Everyone needs car insurance to drive on public roads, but it’s worth understanding the types of car insurance available so you can make the best choice for you.
Car insurance costs can influence the type of car you drive and what you use your car for. It’s a legal requirement that you have car insurance covering whoever will drive your car and for whatever purpose they will use it.
Here we look at the types of car insurance and the options you can choose from.
What type of car insurance do I need?
Car insurance is a legal requirement – driving without insurance could land you a big fine, points on your license or even worse.
The main choice you have to make when you buy car insurance is the level of cover. Opting for the lowest level of cover may be tempting, but sacrificing the quality for what you think is a low-price tag might haunt you.
What are the different main types of car insurance?
In the UK, there are three main types of car insurance:
- Third-party only
- Third-party, fire & theft
- Fully Comprehensive
What is third party only car insurance?
In the UK, third-party only car insurance offers the minimum legal requirement for driving. It prioritizes protecting others involved in an accident you cause, but excludes your vehicle.
What is third party only car insurance covers?
- Third-Party Injuries: If your accident injures someone, their medical bills, lost wages, and legal costs are covered.
- Third-Party Property Damage: Repairs to vehicles, buildings, or other accident damage are covered.
- Legal Defense: Your legal fees are covered if you face legal action due to the accident.
What it doesn’t cover:
- Your Own Vehicle Damage: Regardless of who’s at fault, you are responsible for repairing your own car.
- Theft or Fire Damage: No theft or fire damage is covered unless you add optional fire cover.
- Personal Injury or Loss: Medical expenses or lost wages for yourself or passengers in your car are not covered.
Who might choose it:
Here are some situations where someone might choose third-party only car insurance in the UK:
- Budget-conscious drivers
- Drivers with older, low-value cars
- Low-risk drivers with clean driving history
- Drivers who rarely use their car
- Drivers who accept responsibility for their car
- Young drivers with access to parents’ insurance
Advantages:
- Affordability: It’s the cheapest type of car insurance, suitable for budget-conscious drivers.
- Legal Compliance: Fulfills the minimum legal requirement for driving.
- May be sufficient for: Older cars with low value where repairs might not be financially sound, low-risk drivers with clean driving records.
Disadvantages:
- Limited Protection: Leaves you financially responsible for your own vehicle repairs, even in minor accidents.
- No Coverage for Theft or Fire: Requires additional add-ons for these protections.
- May not be suitable for: Valuable cars, drivers with a history of accidents, or those seeking comprehensive protection.
Example:
- Imagine you accidentally rear-end another car at a red light. The other driver sustains minor injuries and their car requires repairs. In this case, your third-party only insurance will cover:
- The other driver’s medical bills.
- The repairs to their car.
- Any legal costs they incur if they decide to take legal action.
- However, your insurance will not cover:
- . The repairs to your own car.
What is comprehensive car insurance?
In the UK, comprehensive car insurance offers the most extensive coverage for your vehicle, protecting you against a wide range of scenarios. While it comes with a higher price tag than other options, it provides peace of mind and financial security for various situations. Let’s delve into the details:
What it covers:
- Third-Party Liability: This covers injuries to others and damage to their property caused by you, similar to third-party only insurance.
- Own Vehicle Damage: This covers repairs or replacements to your own car, regardless of who caused the accident.
- Theft: If your car is stolen, you’ll be reimbursed for its value or receive a replacement vehicle.
- Fire Damage: Repairs or replacements for your car damaged by fire are covered.
- Windscreen Damage: Repairs or replacements for your car’s windscreen are covered, often with a separate excess.
- Natural Disasters: Damage caused by storms, floods, or other natural events is covered.
- Vandalism: Damage caused by malicious acts is covered.
- Personal Accident: Provides financial support for medical expenses or loss of income if you are injured in an accident.
- Legal Defense: Covers your legal fees if you face legal action due to an accident.
Optional Add-ons:
- No Claims Discount Protection: Protects your accumulated no-claims discount even if you make a claim.
- Courtesy Car: Provides a temporary replacement vehicle while your car is being repaired.
- Breakdown Cover: Offers roadside assistance and repairs in case of breakdowns.
Who might choose it:
- Drivers with valuable cars.
- Drivers with a history of accidents or high risk of claims.
- Drivers seeking comprehensive protection and peace of mind.
- Drivers who park their car in areas with high theft or vandalism rates.
Advantages:
- Most comprehensive coverage: Protects you against a wide range of potential events.
- Peace of mind: Knowing you’re financially protected in most situations.
- Potentially lower future premiums: A good driving history with no claims can lead to lower premiums in the long run.
Disadvantages:
- Highest cost: Compared to other types of insurance, it’s the most expensive option.
- May not be necessary for everyone: Other options might be sufficient if you have an older car with low value and a low risk tolerance.
Example:
- Your car is stolen from your driveway. Comprehensive insurance will reimburse you for the car’s value or receive a replacement vehicle.
- You’re involved in an accident and your car sustains damage. Your insurance will cover the repairs, regardless of who caused the accident.
What is third party, fire and theft car insurance?
In the UK, third-party, fire & theft car insurance offers a level of coverage between third-party only and fully comprehensive. While it protects others involved in an accident you cause, it also provides additional coverage for your own vehicle in specific situations.
What it covers:
- Third-Party Liability: Similar to third-party only, this covers injuries to others and damage to their property caused by you.
- Own Vehicle Damage: Unlike third-party only, this covers repairs or replacements to your own car in case of fire or theft. It’s important to clarify if the policy covers only fire damage or extends to other fire-related events like lightning strikes.
- Theft: If your car is stolen, you’ll be reimbursed for its value or receive a replacement vehicle, similar to comprehensive insurance.
What it doesn’t cover:
- Own Vehicle Damage in Accidents: Unlike fully comprehensive, this insurance doesn’t cover repairs to your own car if it’s damaged in an accident (regardless of who’s at fault).
- Other events: It doesn’t cover damage caused by vandalism, natural disasters, windscreen chips, or personal injuries.
Who might choose it:
- Drivers with slightly older cars where comprehensive insurance might be deemed unnecessary.
- Drivers in areas with relatively low theft rates who want some security against fire damage.
- Budget-conscious drivers who want more protection than third-party only but can’t afford full coverage.
- Young drivers with older cars where comprehensive insurance premiums might be high.
Advantages:
- More affordable than fully comprehensive: Offers additional protection compared to third-party only at a lower cost.
- Peace of mind against fire and theft: Provides financial security in case of these specific events.
- It might offer adequate protection for low-risk drivers: For those with good driving records and low accident risks.
Disadvantages:
- Limited coverage compared to comprehensive: Doesn’t cover your own vehicle in most accident scenarios.
- May not be suitable for everyone: Drivers with valuable cars, high accident risks, or seeking broader protection might require more coverage.
Example:
- Your car catches fire in a parking lot. Third-party, fire & theft insurance will cover the repair or replacement costs.
- You park your car overnight, and it’s stolen. The insurance will reimburse you for its value or offer a replacement vehicle.
- However, if you’re involved in an accident and your car sustains damage, you’ll be responsible for the repairs yourself.
What are the other types of car insurance?
While the main types of car insurance in the UK are Third-Party Only, Third-Party, Fire & Theft, and Fully Comprehensive, there are additional options and add-ons that provide specific forms of coverage:
- Motorbike Insurance
- Classic Car Insurance
- Learner Driver Insurance
- Taxi Insurance
- Motorhome Insurance
- Black Box Insurance
What is Classic Car Insurance UK?
Classic car insurance in the UK is specifically designed for vehicles considered “classics” or “vintage,” typically exceeding 25 or 30 years old. Compared to standard car insurance, it offers several key differences:
- Agreed Value Coverage:Unlike standard insurance based on depreciation, classic car insurance values your vehicle at a pre-agreed amount upon policy initiation. This ensures fair compensation in case of total loss or major damage, regardless of fluctuating market values.
- Limited Mileage:Classic car insurance often sets annual mileage limits to reflect these vehicles being used less frequently for leisure or events rather than daily commutes. This keeps premiums lower compared to high-mileage insurance.
- Specialized Repair Options:Classic car insurance often provides access to specialized repair networks with expertise in restoring and repairing classic vehicles using authentic parts and techniques.
- Additional Coverages:Some insurers offer unique add-ons like cover for attending shows and rallies, breakdown assistance specific to classic car needs, and spare parts cover.
Who might choose classic car insurance?
- Owners of classic or vintage cars with significant value.
- Drivers who use their classic car infrequently for shows, events, or leisure drives.
- Individuals seeking agreed value coverage and access to specialized repair networks.
What is Learner Driver Insurance UK?
Learner Driver Insurance, also known as Provisional Insurance, is a specific type of car insurance in the UK designed for those who are learning to drive and still need to pass their full driving test. It provides financial protection in case of an accident while you’re practicing:
What it covers:
- Third-Party Liability: This is the minimum legal requirement and covers injuries and property damage you cause to others while driving with a qualified instructor or supervisor.
- Own Vehicle Damage (Optional): You can add cover for damage to your car in case of an accident, similar to third-party, fire & theft or fully comprehensive car insurance.
Who needs it:
- Anyone learning to drive with a provisional license in the UK.
- You can only drive legally on the road with insurance, even with a qualified instructor.
Types of Learner Driver Insurance:
- Learner-only insurance: Covers you while practicing with a qualified instructor or supervisor in their car.
- Named driver insurance: Adds you as a named driver to someone else’s insurance policy (e.g., parent, spouse).
- Own car insurance: Insures your own car for learner driving practices with a qualified supervisor.
What is Taxi Insurance UK?
In the UK, Taxi Insurance is a specialized vehicle insurance designed specifically for taxis and private hire vehicles (PHVs). Unlike standard car insurance, it caters to the unique risks and operational demands of these professional driving roles.
What it covers:
- Third-Party Liability: Covers injuries and property damage you cause to others while driving your taxi or PHV. This is the minimum legal requirement.
- Own Vehicle Damage: Covers repairs or replacements to your taxi or PHV in case of accidents, regardless of who’s at fault.
- Passengers: Covers injuries to your passengers arising from an accident.
- Loss of Earnings: Provides financial support if your taxi or PHV is damaged and can’t be used for business, leading to income loss.
- Goods in Transit: Covers damage to any goods you transport, such as luggage or parcels.
- Malicious Damage: Covers vandalism or deliberate damage to your taxi or PHV.
- Legal Defense: Covers your legal fees if you face legal action arising from an accident.
Optional Add-ons:
- Personal Accident Cover: Provides financial support for medical expenses or loss of income if you are injured in an accident.
- Breakdown Cover: Offers roadside assistance and repairs in case of breakdowns.
- Contents Cover: Provides additional protection for valuable equipment or accessories in your taxi or PHV.
Who might choose Taxi Insurance:
- Licensed taxi drivers and private hire vehicle operators.
- Individuals using their own car for taxi or PHV services.
- Fleet owners managing multiple taxi or PHV vehicles.
Advantages of Taxi Insurance:
- Comprehensive coverage: Designed to address the specific risks associated with taxi and PHV operations.
- Peace of mind: Protects you financially against various potential situations.
- Legal compliance: Fulfills the legal requirement for taxi and PHV insurance.
What is Motorhome Insurance UK?
In the UK, Motorhome Insurance is specifically designed to cover your motorhome (also known as a campervan or RV) for various situations, offering peace of mind on your travels.
What it covers:
- Third-Party Liability: This is the minimum legal requirement, covering injuries and property damage you cause to others while driving or parked.
- Own Vehicle Damage: Protects your motorhome in case of accidents (regardless of fault), theft, fire, vandalism, and other covered events.
- Contents Cover: Protects your personal belongings inside the motorhome in case of theft, damage, or fire.
- Awning and Accessories: Covers damage to your awning, satellite dish, or other attached accessories.
- Personal Accident: Provides financial support for medical expenses or loss of income if you are injured while using your motorhome.
- European Cover: Allows you to use your motorhome in other European countries (optional add-on).
Who might choose Motorhome Insurance:
- Anyone who owns or rents a motorhome in the UK.
- Individuals planning trips in the UK or Europe with their motorhome.
- Motorhome owners who store their vehicle for extended periods and need protection
What is Black Box Insurance UK?
Black box insurance, also known as telematics insurance, uses technology to track your driving habits and adjust your insurance premium based on how safely you drive. :
How it works:
- A small device (the “black box”) is installed in your car, usually discreetly hidden.
- It collects data like your speed, acceleration, braking, mileage, and time of driving.
- Some boxes may even use GPS to track location and identify harsh cornering or risky maneuvers.
- Your driving data is analyzed, and a safe driving score is calculated.
- Based on your score, your insurance premium can go up or down, rewarding good driving with discounts and potentially penalizing risky behavior with higher costs.
Who might choose it:
- Young drivers looking to lower their high insurance premiums by proving they drive safely.
- Drivers with variable usage, where mileage-based discounts can benefit those who drive less.
- People who want personalized feedback on their driving habits to improve their skills.
Advantages:
- Potential for lower premiums: Safe drivers can see significant discounts.
- Promotes safer driving: Real-time feedback and potential cost consequences can incentivize safer habits.
- Usage-based discounts: Can be beneficial for low-mileage drivers.
Which Car Insurance is Right for You?
Choosing the right car insurance can be overwhelming with so many options available. Here are some key steps to help you figure out which one is best for you:
- Assess your needs and budget:
- Consider your car’s value: Older cars might not need comprehensive coverage.
- Think about your driving habits: Frequent drivers might benefit from mileage-based options.
- Analyze your risk tolerance: Are you comfortable with higher deductibles for lower premiums?
- Set a realistic budget: Don’t overspend on insurance you can’t afford.
- Understand the different types of coverage:
- Third-party only: Covers others’ injuries and property damage, not your own vehicle.
- Third-party, fire & theft: Adds fire and theft protection to third-party only.
- Fully comprehensive: Covers all possible scenarios, including your own vehicle damage.
- Black box: Rewards safe driving with lower premiums through telematics data.
- Research and compare quotes:
- Seek quotes from different insurers: Don’t just stick with your current provider.
- Compare the level of coverage offered in each quote.
- Pay attention to excess amounts and exclusions.
- Consider add-ons like breakdown cover or windscreen protection.
- Consult with an insurance broker:
- They can provide personalized advice based on your specific needs and situation.
- They can help you navigate different policy options and compare quotes.
- They can answer any questions you have about coverage and exclusions.
Additional tips:
- Check your driving history: Clean records often qualify for discounts.
- Consider loyalty discounts: Many insurers reward long-term customers.
- Ask about multi-car discounts: If you insure multiple vehicles with the same provider.
- Read reviews and customer feedback: Look for reputable and reliable insurers.
How can I get cheaper car insurance?
Here are some strategies to help you get cheaper car insurance:
Shop around and compare quotes:
- Don’t automatically renew with your current provider. Get quotes from several different insurers, including online comparison sites, independent brokers, and direct insurers.
Maintain a clean driving record:
- Avoiding accidents, tickets, and other violations significantly impacts your premium.
Increase your deductible:
- Choosing a higher deductible lowers your monthly premium, but you’ll pay more out-of-pocket if you need to file a claim.
Drive less:
- Some insurers offer lower premiums for low-mileage drivers. Consider usage-based insurance options if you drive infrequently.
Choose the right level of coverage:
- Young drivers or older cars might not need comprehensive coverage. Assess your needs and budget to find the optimal coverage level.
Bundle your insurance:
- Combining car insurance with other policies like homeowners or renters insurance can often lead to discounts.
Take advantage of discounts:
- Many insurers offer discounts for things like good student grades, completing defensive driving courses, belonging to certain organizations, or installing safety features in your car.
Pay your premiums annually:
- Some insurers offer discounts for paying annually instead of monthly.
Consider black box insurance:
- This option tracks your driving habits and rewards safe driving with lower premiums. However, be mindful of privacy concerns.
Negotiate your premium:
- Don’t be afraid to contact your insurer and negotiate your premium based on your good driving record, loyalty, or other factors.
Avoid making small claims:
- Filing frequent small claims, even if not at fault, can raise your premiums over time. Consider absorbing minor repair costs if feasible.
Park your car safely:
- Parking in a garage or secure location can lower your risk of theft and vandalism, potentially leading to lower premiums.
Review your policy regularly:
- As your needs and circumstances change, ensure your coverage remains relevant and cost-effective. Update your policy accordingly.
What extras can I add to my car insurance policy?
In addition to the standard coverage offered by car insurance policies (third-party, third-party, fire & theft, and fully comprehensive), you can customize your policy and enhance your protection by adding various optional extras. Here are some popular options available in the UK:
Breakdown Cover:
- Provides roadside assistance and repairs in case of breakdowns, punctures, or mechanical failures.
- Offers different levels of coverage, from roadside repairs to vehicle recovery and onward travel assistance.
- Can give you peace of mind, especially if you travel long distances frequently.
Windscreen Cover:
- Covers repairs or replacements for chips, cracks, or other damage to your car’s windscreen.
- Can often be added with a low excess amount, making repairs more affordable.
- Saves you the inconvenience and potential safety hazards of driving with a damaged windscreen.
Personal Accident Cover:
- Provides financial support for medical expenses or loss of income if you are injured in an accident, regardless of who is at fault.
- Useful if you rely on your car for work or have concerns about potential medical costs after an accident.
- Carefully review the level of cover and any exclusions before adding this option.
Courtesy Car:
- Offers a temporary replacement vehicle while your car is being repaired after an accident, theft, or fire.
- Can help you maintain your daily routine and avoid disruption caused by a damaged car.
- Be aware of potential daily limits on mileage and duration of the provided replacement vehicle.
Legal Expenses Cover:
- Provides financial assistance with legal fees if you need to defend yourself in court following an accident.
- Can be helpful if you face legal disputes arising from car accidents, especially if they involve personal injury claims.
- Consider the scope of cover and any limitations of this add-on.
Key Cover:
- Covers the cost of replacing lost or stolen car keys, including call-out charges for locksmith services.
- Can save you a significant amount of money compared to replacing keys without insurance coverage.
- Assess the specific coverages included and any excess amount associated with this option.
Excess Protection:
- Reduces the excess amount you need to pay for each claim under your car insurance policy.
- Can be beneficial if you expect to make claims frequently or want to minimize out-of-pocket expenses.
- Understand the cost of this add-on and weigh it against the potential reduction in your excess amount.
Additional Extras:
- Depending on your insurer and needs, you might find other options like:Contents Cover:Protects personal belongings inside your car in case of theft or damage.
- Motorhome Contents Cover:Specific option for valuables and accessories in your motorhome.
- Audio Equipment Cover:Protects car sound systems and other entertainment equipment.
- European Travel Cover:Extends your insurance coverage when driving your car within Europe.
FAQs
Q: Specialist Car Insurance Policies in the UK
Ans: In the UK, specialist car insurance policies cater to vehicles outside the realm of standard car insurance due to their unique value, usage, or modifications. Here’s a breakdown of some common types:
- Classic Car Insurance:
- For cars exceeding 25-30 years old, often valued based on agreed valuation instead of depreciation.
- Offers limited mileage options reflecting infrequent use for shows, events, or leisure.
- Provides access to specialized repair networks with expertise in classic car restoration.
- Consider providers like: Hagerty, Footman James, Adrian Flux.
- High-Performance Car Insurance:
- Covers high-powered or luxury cars with higher repair costs and theft risks.
- Premiums based on factors like car value, performance specifications, driving history, and modifications.
- Consider providers like Adrian Flux, Chubb, Carole Nash.
- Prestige Car Insurance:
- Similar to high-performance insurance, but focuses on luxury brands like Bentley, Rolls-Royce, and Aston Martin.
- Additional coverages for unique features like extended warranties or roadside assistance.
- Consider providers like Chubb, AXA, AIG.
- Modified Car Insurance:
- Covers cars with non-standard modifications like performance upgrades, bodykits, or suspension changes.
- Requires declaring all modifications to ensure accurate risk assessment and proper coverage.
- Consider providers like Adrian Flux, Performance Direct, Modified Car Insurance Direct.
- American Car Insurance:
- Imports of US-specification cars face challenges with standard UK insurance due to different features and parts availability.
- Specialist providers understand these differences and offer tailored coverage.
- Consider providers like Adrian Flux, Carole Nash, American International Group (AIG).
- Young Driver Insurance:
- High insurance costs for young drivers due to lack of experience and higher accident risks.
- Specialist providers offer options like black box insurance, learner driver cover, and named driver policies.
- Consider providers like Admiral, Direct Line, Young Driver.
- Motorbike Insurance:
- Similar to car insurance, but caters to specific needs of motorbikes, offering options like third-party only, theft & fire, and fully comprehensive.
- Premiums influenced by factors like bike type, engine size, riding experience, and modifications.
- Consider providers like MCE, Carole Nash, Bennetts.
- Van Insurance:
- Covers commercial vans and personal vans used for leisure activities.
- Options tailored to van usage (goods transportation, deliveries, personal use) and load capacity.
- Consider providers like Adrian Flux, Carole Nash, Hiscox.
- Taxi Insurance:
- Designed for licensed taxi drivers and private hire vehicles, covering passengers, loss of earnings, and goods in transit.
- Includes legal defense and malicious damage coverages relevant to taxi operations.
- Consider providers like A-Plan, Admiral, Sabre Insurance.
- Motorhome Insurance:
- Covers motorhomes for accidents, theft, fire, contents damage, and awning/accessory protection.
- Options for personal and commercial use, with potential European travel cover.
- Consider providers like Adrian Flux, Caravan Guard, The Camping and Caravanning Club.
Q: Do I have to use a specific repairer with fully comprehensive car insurance?
Ans: You may find that your cover is affected if you don’t use an approved repairer. For example, some insurers limit the windscreen cover or don’t provide a courtesy car while yours is being fixed if you don’t use the approved repairer.
Q: Is comprehensive cover the most expensive type of car insurance?
Ans: Like all car insurance policies, comprehensive insurance prices are based on many factors including the type of car you drive, your driving experience, no claims bonus, and your history of claims and convictions.
Add to this the fact that the level of cover is so thorough and it’s reasonable to assume that comprehensive car insurance costs more than other types of policy. But that’s often not the case because:
Third party insurance was historically the cheapest type of cover to purchase, but this led to many higher risk drivers taking out third party insurance to keep their costs down.
As these higher risk drivers made a disproportionately high number of claims on their policies, third party premiums increased — meaning comprehensive insurance is often the cheaper option, especially for drivers deemed high risk.
Q: What isn’t included in third party only insurance?
Ans: Here’s what’s typically not included in third-party only insurance:
- Damage to your own vehicle:If you’re involved in an accident, regardless of fault, any damage to your own car won’t be covered. You’ll be responsible for repairs or replacements yourself.
- Theft and fire:If your car is stolen or damaged by fire, you won’t receive any financial compensation under third-party only insurance.
- Personal injury:Medical expenses or loss of income due to injuries you sustain in an accident aren’t covered.
- Windscreen damage:Repairs or replacements for chipped or cracked windscreens typically require additional cover.
- Personal belongings:Any belongings stolen from your car aren’t covered under this type of insurance.
- Legal expenses:If you face legal disputes arising from an accident, you’ll need separate legal cover as it’s not included in third-party only.
- Loss of earnings:If you’re unable to work due to injuries sustained in an accident, there’s no financial support provided by this type of insurance.
- European travel:If you plan to drive your car in Europe, you’ll need additional cover or an extension on your existing policy as more than third-party only might be required.
- Malicious damage:This type of insurance doesn’t cover vandalism or deliberate damage to your car.
- Breakdown assistance:If your car breaks down, third-party only insurance won’t provide roadside assistance or repairs.
