What are the different types of car insurance?

12 min Read Published: 25 Feb 2021

What are the different types of car insurance?Online comparison sites have made the process of comparing car insurance easier than ever, however, you'll still need to do a bit of research before you can get started. There will be lots of questions you'll need to answer before you are presented with your online car insurance quote and the most important question of all is the type of car insurance you need. So, in this article we take a look at the different types of car insurance you can buy, explaining which one may be best for you and why.

What type of car insurance do I need?

You'll need to ask yourself a number of questions to establish the best type of car insurance for you. An important factor for a lot of people is cost and so you need to understand how much you can realistically afford as this may dictate the type of car insurance you end up buying. What is the age of your car, how valuable is it and how expensive would it be to replace it? Where do you park your car and what type of area do you live in? The most basic types of car insurance will only pay out for damage to other people's vehicle's and property whereas the most comprehensive types of car insurance will pay out for damage to your own vehicle, including accidental damage and vandalism.

The three main types of car insurance are:

  • third party
  • third party fire and theft
  • fully comprehensive

We explain each of these three types of car insurance in more detail below.

What is third party car insurance?

Third party car insurance is the minimum level of car insurance required to legally drive on UK roads. Third party car insurance is the most basic type of car insurance and as a result, is the cheapest type of car insurance you can buy. Third party car insurance will only insure you against damage to other people's vehicle's or property meaning you will not be compensated if your vehicle is damaged. Third party car insurance will also cover you for compensation claims that are made against you for any injuries that may have occurred, including injuries to passengers in your own car. It is worth noting that if you are involved in an accident that you can prove is the fault of the other driver you could make a claim against their insurance even if you only have third party insurance on your car.

Third party car insurance provides cover for:

tick Damage to other people's car or property

tick Compensation claims for injuries caused by you (including injuries to your own passengers)

Third party car insurance will not provide cover for:

cross Damage to your own car or property

cross Theft of your car

cross Fire damage

cross Personal injury compensation

cross Criminal damage/vandalism

cross Windscreen repair/replacement

What is third party fire and theft car insurance?

Third party fire and theft car insurance provides the same level of cover as third party car insurance but your vehicle will also be insured against fire and theft. This type of insurance won't pay towards the cost of repairing or replacing your vehicle if it is involved in an accident and you won't be able to claim compensation for any injuries.

Third party fire and theft car insurance provides cover for:

tick Damage to other people's car or property

tick Compensation claims for injuries caused by you (including injuries to your own passengers)

tick Fire damage to your car (whether accidental or as a result of arson)

tick Replacement of your vehicle if it is stolen

Some policies may also pay towards the cost of repairing a vehicle if it receives damage as a result of attempted theft, such as a broken window or damaged electrics.

Third party fire and theft car insurance will not provide cover for:

cross Damage to your own car or property

cross Personal injury compensation

cross Criminal damage/vandalism

cross Windscreen repair/replacement

What is fully comprehensive car insurance?

Fully comprehensive car insurance is the highest level of cover you can buy and it is typically the most expensive. It provides cover for damage to your own vehicle and most policies allow you to claim if your vehicle has been vandalised. You'll also be able to claim compensation for personal injury if you have fully comprehensive car insurance and some policies even include windscreen cover, meaning you can get your windscreen repaired or replaced if it is damaged.

Fully comprehensive car insurance typically provides cover for:

tick Damage to other people's car or property

tick Compensation claims for injuries caused by you (including injuries to your own passengers)

tick Fire damage to your car (whether accidental or as a result of arson)

tick Replacement of your vehicle if it is stolen

tick Damage to your own car or property

tick Personal injury compensation

tick Criminal damage/vandalism

Some fully comprehensive car insurance policies also include: 

tick Windscreen repair/replacement

tick Courtesy car

tick Replacement of belongings

Fully comprehensive car insurance policies vary from insurer to insurer. Some car insurance providers include the above features in their standard fully comprehensive policy, however, some providers may charge extra. Always check the quote to understand exactly what is included with the policy.

We've summarised the three main types of car insurance in a simple comparison table below.

Car insurance types - Comparison table

Third party Third party fire and theft Fully comprehensive
Damage to other people's car or property tick tick tick
Compensation claims for injuries caused by you (including injuries to your own passengers) tick tick tick
Fire damage to your car (whether accidental or as a result of arson) cross tick tick
Replacement of your vehicle if it is stolen cross tick tick
Damage to your own car or property cross cross tick
Personal injury compensation cross cross tick
Criminal damage/vandalism cross cross tick

Other types of car insurance

The three types of car insurance we have described in this article explain the different levels of cover available, but there are a few other types of car insurance that you can buy and we explain each of these below.

Temporary car insurance

Temporary car insurance is a comprehensive car insurance policy that covers you for a limited period, usually up to a maximum of 28 days. This type of car insurance would be suitable if you needed to use someone else's car for a short period of time.

Multicar insurance

Multicar insurance is where policyholders can insure multiple vehicles on the same policy and get rewarded with a discount. The vehicles usually need to be registered at the same address.

Test drive insurance

Test drive insurance ensures that you are covered when test driving a new vehicle.

Gap insurance

Guaranteed Asset Protection (GAP) insurance is an insurance policy that bridges the gap between the amount you paid for your car and the amount an insurance company would pay you if your car is written off or stolen. This type of insurance policy is often sold as part of a package when you purchase a brand new car.

Classic car insurance

Classic car insurance policies are specialist policies that are tailored to the needs of vintage, antique and classic car owners.

Other things to consider when buying car insurance

Deciding on the type of cover is just the first part of the process when buying car insurance. There are other things to consider which we have summarised below.

Excess (Voluntary or Compulsory)

'Excess' is the amount you need to pay in the event of a claim. There are two types of excess and we explain each of these below.

  • Compulsory excess - This is set by the insurance company and will be based on a number of factors including your age, driving experience and the type of car you drive.
  • Voluntary excess - This is an amount that you choose to pay towards a claim. If you consider yourself to be a safe driver then you may want to increase your voluntary excess in order to bring down your monthly premiums.

No claims bonus

A no claims bonus - sometimes referred to as a no claims discount - is a discount that is applied to your car insurance quote to reward you for being a safer driver. For each year that you do not make a claim, your discount will increase, usually up to a maximum of around nine years. When obtaining a quote for car insurance, you may be asked whether you want to protect your no claims bonus. This is effectively an extra insurance policy that ensures you keep your no claims discount even if you end up needing to claim on the policy.

Courtesy car

If you are involved in an accident then a courtesy car ensures you have access to a vehicle while yours is being repaired or replaced. Some fully comprehensive car insurance policies automatically include a courtesy car, however, some car insurance providers require you to select it as an optional extra and so may charge more.

Adding an additional driver to your car insurance policy

You have the option of adding other people to your car insurance policy. You'll need to confirm whether they are the 'named' driver or an 'additional' driver. The named driver should be the person who uses the car most often.