Choosing Motor Insurance Types

If you drive your vehicle on the road, or leave it parked in the street, the law says that you must have motor insurance. It is a criminal offence not to insure your motor vehicle.

Before you buy motor insurance, decide who will be driving your car, and how much cover you would like. There are three main types of motor insurance:

Third party insurance
This is the minimum amount of insurance cover that you must have by law for your vehicle. Third party insurance only covers you for damage to someone else's vehicle or property, or injury to someone else in an accident which involves your car. This includes accidents caused by your passenger. If your vehicle is damaged in the accident you will have to pay for the repairs yourself.

Third party, fire and theft insurance
This includes third party cover and, additionally, damage to or loss of your car by fire or theft.

Comprehensive insurance
This includes third party, fire and theft insurance. In addition, it will also pay for repairs to your car. There is a range of extra cover that some policies provide, including:

• cover for your own death or injury, or that of your partner or other member of your family, up to a limited amount
• cover for your personal belongings if they are stolen from your vehicle or damaged
• cover for your medical and legal expenses
• hiring a replacement vehicle.

The cost of an insurance policy is called a 'premium'. Ask for quotes from several insurers to help you to get the best deal for your circumstances. You will need to compare:

• what each policy covers, and any exclusions (risks which are specifically excluded, for example, allowing drivers under 21 to drive your car)
• the amount of any excess. This is the first amount of any claim, for example the first £50, that you will have to pay yourself. Some policies allow you to pay a higher excess in return for a cheaper premium. Most young drivers (under 21 or 25 depending on the policy), and inexperienced drivers are expected to pay a compulsory excess which is higher than usual
• discounts offered, for example a 10% discount for older drivers
• the no claims bonus which increases for every year that no claims are made on your policy, up to a maximum amount. Most insurers will let you transfer the discount, if you want to change your insurer. You will also need to compare the amount by which your no claims bonus would be reduced if you made a claim
• any policy restrictions, for example, only named drivers are covered.