You could go for the bare minimum legal requirement. Or perhaps you’d be better off with a fully comprehensive policy that covers damage to your car if you cause an accident?
Whether you’re a 17-year-old who has just passed your test, or a nature motoring enthusiast with a collection of cars to insure, there’s a car insurance policy for you.
But in an industry renowned for complicated conditions and technical jargon, that amount of choice can make picking the right policy a tough job.
But MoneySuperMarket is here to help with this guide to finding the best policy for your needs – at the lowest possible price.
What are the different types of car insurance policy?
Car insurance offers different levels of cover, according to the type of policy you choose.
There are three main types: third party; third party, fire and theft; and fully comprehensive.
This is the legal minimum for all vehicles that are not registered as off the road (and kept unused on private land) via a SORN – Statutory Off Road Notice – that you must get from the DVLA.
Remember – it doesn’t matter if your car never leaves your drive. If you don’t have a SORN, it must be insured.
A third party policy covers other road users (including pedestrians and passengers in your car) if you injure them or damage their property. But you and your car are not protected.
Third party, fire and theft
This level of cover adds damage to your car, as a result of fire or theft, to the cover provided by a third party policy.
The highest level of cover, comprehensive policies include damage to your car that is your fault, including accidental damage (as might be caused by hitting a wall when driving in a supermarket car park).
Some policies also provide third party cover for you to drive another person’s car – if you have their permission, of course.
You might quite reasonably assume third party cover would be cheaper than fully comprehensive insurance, but this isn’t always the case.
That’s because insurers have spotted that some high-risk drivers – those who are likely to make a claim – are opting for third party cover in a bid to reduce their premiums. In response, those insurers are raising the cost of third party cover.
That means you need sure to shop around to see where the best deal lies, checking third party and comprehensive prices.
In recent years, insurers have launched different kinds of car insurance to meet motorists’ varying needs.
Telematics policies, for example (sometimes called ‘black box’ policies), work by monitoring your driving using satellite technology.
Your premiums are then adjusted based on how safely you drive, where and when.
This approach can be particularly useful for young drivers facing sky-high insurance costs on traditional policies.
Families with two or more cars at the same address might find multi-car policies cheaper than taking out a separate policy for each vehicle.
What are car insurance policy extras?
Most insurers offer a long list of extras or add-ons that you can take out alongside your policy.
Examples of these include cover for legal expenses, personal accident, breakdown, personal belongings, and the use of a courtesy car.
Adding these to your policy will increase the premium you pay, so it’s really up to you to decide whether you are prepared to pay extra to buy legal expenses cover that protects against motor-related court actions.
You might, for example, want to pay a bit more for access to a courtesy car if your job depends on you being able to drive.
But you could safely dodge an extra charge for add-on European cover if you are not planning a road trip to the Continent.
In each case, consider how likely you are to use the cover and check the cost against other options, such as taking out personal belongings insurance alongside your home contents policy.
And always check that you are not paying twice for the same cover. If, for example, you get breakdown cover with your current account, you do not need to spend more on a standalone policy or a car insurance add-on.
What is a car insurance policy excess?
Insurers do not want drivers claiming for every little bump and scratch – this would cost a fortune to administer, and it would make everyone’s cover much more expensive.
They therefore insist on drivers paying the first part of any claim. This sum is known as the policy ‘excess’ and is split into two parts: compulsory and voluntary.
The compulsory excess is the minimum amount stipulated by the insurer.
The voluntary excess is the amount on top of this that you choose to pay towards any claims (increasing the excess usually leads to a lower premium).
Say the compulsory excess is £200, and you choose to add a voluntary excess of £100, you will have to pay a total of £300 towards the cost of any claim.
Say you have an accident and the bill for repairs comes to £1,200. With a total excess of £300, you will only receive £900 from the insurance company.