There are three main types of car insurance offered in the UK - fully comprehensive; third party, fire and theft (TPFT); and third party.
Third party insurance is the minimum level of cover you need to drive legally in this country and offers the lowest level of protection.
What does third party insurance cover?
As its name suggests, third party insurance offers protection for damage and injury to other people and property but not you or your vehicle.
That means if you cause a crash with another vehicle, for example, your insurance would pay out for damage to that vehicle and for injuries to any driver or passengers in that vehicle. It would also cover injury to any passengers in your vehicle.
However, it would not pay for any repairs to or replacement of your own vehicle, leaving you facing a potentially expensive bill.
It also would not help cover any of your own medical costs, so if you caused an accident which left you needing long-term treatment or care you would have to cover any costs out of your own pocket.
Third party insurance also doesn’t cover you for any other loss or damage to your vehicle. So if your car is stolen, vandalised or damaged by fire, you will be left to foot the bill for repair or replacement.
Third party insurance costs
While you might think the lowest level of cover would also be the cheapest, that’s not always the case.
Historically, third party insurance was cheaper than fully comp or third party, fire and theft. However, this made it more attractive to young and newly qualified drivers, who generally face higher premiums. That was bad news for insurers as these drivers are more likely to be involved in a crash and so pose a higher risk to insurers.
In response, insurers have increased the cost of third party cover to offset this risk, meaning it is now often more expensive than more comprehensive cover. According to data from MoneySupermarket, in some instances it can be twice as expensive as a fully comprehensive policy.
What do other types of insurance offer over third party?
As well as often being cheaper than simple third-party insurance, the other types of policy also offer better protection.
Third party, fire and theft covers you for damage and injury caused to others and adds protection should your car be stolen or damaged by fire, whether accidental or deliberate, so you don’t face a big bill. Fully comprehensive is, as you’d expect, the most complete insurance and will cover repairs or replacement even if you are at fault, and can protect you against incidents with uninsured or untraced drivers.
Things to consider when taking out insurance
As previously mentioned, third party cover is now rarely the cheapest option so another type of policy may be one easy way to bring down costs but you can also take other steps to reduce your premiums.
Try paying your premium up front rather than in monthly instalments and consider a higher voluntary excess. Also think about how far you drive and whether you need to use the car for commuting - both can have a significant impact on your premiums - and think about named drivers. Having a more experienced driver on your policy can help bring premiums down while a young or inexperienced motorist can cause the price to rise dramatically.
For more advice on how to save money, take a look at our top 10 tips to reduce your car insurance bill.