When you own a car, having car insurance is a legal requirement unless you have registered your vehicle as off the road (SORN) – and what is also crucial is understanding what scenarios different types of policy cover. Levels of cover that you get with your insurance will vary from policy to policy and from insurer to insurer. Read on to learn about the three types of car insurance, what they each can cover, and how excess fits into the picture.
Third party car insurance is the most basic form of car insurance and is the legal minimum requirement. It covers injuries to ‘third parties’ – in other words injuries to other people, passengers or animals, damage to other people’s property, and accidents caused by a passenger or a named driver on your policy. ‘Third party’ also covers any passengers in your car who are injured in a collision where you are at fault.
However, third party car insurance won’t cover the repairs for your own car, an injury to you or replacement costs if your car is lost because it has been stolen or is destroyed by fire.
Third party, fire and theft (or TPFT)
As the name suggests, ‘third party, fire, and theft’ policies - often called ‘TPFT’ - include everything covered by third party insurance but with some additional protection. These policies will provide cover if your car is stolen, damaged or written-off by fire and, in some cases, will cover damage caused by an attempted theft (as long as you aren’t at fault). As with third party only policies, you are not covered for damage to your car or injury you might suffer if it is your own fault.
Third party and Third party, fire and theft car insurance can sometimes be the cheapest option and, as such, many young drivers who have older, low value cars take out the policy to save money. However young drivers are seen as high-risk and, as a result, the cost of such insurance can be very expensive. Not every insurer offers third party or third party, fire and theft cover so you might find that the cheapest comprehensive policies available may be cheaper than the cheapest third party policies.
You can expect fully comprehensive car insurance policies to cover everything included in TPFT insurance, but it can also cover damage done to your car. Some policies may also provide cover for your windscreen, personal contents such as a sat-nav, medical costs (up to a specified amount), using a trailer fixed to your car, while others might include a courtesy car or include comprehensive cover if you drive your car outside the UK. Not all will include these benefits while others may offer them at an additional cost so it is important that you check that the policy you choose includes everything that you want or expect it to.
Compulsory vs. voluntary excess
If you make a claim, Insurers will typically require you to pay a certain amount of money towards the cost of repairing the damage when you make a claim. This is called the ‘excess’ and is made up of two parts: ‘compulsory’ and ‘voluntary’. For example, if you make a claim for £700 worth of damage and your combined compulsory and voluntary excess is £200, you will be responsible for £200 of the cost and the insurer meets the remaining £500.
In cases where you weren’t at fault for the claim, insurers are likely to waive the excess because they will be able to meet the cost from the other driver’s policy and cover the entire cost. However, this might not be a standard part of the policy, therefore you should check before making a claim.
So what’s the difference between ‘compulsory’ and ‘voluntary’ excesses?
Compulsory – Compulsory excess is determined by the insurer and you have to pay this amount in order to make a claim. The compulsory excess your insurer decides may be relatively higher if you are a young or new driver due to the higher risk of being involved in an accident, while expensive vehicles can also command a higher compulsory excess.
Voluntary – Voluntary excess is determined by you, meaning you are able to increase or decrease the amount you are willing to pay towards a claim. The motivation for increasing your voluntary excess is that it may well lead to a reduction in your car insurance premium, but there is usually both a maximum and minimum voluntary excess you can opt for. You should check exactly how your premium will be affected before agreeing to a particular policy.
Car insurance options
The level of insurance cover you get can depend on the type of car insurance you choose and the amount you pay towards the costs of a claim, the exact details of each policy can also differ between insurers. The cost of your policy will depend on a wide range of factors such as your age, the job that you do, where you keep the car, whether there are any other ‘named drivers’ on your policy, the make and model of car, whether you have any motoring convictions to name but a few. It can therefore be helpful to consider exactly what you need from your insurance, and to be sure to compare policies when getting a quote. Read more on how to compare quotes for help choosing the best car insurance policy deal for you.