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Types of car insurance explained

It’s illegal to drive without car insurance in the UK, so you need to buy cover before you drive your car on a public road.

There are three main types of car insurance: third party, third party fire and theft, and fully comprehensive, and they offer different levels of cover. Third party is the minimum you need to stay within the law, but comprehensive insurance gives you much more protection. 

This article explains what each type of insurance covers so you can buy the right car insurance policy for your circumstances.

What are the different types of car insurance?

The three types of insurance all offer different levels of protection. Some insurers also offer add-ons to give you extra protection against certain events. When explaining who’s covered by an insurance policy, insurers talk about “parties”. The first party is you, the policyholder; the second party is the insurance company; and the third party is other people/drivers and their vehicles.

You need car insurance unless you officially register your car as off the road with a Statutory Off Road Notification via the Driver and Vehicle Licensing Agency. If you’re caught driving without insurance, you could end up with an unlimited fine.

Third-party car insurance

Third-party insurance, or third party only, is the minimum level of car insurance you need to legally drive on UK roads. If you cause an accident, third-party cover will only pay other people’s costs, not yours.

Historically, third party was the cheapest type of car insurance, but this is no longer the case for most drivers

You might choose third party if:

  • Your car is old and/or not worth much 
  • You have a history of criminal or driving convictions, making other types of car insurance too expensive 

Third-party insurance covers:

  • Damage to someone else’s car
  • Damage to someone else’s property
  • Other people’s injuries caused by you (ie other drivers and your passengers)

Third-party insurance doesn’t cover:

  • Damage to your car or your property
  • Your injuries and medical bills
  • Damage to or destruction of your car by fire or theft

Third party, fire and theft car insurance

Third party, fire and theft insurance covers other people and their vehicles in the event of an accident, but it also covers your car if it’s stolen or damaged or destroyed by fire.

It won’t, however, pay your costs if you’re injured or your car needs repairs after an accident.

Traditionally third party, fire and theft cover was cheaper than fully comprehensive cover, but high levels of claims on this type of policy pushed up the price, so it’s often on a par with fully comprehensive insurance now. 

You might choose third party, fire and theft if:

  • Your car isn’t worth much and you could afford to replace it
  • Spare parts are affordable and/or you could make repairs yourself
  • You have a history of criminal or driving convictions, making comprehensive car insurance too expensive 
  • You only drive your car occasionally

Third party, fire and theft insurance covers:

  • Damage to someone else’s car
  • Damage to someone else’s property
  • Other people’s injuries caused by you (ie other drivers and your passengers)
  • Damage to or destruction of your car by fire
  • Theft of your car

Third party, fire and theft insurance doesn’t cover:

  • Damage to your car or property if you caused the accident
  • Your injuries or medical bills
  • Theft of possessions from your car
  • Fire resulting from a mechanical/electrical issue with your car

Fully comprehensive car insurance

Fully comprehensive car insurance covers everything covered by third party, fire and theft cover but also includes damage to your car if you were at fault and your medical bills if you’re injured. You’ll also be covered against vandalism and damage from natural events, such as storms and floods, as well as fires.

Some comprehensive policies also offer additional cover for personal injuries and cover for your personal possessions if they’re damaged or stolen from your car. 

You might choose fully comprehensive cover if:

  • You want the highest level of insurance
  • You want to be covered for damage to your car and your medical costs 
  • You want the option to include various add-ons to your policy

Comprehensive insurance covers:

  • Damage to someone else’s car
  • Damage to someone else’s property
  • Other people’s injuries that you caused (ie other drivers and your passengers)
  • Damage to or destruction of your car by fire or natural events such as storms and floods
  • Theft of your car
  • Damage to your car
  • Your injuries and medical bills

Comprehensive insurance doesn’t include:

  • Mechanical or electrical breakdown of your car or wear and tear
  • Incidents that occur if you drive another person’s car
  • Incidents that occur if someone else drives your car (drivers need to be named on the policy)
  • Theft caused by negligence or carelessness
  • Incidents that occur if you drive under the influence of alcohol or drugs
  • Incidents that occur when driving if you’ve been disqualified
  • Damage to windscreens or tyres
  • Damage caused if you fill up your car with the wrong fuel
  • Cars without a valid MOT
  • Your possessions in your car (unless included as an extra)

Other types of car insurance

Temporary car insurance covers you to legally drive a car from an hour up to several months. You might buy temporary car insurance if you’re borrowing someone else’s car, driving a vehicle in an emergency or test-driving a new car. Temporary car insurance usually offers fully comprehensive cover.

Telematics insurance involves fitting a small tracking device to your car to monitor your driving habits. This “black box” is designed to monitor how you drive on a day-to-day basis. The safer your drive, the lower your insurance premiums could be when it comes time to renew.

Classic car insurance, or heritage car insurance, is designed to cover older classic or vintage cars that are driven less frequently and were usually registered more than 40 years ago. 

Learner driver insurance is a type of temporary cover for drivers learning to drive in their own car or that of a friend or family member (driving instructors have their own insurance). You can choose from third party, third party, fire and theft, and fully comprehensive learner driver insurance.

What car insurance extras should I consider?

When you buy car insurance, you’ll have the option to add on various other types of cover for an extra charge, including the following:

  • Breakdown cover is typically provided by the Automobile Association or RAC and provides you with assistance if your car breaks down on the road or at your home
  • Courtesy cars are provided by your insurer to drive if your car is being repaired following an accident
  • Electric car insurance covers things such as portable charging cables and damage to an electric car’s battery
  • Legal expenses cover offers financial protection against legal fees if you’re involved in an accident that’s not your fault. This may include personal injury, excess recovery and loss of earnings
  • Misfuelling cover includes the cost of draining and cleaning your tank or the cost of repairs if you accidentally put diesel in a petrol car or vice versa
  • No claims bonus protection covers your no claims bonus/discount so you don’t lose your entire discount in the event of one or two minor claims
  • Personal accident cover provides you or your family with financial support up to a certain level if you’re injured or die in an accident 
  • Personal belongings cover provides coverage for lost, stolen or damaged personal belongings left in the car
  • Windscreen cover protects you against damage to your car’s windscreen, including the repair of chips and cracks and full replacements

What’s the cheapest type of car insurance?

It might seem logical that third-party and third party, fire and theft cover are cheaper than comprehensive insurance, as these types of insurance offer less cover. While this was previously true, it’s no longer the case for most drivers. This is because in the past, high-risk drivers (such as young drivers and those with driving convictions) would choose third-party or third party, fire and theft cover to reduce their insurance costs. This resulted in insurers dealing with more claims from high-risk drivers with third-party policies, so these policies are now associated with a higher crash risk and are typically more expensive.

The cheapest car insurance policy and insurer will depend on your personal circumstances. The most affordable insurer for one driver might not be the cheapest for another, so it’s important to shop around and compare premiums and the things that different policies cover.

Types of car insurance FAQs

Car insurance premiums are based on how likely your insurer thinks you are to make a claim and how expensive any claim could be. 

Insurance companies calculate a customer’s premium by looking at various factors, such as:

  • Your car’s make, model and value 
  • The excess on your policy
  • The number of miles you drive per year
  • Your claims history and any driving convictions
  • Where you live and park your car during the day/night
  • Your age, occupation and marital status

You can add most optional extras, including breakdown cover, a courtesy car and personal belongings, to any type of car insurance, although exactly what you can add will vary. Some fully comprehensive policies cover some optional extras as standard, so take this into account when you’re comparing policies.

emma lunn

Emma Lunn

Money Writer

Emma Lunn is a multi-award winning journalist who specialises in personal finance and consumer issues. 

With more than 18 years’ experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. 

Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday, and the Mirror. 

As a freelancer she has also completed various in-house contracts at The Guardian, The Independent, Mortgage Solutions, Orange, and Moneywise. She also writes regularly for specialist magazines and websites such as Property Hub, Mortgage Strategy and 

She has a real passion for helping people learn about money – especially when many people are struggling to get by in today’s challenging economic climate – and prides herself on simplifying complex subjects.

Molly Dyson


After growing up with a passion for writing, Molly studied journalism and creative writing at university in her home country of the United States.

She has written for a variety of print and online publications, from small town newspapers to international magazines. Most of her 10-year career since relocating to the UK has been spent in business journalism, writing and editing for admin professionals at PA Life magazine and business travel managers at Business Travel News Europe and representing those titles at conferences around the world.

Now an Editor at the Independent Advisor, Molly is an expert in a broad range of consumer topics, that include solar panels and renewables, home improvements and home insurance, and consumer technology such as home security and VPNs.

In her free time, Molly can usually be found exploring the outdoors with her husband and their young son or gardening.