What type of cover is best for car insurance. Image credit: AdobeStock
According to NimbleFins, comprehensive car insurance is technically the best type of cover as it protects both other road users and vehicles as well as a driver’s own car. It is the top level of car insurance you can buy, offering the widest cover.
At a minimum, car insurance always covers injuries or damage to third parties – that is, damage you cause to other road users, their vehicles, and their property. Depending on the level of cover chosen, car insurance can cover other costs related to your car as well.
For instance, third party fire and theft policies will cover your vehicle for fire damage and theft. And the top tier of cover, comprehensive, covers your vehicle if you’ve damaged it in an accident. This can include repair costs to fix minor damage through to covering the value of the car if it’s badly damaged and written off.
To recap, the three levels of car insurance are:
In addition, car insurance can include extra coverages that may be included as standard or may cost an extra premium. Common extra coverages for car insurance include legal cover, a courtesy car if yours is being repaired after an accident or written off, personal injury cover, breakdown cover, and cover for driving in Europe. These coverages will not be available on all policies, but are more likely to be found as options on comprehensive plans.
Third party car insurance, otherwise known as TPO (Third Party Only), covers damage you cause to other vehicles, people or their property.
TPO insurance does not offer any cover to you if you’re injured or your car if it’s damaged in an accident that’s your fault. That means if your car is damaged in an at-fault accident, you are wholly responsible for paying for the repairs.
It also doesn’t cover fire damage to or theft of your car. That means if your car is stolen, you won’t receive any amount of reimbursement to help you buy a replacement car. TPO insurance will not cover any costs related to those events, including damage from an attempted but unsuccessful theft.
TPO is the minimum level of car insurance as required by law in the UK. It is illegal to drive without third party vehicle insurance. If you’re caught without third party car insurance you could be a fixed penalty of £300 and 6 penalty points, or worse. Cases that go to court could result in an unlimited fine or disqualification from driving. The police can even seize and destroy a vehicle that was driven uninsured.
Third party, fire and theft (TPFT) car insurance includes the minimum third party cover you need by law (TPO) plus it also covers damage to or loss of your car due to a fire or theft. Repairs to fix damage from attempted theft can also be covered.
TPFT car insurance does not provide any protection for your car if it’s damaged in a road traffic accident that was your fault. For this, you’d need to upgrade to comprehensive car insurance. (FYI, damage caused in an accident that was another driver’s fault would be covered by their TPO vehicle insurance.)
Comprehensive car insurance is the top tier of car insurance. It will pay for repairs to your vehicle if it’s damaged in an accident that you caused, in a fire, or during an attempted theft. It will also cover the value of your car it it’s stolen or written off after an accident.
Comprehensive cover is one step up from TPFT. So it includes everything that’s covered by TPFT, including the mandatory third party cover, plus it also covers damage to or loss of your car.
While you might expect that comprehensive car insurance is the most expensive type of coverage, that’s often not the case. Comprehensive car insurance is often cheaper than lower levels of cover, TPFT and TPO. This is because drivers who want to protect their car are typically safer drivers.
Drivers who care enough about their car to insure it also care enough to drive carefully, park in safer places and generally look after their cars. At least that’s the experience of car insurance companies. As a result, these drivers are considered to be less risky so despite getting a higher level of cover, they pay less due to a more attractive risk profile.
Comprehensive car insurance is especially important for anyone with a valuable car or who could not easily cover any repair bills or pay for a replacement car in case of theft or a serious accident. Some people with very inexpensive cars might decide they don’t need comprehensive cover, but it will be the best type of cover in most cases.