While you may know that you need to take out car insurance when you purchase a vehicle, unless you’ve looked into car insurance in more depth, you may not realise just how many options there are. For instance, you may come across third party insurance or comprehensive insurance, and not be completely sure what the difference is.

To help you get to grips with all the different forms of car insurance, we’ve explored the topic in more detail below. We’ve also looked at things like compulsory and voluntary excess, so that if anything does go wrong, you can be confident what the next steps will be.

What is Car Insurance?

Unless you’ve declared your car SORN, which means that it’s off the road, car insurance is a legal requirement for drivers in the UK. But what exactly does insuring your car mean? Essentially, you’re purchasing a policy that provides financial protection in the event of some kind of incident. Such incidents may involve damage or injury to a person, vehicle or property. How much of the damage and repair costs are covered by your insurance will depend on the type of policy you have.

In order to apply for car insurance, you'll need to complete an application with an insurance company. Many people choose to use a comparison service, such as Compare the Market or Go Compare, to see which option will be the cheapest. You’ll be asked questions about the vehicle, how the car will be used, some personal details, your driving history, and any additional drivers you’d like to add to your policy.

Why Do I Need Car Insurance?

As mentioned above, motorists are required to take out car insurance by law. But even if this were not the case, many people find that having insurance of any kind brings them peace of mind. You’re secure in the knowledge that, should something happen, you won’t be left completely out of pocket.

A lot of people choose to get things like home insurance for this reason too. That way, if your home were broken into, or if there were some form of disaster, your insurance company would pay money towards any stolen or damaged property. Overall, insurance provides you with protection, and can offer reassurance for the future.

What is Third Party Insurance?

Third party insurance is the most basic type of car insurance you can get. This means that it’s the legal minimum requirement for motorists. As the name suggests, third party insurance doesn’t cover any of your own damages, just that of third parties. So any injuries, repairs, or replacement costs on your side would not be recompensed, regardless of who is at fault. Even theft or fire would not be covered.

In terms of what damages or injuries to third parties your insurer would cover, these include damage to property, as well as injuries to other people, passengers or animals. The policy will furthermore cover injury to any passengers in your own car, if a collision is your fault. 

Third Party Fire and Theft (TPFT)

Alongside third party insurance, some insurance companies offer what is often referred to as TPFT, which stands for third party, fire and theft. This will provide you with additional protection - obviously against your car being stolen, damaged or written off by fire. If you were not at fault, in some cases, you may be covered for any damage caused by an attempted theft of your vehicle.

This type of car insurance can sometimes work out to be the cheapest option, especially for drivers with older vehicles. However, this may not be the case with younger drivers, who are generally seen as a higher risk as they’re less experienced, and comprehensive cover might be the cheaper choice.

What is Comprehensive Insurance?

As with the other types of insurance discussed above, with comprehensive insurance, the name speaks for itself. A comprehensive policy will cover you for everything TPFT insurance would, as well as damage done to your vehicle.

It’s a good idea to look into what the insurance company is offering in regards to comprehensive cover, as some policies will also cover you for things like your windscreen, contents of the car like your sat-nav, as well as some medical costs. You may even be eligible for a courtesy car, while yours is being repaired or replaced.

What is GAP Insurance?

In addition to the regular car insurance you are required to get when you buy a car, there are other forms of insurance you can opt into as well. This includes GAP insurance , which is short for Guaranteed Asset Protection insurance. This may be offered to people who take out car finance, as it adds an additional layer of protection, should your vehicle be written off or stolen.

With GAP insurance, the idea is that if your car is deemed a Total Loss, and thus should be written off, you won’t have to rely solely on the funds paid out by your primary car insurance company. Your GAP insurer should also contribute towards the claim, helping you settle any outstanding finance on the vehicle, as well as paying towards a replacement car.

There are different levels of GAP insurance. Some will match the cost of replacing your vehicle with a new version of the same make and model, while others will simply top-up your insurance payout by up to 25%. The level of cover you may need will depend on your individual circumstances.

Compulsory and Voluntary Excess

If you make a claim to your insurance company, you’re generally expected to contribute towards the costs. This is called the excess. The excess is made up of voluntary and compulsory excess. The latter is determined by your insurer, and is obligatory when you make a claim. Often, the compulsory excess is higher for young or less experienced drivers. Voluntary excess, as the name implies, is the amount you’re willing to pay towards a claim. If you agree to a higher voluntary excess, this will typically lead to a lower insurance premium.

To help illustrate excess, let’s say you were to make a claim of £800 worth of damage. Your compulsory excess is £100, and you’ve agreed to a voluntary excess of £150. This means that you’d be paying a total of £250 in excess, while your insurance company would cover the remaining £550.