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Car insurance: third party vs fire & theft vs comprehensive

There are three different levels of car insurance here in the UK. Find out which one suits your needs, and how to adjust your current cover.

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What do the different levels of car insurance mean and is the most basic always the cheapest? We explain the differences and help you understand what you need to know.

The legal minimum car insurance cover is third party only. This covers you against costs as a result of damage you cause to another person’s vehicle, property or injuries to them (they are the third party). They will make a claim against you, but you can’t claim for damage on your own car if the accident was your fault. There will be no cover for medical costs if you’re injured, such as physiotherapy.

Third-party, fire and theft insurance offers the same cover as third-party but can also cover you if your car is stolen and can’t be recovered or damaged by fire (accident or arson). It gives you more cover than a basic third-party policy, but not as much as comprehensive insurance. Some third-party, fire and theft policies also cover car audio, sat nav and entertainment systems if they’re stolen or damaged because of fire.

Comprehensive is the highest level of cover available. It protects against; injuries to other people and damage to their vehicles, your vehicle being damaged, stolen or destroyed in a fire, medical expenses and damage to or theft of a vehicle’s contents. You’ll also normally be covered for damage to your vehicle even if you don’t know – or can’t prove – who caused it. It used to be the case that comprehensive cover allowed you to drive any car not owned by you on a third-party only basis, but policies that allow you to do this are increasingly rare. 

Basic cover isn’t always cheaper

Comparethemarket.com provides car insurance quotes from 150 provider products. “Most drivers typically choose a comprehensive car insurance policy,” says Julie Daniels, Comparethemarket motor insurance expert.

“It offers the highest level of protection for your car and can even be cheaper for some drivers. Demand for third-party fire and theft policies has remained fairly consistent in recent years, though there are more comprehensive car insurance policies available in the UK compared to third-party, fire and theft.”

As an example, in the year between February 2022 and February 2023, 51% of Comparethemarket customers aged 35 who drive a Ford (no model specified) were quoted up to £515 for their comprehensive car insurance, up to £936 for their third party fire and theft car insurance, up to £1,004 for their third party car insurance.

Why would this be? “Drivers with third-party cover tend to pay more as they are more likely to be younger or high-risk drivers, but it’s worth noting a comprehensive policy for these same drivers could lead to greater costs,” says Julie. “Third-party policies provide less cover for claims but can cost more as insurers’ risk modelling anticipates that drivers with third-party cover are more likely to make a claim and could claim for larger amounts. There can also be less competition for drivers in the third-party market. When you come to renew your car insurance, it is always worth shopping around and comparing different types of policy to ensure you’re getting a great deal with the right amount of protection.”

There will be some situations where third party may work, she adds. “Third-party insurance could be more economical if the cost of getting your car repaired is more than its actual value. However, the cost of insurance depends on lots of other factors, such as the area you live in or whether you have any no claims bonus.”

Adjusting your cover

Like all costs, insurance is going up. The Association of British Insurers’ Motor Insurance Premium Tracker shows the average premium paid for private motor insurance (a fully comprehensive policy) was £470; up 8% in the fourth quarter of last year. Insurance companies say factors such as energy inflation, increasing paint and material costs and parts delays all had an impact.

You can make savings on any level of motor insurance policy by increasing the excess you would pay (the amount of any claim you cover yourself), reducing mileage, reducing the number of drivers and their age and building up a good no claims discount. Young people and students are advised to go for telematics or ‘black box’ policies which monitor how the car is being driven. The majority of telematics policies are comprehensive, though there are a number that fall under third-party, fire and theft. The idea is to encourage safe driving.

Not all comprehensive cover need be the same. Many car insurers now offer different levels of comprehensive cover, some of which provide a lower level of protection for a cheaper price. For example, ‘essential’ policies may not offer windscreen cover, personal belongings cover, or car key cover. 

“We understand that the lower price of ‘essential’ policies may be attractive to motorists, but it’s also important to understand that this type of policy may offer less protection,” says Julie. “What might seem a cheaper option could end up costing you more in the long run, if you need to claim. For example, replacing a windscreen can cost anything between £130 and £600, depending on where you live and what car you drive. Ultimately, it’s up to the driver to weigh up the cost versus the level of cover based on their needs. It’s worth checking with your provider if you need any information about what cover you may need.”

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Russell Hayes
Russell Hayeshttps://amzn.to/3dga7y8
Russell Hayes’ early career was 14 years of motoring journalism in print, television and online. He worked for What Car? and Complete Car magazines, the BBC's original Top Gear programme and Channel 4's Driven. Since 2007 he has written motoring history books on subjects including Lotus, TVR, the Earls Court Motor Show, the Volkswagen Golf, Volkswagen Beetle and Bus and the original Aston Martin V8. Now a full-time author, two more books are in the pipeline for 2023 and 2024.