What kind of motor insurance do you need?
When you take out a car insurance policy, you will be offered a choice of three main levels of cover.
Third party: the minimum type of motor insurance you can take out is “third party”. This covers liability for:
- Injuries to other people, including passengers
- Damage to other people`s property
- Passengers for accidents caused by them
- Arising from the use of caravan or trailer while attached to the car.
TIP: Third party cover is OK for people who cannot afford a better type of car insurance.
It may make sense if you are driving an old banger where almost any repair would cost more than the car is worth, or where its replacement might only cost a couple of hundred pounds at most.
But if your car costs more to replace, you need to consider something better.
Third party, fire and theft: the next step up is “third party, fire and theft”, sometimes written as TPFT. This provides the above cover, plus fire or theft of the vehicle. If you are at fault in the event of an accident, TPFT will not pay for repairs to your car.
TIP: TPFT cover is useful for those whose car is not worth much – but would still cost more to replace than the cost of excesses. It can also be useful for younger drivers who might find fully comprehensive policies very costly, those who only drive occasionally or have minimal no-claims bonuses.
But it is generally unsuitable for regular drivers, or those with expensive cars.
Fully comprehensive: this is the most complete form of car insurance and protects against the above, plus:
- Accidental damage to your car
- Personal accident benefit
- Medical expenses
- Loss of or damage to personal effects in the car
TIP: Not all “fully comp” insurance is the same. Although all insurers will cover off the basics, many will offer additional variants on their policies, such as courtesy cars in the event of theft, breakdown or accident, or protected no-claims bonuses.
You may also want free cover for driving in Europe and, in some cases, legal aid when the accident is not your fault. These benefits may incur an extra cost.