Car insurance is a contract between an insurance company and the customer that safeguards the policy holder against financial loss in cases of theft or accident. The car insurance policy also offers coverage for damage or loss caused to the car. It is important to insure your vehicles in case of accident, damage or theft, protecting you against any large pay-outs.

What are the main types of car insurance?

Third party

This is the lowest level of cover and protects you from damage that’s caused by you or your passenger/s to others. Third party covers damage to others drivers and their vehicles as well as accidental damage to certain types of property. This insurance does not cover your own vehicle and you’ll have to foot the bill for the damage yourself.  

Third party, fire and theft 

This covers everything in Third Party insurance but will also pay to repair or replace your car if it’s stolen or damaged/destroyed by fire.  

Comprehensive car insurance

This is the widest level of coverage available. This also includes wider damage to your own vehicle, on top of the benefits of third party, fire and theft. Some of these policies may even cover you to drive the cars owned by  other people.  

Car insurance premiums

Insurers decide on the amount you pay based on a variety of factors, including your driving record, personal circumstances and your car. For example, older drivers with a clean driving record and driving a sensible car will have a relatively cheap premium.  

Instead, younger drivers with very little experience and a high performance car will have a far more expensive premium.  

What is an excess?

An excess is the amount you pay towards any claim you make on a car insurance policy. For example, if you have a claim worth £500, and you have a £100 excess, you’ll only receive £400 from your provider. 

Two types of excesses are available. A compulsory excess, which is set by the insurer and can’t be modified, and a voluntary excess, which the customer sets themselves.  

Coverage overseas  

For those driving their car overseas in the EU, your normal insurance will automatically give you the minimum legal requirement in each country. However, it is still wise to talk to your insurance company about extending the minimum cover to include damage and theft or potentially getting separate breakdown cover.