What car insurance policy and level of cover do I need to stay legal?
A car insurance premium is designed to cover you and your vehicle, should you need to pay expensive claims that you may struggle to manage yourself. An active insurance policy is also legally required to drive on the road.
As a UK motorist, having valid car insurance is compulsory unless your vehicle is kept off the road (meaning that you’re not using it) and registered as SORN with DVLA.
The type of car insurance cover will depend on your personal circumstances, such as:
- Your budget
- Type of vehicle you own (make and model)
- Motoring convictions (which lend to higher premiums)
- You have recently passed your driving test.
This quick guide will look at the different types of car insurance policies and what you’ll need to drive on the road.
- Different car insurance types cater to various needs and budgets
- Understanding the differences between insurance types helps you buy the right cover for your own car
- Selecting the right policy is crucial for your financial protection and peace of mind
Examining Various Car Insurance Policies
There are three primary car insurance options to consider:
- Third-party cover
- Third-party fire and theft cover
- Fully comprehensive cover
How Car Insurance Works
Third-party cover – The minimum legal requirement for all drivers, third-party insurance covers damages to another person’s car or injuries sustained by others in an accident.
However, car insurance companies do not cover your injuries or damages to your car.
Third-party fire and theft – Offering the same coverage as a standard third-party policy, this option also includes protection against theft or fire damage to your car.
Fully comprehensive – Often called “fully comp,” this option provides the highest level of coverage for your peace of mind.
Each insurance policy factors in:
- Compulsory excess – your insurer sets this figure within your quote. It’s a non-negotiable fee that you must pay towards any insurance claims you make. Factors contributing to Compulsory Excess include your age (tends to be more for young drivers), the type of car you own, any no-claims bonuses
- Voluntary excess – a fee you agree to pay for any motor insurance claim.
Voluntary Excess is paid on top of Compulsory Excess.
More detail on the types of car insurance.
Third-Party Insurance Policies
Third-party insurance is the basic legally required level of car insurance. Surprisingly, it’s only sometimes the cheapest option since it is associated with risk, such as young drivers and those with convictions.
These factors increase insurance premiums.
Typically, third-party insurance covers:
- Damage to another person’s car or property
- Injuries caused to others by you
- Injuries sustained by your passengers during an accident
However, third-party insurance does NOT cover:
- Your vehicle
Be cautious about the limitations of this insurance type.
For instance, if your car is stolen or incurs damage in a road accident, fire or flood, you will have to bear the expenses to replace or repair it.
Your insurance company policy will not cover medical expenses if you sustain injuries in an accident unless offered as an add-on.
Third-Party Fire and Theft Insurance Policies
Third-party fire and theft insurance protects the basic coverage of third-party car insurance by covering damages caused by fire and theft incidents.
This type of insurance is particularly beneficial if you seek more than just minimal coverage or reside in a high-crime area.
Note that some insurance policies may not cover damages resulting from attempted theft; thus, reviewing your policy carefully is essential.
Third-party fire theft insurance typically covers the following:
- Damage to other people’s vehicles or property
- Injuries caused to others by you
- Injuries sustained by passengers in an accident
- Fire damage*
- Theft (and potentially damages from attempted theft)*
*After you pay your excess
However, this insurance will not cover:
- Your injuries
- Your vehicle (apart from fire damage and theft)
Note: Remember that accidental damage is not covered under these types of insurance write-off categories.
Fully Comprehensive Cover
A fully comprehensive car insurance policy offers you the highest level of protection. It’s sought after and recommended to any driver if affordable.
If you have a new or high-value vehicle, this policy type might suit you. Typically, fully comprehensive insurance covers:
- Damage to other people’s cars or property
- Injuries caused to others by you
- Injuries to your passengers in an accident
- Fire damage*
- Theft (and potential damage from attempted theft)*
- Malicious damage and vandalism*
- Accidental damage to your car*.
*These coverages are applicable after you pay your excess.
Remember, having comprehensive car insurance doesn’t guarantee that everything will be covered.
The policy may or may not include additional features such as
- Courtesy car
- Windscreen cover
- Coverage for personal belongings like your handbag or laptop.
However, you can usually add these options as extras.
Your policy may not cover personal injury if the accident is your fault, so always review the terms and conditions when acquiring a quote.
If your policy does not cover some situations as standard, you can generally pay an additional fee to include them as extras.
Make sure to assess the coverage to ensure it meets your needs carefully.
Extras such as personal injury and protected no-claims bonus cover are recommended if affordable.
Temporary Car Insurance
A Short-term cheaper policy with temporary car insurance coverage.
When you need car insurance for a short period, temporary car insurance is the ideal solution.
You might use a cover like this when borrowing a friend’s car (day car insurance) or teaching someone to drive in their vehicle.
For a keen quote, check out Go Shorty.
Temporary car insurance offers you flexibility and convenience, as you only pay for the coverage you require, and it typically involves a straightforward application process.
Some of the benefits of this insurance include:
- Quick and easy setup: You can usually obtain a temporary car insurance policy online within minutes.
- Comprehensive coverage: This insurance generally includes fully comprehensive coverage, protecting you against accidents, theft, or damage to the vehicle.
- Customisable duration: With temporary car insurance, you can choose the period that suits your needs, whether a day or several weeks.
Before purchasing temporary car insurance, you must compare different options to find the best policy for your needs.
Remember that certain restrictions, such as age limits, driving history (convictions), or the type of vehicle insured, may apply.
In summary, temporary car insurance offers a practical and cost-effective solution for situations where you need to stay within the law with short-term car coverage.
Young Drivers Insurance
New or learner drivers pay the most of their road insurance. There are some simple steps to help reduce premiums. These include:
- Telematics (also known as black box insurance)
- Increasing voluntary excess
- Taking an advanced driving course
- Having an experienced named driver included on the policy
Read our detailed guide on young driver insurance and how to save the most money.
Car Insurance Groups
Groups for car insurance range from 1 to 50, with 1 being the lowest (cheapest) and 50 being the highest.
Understanding insurance groups before buying a car will save you money. Check our guide that includes popular makes and models of cars and their insurance categorisations.
You can check the group of any car using our free car check reports.
Additional Car Insurance Features for Your Policy
When enhancing your car insurance policy, consider the following options:
- Roadside Assistance: Add this service to your policy to avoid getting stranded due to vehicle breakdowns. It’s helpful if you run a higher annual mileage than average.
- Personal Injury Protection: This can offer compensation for severe injury or death from a car accident and is often part of comprehensive policies.
- Legal Expense Cover: This option helps with legal costs if you need to pursue or defend against claims resulting from an accident.
- Courtesy Vehicle Provision: Should you experience an accident, this feature ensures you receive a temporary car while yours is being repaired.
- No Claims Discount Safeguard: Secure your accumulated no-claims discount by adding this protection to your policy, potentially saving you money on premiums.
- Windscreen Protection: Though occasionally integrated into comprehensive policies, double-check to confirm it’s included. This safeguard covers costly indscreen replacement expenses in case of damage.
- Misplaced Key Protection: This covers the cost of replacing lost or stolen car keys, particularly vital as electronic keys become increasingly prevalent and are expensive to replace.
Review the specific terms and ensure they suit your needs before adding these features to your policy.
Which Car Insurance Option Provides the Lowest Price?
For the cheapest and best car insurance policies, go to Confused.com and get no-obligation quotes from over 200 well-known UK insurers.
When choosing car insurance, remember that your circumstances determine your best option.
Surprisingly, comprehensive car insurance, often considered the most expensive option, actually costs less on average than other options.
Comparing average premiums, we found that:
- Comprehensive car insurance: £743
- Third-party, fire, and theft policy: £1,158
- Third-party (minimum level of cover): £1,668
These findings are based on 51% of Compare the Market customers being quoted lower amounts for each policy type in June 2023.
To ensure you choose the most cost-effective insurance, don’t make assumptions or blindly follow recommendations from friends or colleagues.
Take time to research and compare different insurance providers and policies. Consider your age, car type, and occupation for the best possible deal.
Always remember to weigh the benefits and drawbacks of each policy against its cost.
The best way to compare road insurance quotes is to use a comparison website like Confused.com.
Check insurance groups and car history
Enter a registration number
(Such as DW19 ESO)