Choosing the right car insurance policy is often overwhelming. We all want the best blend of protection and affordability. After all, if you drive a car you must be insured to drive it – it’s a basic legal need.
But the level of cover you choose can impact how much protection you get. So how do you choose? Here’s what you need to know.
What are the different levels of car insurance?
There are 3 main car insurance types, with each policy type offering slightly more protection than the previous one:
Third-party only (TPO) is the legal minimum for driving in the UK. It’s the most basic protection possible.
Your third-party insurance policy should cover:
Repair costs to other cars if you're involved in a car accident
Any injury costs should you injure the driver and passengers another car
Any property damage caused by your driving
But third-party cover doesn't usually cover:
If you or your passengers sustain accident injuries.
Any accident costs to your vehicle. This means if you have an accident and your car’s badly damaged, you might be paying for all the repairs.
If your car is stolen.
If you’re involved in an accident that isn’t your fault, the other driver’s insurance should pay any compensation owed to you. But your insurance company might not show much interest in supporting you with this claim.
Third-party, fire and theft
With third-party, fire and theft (TPFT) cover, you get all the benefits of third-party cover. So, you’re covered if you run into another vehicle, or damage their property.
Also, you’ve got protection if there’s any injury to the other driver and passengers.
But third-party, fire and theft protection also adds:
Fire damage protection to your car, including damage from attempted arson
The replacement cost of your car if you’re a victim of car theft
The cost of any damage to it if someone attempts to steal it
While these extra protections are added, TPFT still might not give you:
Cover for any damage to your car
So, while there’s some extra cover, the gap between TPFT and fully comprehensive cover is still pretty big. There’s also still no protection for you if an accident is your own fault.
Comprehensive car insurance offers you the broadest range of protection for a wide range of driving risks.
Comprehensive insurance gives you the benefits of third-party, fire and theft, plus:
Cover for repair costs on your own car after an accident, even if it’s your fault
The cost of treating any accident-related injuries for you and any passengers
Damage protection to your car, even if you don’t know whose fault it is
The option to drive someone else's car, sometimes – though this cover is normally limited to third-party cover only
What are the types of car insurance?
As well as the 3 main basic levels of car insurance, there are several specialist policy types that are designed to suit certain kinds of drivers.
These represent particular risks that might lean towards a certain set of car insurance companies:
- Learner driver insurance
- Black box insurance
- Temporary car insurance
- Classic car insurance
Learner driver insurance
Learner driver car insurance covers you while you're practising before passing your driving test. You still need a qualified driver with you when you’re on the road though.
If you’re learning in someone else’s car, using a temporary learner driver policy is less likely to impact the owner's no-claims bonus.
Learner driver insurance isn’t the only way to support your driving confidence pre-test. You might want to consider asking someone to add you onto their own policy as a named driver.
But bear in mind, if you bump the car as a named driver, the policyholder's no-claims bonus might be affected. So, perhaps shop around for both options, if they’re available to you.
Telematics and black box insurance
This black box sends information to your insurer who measures how safe your driving is. Your car insurance costs are then more of a reflection of how you drive.
Car insurance costs tend to be quite high for young drivers. Black box car insurance tries to help with this cost barrier.
If you’re a young driver and you build up a safe, responsible driving profile then black box cover could save you cash.
A few things to keep in mind:
- A telematics device could help you track down your car if it’s stolen
- They’re a good way to start building up your no-claims bonus
- Be careful if you’ve got a second driver on your policy. A telematics device doesn’t know who’s driving. So, if you have a friend with bad habits, you might end up paying for them.
Temporary car insurance
Temporary car insurance is a short-term car insurance policy that can last from 1 hour to a month.
Another benefit of temporary car insurance is that there’s no contract. Once the cover has ended, you’re done. If you need more time, you buy another policy.
Temporary cover could let a friend borrow your car or allow someone to help you share the driving on a longer trip. Some garages also use it for test drives.
If you’re under 25 you might face some exclusions when trying to find a quote online.
Classic car insurance
Classic car insurance is specialist protection for a classic car.
If you’re lucky enough to own one you probably drive it less than your day-to-day vehicle. You might also belong to an owners' club, which could help keep your costs in check.
There might be age limits on the car for it to be considered a ‘classic’ – usually, any car older than 15 years falls under the classic umbrella.
If your classic car is written off, it’s not so easy to get a valuation. That means an insurer might ask you for an agreed valuation when you buy your policy. This could increase your insurance costs.
If your car is no longer on the road, consider laid-up cover. You should still be covered for fire and theft. But if you're not driving your classic car at all, you might want give it a statutory off-road notification (SORN).
Excess on car insurance
You have to pay the first part of any insurance claim - this is called the ‘excess’. So if the insurer imposes a compulsory excess on your policy of £200 and then agrees to settle a claim for £2,000, you get £1,800.
Sometimes an insurer might waive your excess if it can claim the amount from the other party. This is so long as the accident was the other driver’s fault. But not all insurers automatically do that.
The higher the excess on your policy, the cheaper your insurance costs usually are. You can sometimes bring your costs down further by increasing your voluntary excess, too.
Your policy might come with a compulsory excess of £200. But if you add a voluntary excess of £200, it means that you get £1,600 from a £2,000 claim – you’ve effectively paid the first £400 yourself.
Before signing up for voluntary excess, find out from your insurer how much it could reduce your insurance costs.
How much are different car insurance policy types?
According to our data, these are the average car insurance costs for each level of cover*:
|Type of car insurance policy||Average cost*|
Third-party, fire and theft
But how do these amounts compare to the cost of a claim? Our data shows that the average claim amount for an accident is £3,851*. For theft, the average claim amount is £12,937* A comprehensive policy covers both of these claim types for a fraction of the cost.
A comprehensive policy is often cheaper than third-party insurance because it shows the driver is willing to take less risk. But it’s important to remember that several factors impact how much you pay for your policy. So it's still worth comparing quotes for comprehensive and third-party to see what's best for you.
*Confused.com data. July 2022-June 2023.
What factors affect the cost of different types of car insurance policies?
As well as the type of policy you choose, there are several factors that can affect the cost of different types of car insurance. These include:
Your age and occupation
Where you live
Your driving history
The make and model of your car
Your annual mileage
Your car's value
How you use your car
According to our car insurance price index, younger drivers are paying higher insurance costs. Drivers aged 18 are currently paying an average of £2,995, on average - 89% more than the previous year**.
The data also shows that drivers in Outer London have seen a 60% annual increase in the cost of their car insurance. They're paying £1,187 for their policies. And outside of London, drivers in Manchester and Merseyside are seeing some of the biggest increases. They're now paying £417 (57%) more for their car insurance, with an average policy cost of £1,154.**
Are there any extras that I can add to my car insurance policy?
While comprehensive policies cover most eventualities, there are some exclusions. So you might want to consider adding extras to your policy. These usually come at an extra cost
- Breakdown cover. This provides roadside assistance if your car breaks down. Some enhanced policies cover you in Europe or allow for home-starts.
- Courtesy car cover. If your car needs repairs or is written off, some insurers might offer you a basic vehicle to keep you mobile.
- Windscreen cover. This covers you for repairs and replacement of your windscreen. This often comes with its own excess.
- Legal expenses cover. This add-on offers extra peace of mind, covering personal injury to loss of earnings, plus protection from court fees. But this might only cover you if there’s a reasonably strong chance of winning your case.
The specifics of what you could be covered for vary between insurance companies, as does the price. So, it’s even more important to compare comprehensive policies. The cheapest might not always be the best.
A basic, cheaper policy could end up costing more stress, time and money in the long run.
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*Confused.com data, average insurance premiums based on customer quotes from January 2023.
**Confused.com car insurance price index, Q3 2023