Last updated: 29 September 2020

It’s illegal to drive on UK roads without valid car insurance. This means having third party car insurance at the very least. But what does this insurance offer and would you be better off paying more for better cover?

What are the different levels of car insurance?

There are three levels of car insurance that entitle motorists to drive on UK roads, ranging from the most basic to the more advanced. There are variants within each, depending on what specific policies offer as standard and what you pay extra for, but they are known as:

  • third party

  • third party, fire and theft

  • comprehensive

What is third party insurance?

Third party insurance is the most basic policy, covering injury or damage to anyone else’s car and property as a result of a road traffic accident you cause. It will cover injury to other people involved in the accident, including passengers in your own car.

Third party will not cover any personal injury you incur, damage to your car or loss or damage to your property. Incidentally, the term ‘third party’ just means someone else. You and your insurers are the first and second parties.

Although third party insurance won’t cover your losses, if someone causes a road traffic accident resulting in injury to you or damage to your car or property you can claim on their insurance to cover your losses.

What is third party, fire and theft?

Third party, fire and theft (TPFT) is the next level up from straightforward third party insurance. In addition to providing third party cover it will pay out if your car is damaged or lost as a result of fire or theft.

What is comprehensive car insurance?

As the name suggests comprehensive car insurance covers most typical claims. Aside from TPFT, it will typically cover accidental damage to your car, as standard.

Additionally, many comprehensive policies will also cover personal accident and injury, personal belongings, windscreen cover and uninsured driver cover. The last of these applies if your car is hit by someone without insurance, or who drives off without leaving their details.

Can you get cheap third party insurance in the UK?

You would think that third party car insurance is the least pricey of the three levels of cover on offer, but this isn’t necessarily so.

Data collected by insurers shows that the typical third party only customer tends to be an inexperienced and young driver who is raring to get on the road and pays little attention to their policies. They just opt for the most basic option on the principle that it’ll be cheap.

As drivers under 25 are involved in more claims than older drivers, some insurers reflect this by increasing premiums for people who choose third party or third party, fire and theft policies. Conversely, experienced drivers who choose comprehensive are seen as a safer bet.

Why buy third party insurance?

Just because third party insurance isn’t necessarily the cheapest doesn’t mean it is always more expensive than the other options. If you are on a tight budget, and willing to risk starting from scratch following a prang, it could offer significant savings.

Also, third party cover could be better than remaining on someone else’s insurance as a named driver, if you are keen to build up your no claims discount and enjoy greater savings when you buy your next car.

It may also be a better bet than borrowing someone’s car on occasion and paying for short-term car insurance, which is cheaper for one-offs temporary excursions, but less so if this becomes a regular event.

What if you are taking a break from driving?

Third party insurance, or whatever the cheapest option available, is sometimes selected when someone mothballs their car, perhaps if they spend a large chunk of the year away, either at university or on an extended holiday.

This may seem the best option, but why pay insurance when the chances of your car getting damaged or stolen from a garage or drive is slim?

If you are parked on your own property, rather than the road you may be better off applying for a Statutory Off Road Notification (SORN), a legal requirement even if your car is not being used.

How do I reduce the cost of my car insurance?

Whatever your budget for car insurance it’s always good to make as many savings as you can. Even if you are opting for third party insurance you may be able to chip a little off the bottom line with some careful consideration when getting quotes.

Don’t get modifications

Adding alloy wheels or a body kid can give your car a whole new look and feel. However, any enhancement that makes it stand out from the crowd also makes it more attractive to thieves, and so will increase your insurance premium.

Watch your mileage

Insurers take your mileage into consideration. If you can limit the time you spend behind the wheel, you will pay less, as the more you drive, the greater the risk of being involved in an accident.

Consider multi car insurance

If your household has a corral of cars, it may be worthwhile getting a multi car insurance policy to cover them all, and split the bill. In this way you may be able to get a higher level of cover than third party for little more or even a bit less of an outlay.

Pay annual rather than monthly car insurance

It is tempting to pay for car insurance on a monthly rather than annual basis, but doing so will see you incur interest, which can increase an already hefty premium. If possible, budget for cover and pay the lot in one lump sum.

Use a comparison site

Don’t just call a few big-name insurers for quotes, and never auto renew without first shopping around, as existing customers rarely get a good deal from their policy provider.

Instead use a comparison site to find the cheapest policy of the standard you require. If you are focused on getting a third-party policy, take a moment to edit your search to see if it is cheaper to buy TPFT or comprehensive, getting more for less.