid out £322m in compensation to victims of uninsured drivers in 2019.

What type of car insurance do I need?

Choosing the right level of cover is not just about price. While the cheapest car insurance policy may seem like the preferable option you may end up missing out on the quality or level of cover you need.

Choosing the right level can save you from an expensive shock later on.

What levels of car insurance cover are there?

There are three main levels of car insurance:

• Fully comprehensive

• Third-party, fire and theft

• Third-party only cover

What is comprehensive car insurance?

Not all comprehensive policies are the same, but nearly all comprehensive car insurance policies will give you financial protection against fire, theft and accidental damage to your car.

It will also cover your liability for the health and property of third parties in the event of you causing an accident. 

What does fully comprehensive insurance cover?

Many fully comprehensive policies will also include cover for:

• Personal injury

• Windscreen damage

• Personal possessions

• Driving other cars (find out more in this guide)

Is fully comprehensive car insurance the best cover?

Comprehensive cover can offer a lot more protection than the other insurance levels but each insurer will offer different benefits – so shop around.

Other benefits you may be able to purchase with a comprehensive car insurance include:

• A courtesy car

• Breakdown cover 

• Motor legal protection 

There may be other optional extras for an additional premium available.

Third party fire and theft insurance

Third party, fire and theft cover will not pay out for any damage to your own car in the event of you causing an accident.

What third party insurance covers

It is the minimum legal level of cover you can get to drive in the UK. Some insurers will not offer this level of cover.

What is the difference between comprehensive and third party insurance?

Third party only insurance will also compensate passengers that suffer injuries while travelling in your car. Third party cover will never pay for damage to your car.

Fully comprehensive cover will also pay for damage to your car; although if your car is damaged by another driver and you are injured their car insurance policy will pay out.

What does each type of car insurance cover?

This table shows what each level of cover could protect you against:

*These may be available as optional extras that can be added to your policy for an additional cost, but many fully comprehensive policies will include them as standard.

Remember: this is only a rough guide and every policy is different. Check the policy documents carefully to see what is covered by each policy.

Why is comprehensive insurance cheaper?

Third party cover used to always be the cheapest option because traditionally, third party levels of car insurance offer fewer benefits. 

But while fully comprehensive car insurance offers the best levels of cover, it can still be the cheapest option – depending on certain risk factors such as age and claims history.

High-risk drivers have been driven towards third party policies to reduce their insurance costs. Insurance companies, however, now recognise that the risk profiles of many drivers with lower protection policies make them more likely to claim, so increase the cost.

What is the best type of car insurance cover for me?

Much depends on your various risk factors: your age and driving experience, the type of car you drive, where you park it and where you live, among many other factors.

For example, a newly qualified driver might still find a third party policy to be the cheaper option. 

Learner drivers and car insurance cover

In recent years “black box” telematics schemes that monitor and reward safe driving habits have flourished. These types of schemes can help younger and newer drivers build up a no-claims bonus.

Brand new cars and car insurance cover

If you buy a brand-new car, there’s really no alternative to comprehensive insurance. Many insurers guarantee a replacement of the same make and model if you’ve had the vehicle less than a year.

Low value cars and car insurance cover

Meanwhile, someone driving a car that has been on the road for several years and is of low replacement value if damaged beyond repair and written off by the insurer, might save money taking out third-party level car insurance. 

Indeed, if your car is worth less than £1,000, think about the costs of claiming on comprehensive cover – given the excess fees and administration charges – and ask yourself if it’s worth it.

If you are looking for the best price for your car insurance, compare quotes for each level. 

You may find you can get much more cover for less money.

Using your car: comprehensive vs third party

Whether you choose Comprehensive, TPFT or TPO you will also have to tell your insurer how you use your car. 

There are several different usage types:

• Social, domestic and pleasure (SDP) – standard home use of the car, excludes any work driving, including regular commutes

• SDP + commuting – if you use your car to drive to work or to the local station each work day

• Business use – if you drive to different workplaces or between workplaces. Exactly why you are traveling will also make a difference: if you travel to clients and carry goods, you will only be insured for the type of goods and activities you detail to your insurer.

Whatever car you drive, make sure you find insurance that covers everything you need as cheaply as possible by comparing policies.

How can I get cheaper car insurance?

There are some things you can do that may reduce the cost of your car insurance such as:

• Having a black box fitted

• Lowering your mileage

• Parking in a private driveway or garage

• Considering a multi-car insurance policy

• Choosing a car from a low insurance group

Black box car insurance

Having a black box fitted means your driver behaviour is monitored. It reports on how you

accelerate, brake and negotiate sharp bends.

Lower mileage 

If you drive fewer miles in a year this could result in a lower car insurance premium.

Parking in a private driveway

Parking in a private driveway or garage can also attract a discount. Car insurers may take

into account where you park depending where you live.

A multi-car insurance policy

If your driveway is cluttered with cars, you may want to consider a multi-car insurance policy.

Choose a car from a lower insurance group

The lower the value of the car and the cheaper it is to repair, the less car insurance you may have to pay. 

Whatever car you drive, make sure you find insurance that covers everything you need as cheaply as possible by comparing policies.