Comprehensive vs third party car insurance

You don’t get something for nothing. At least, that’s the theory. So when you’re shopping around for car insurance, it’s easy to assume that the more basic the cover, the lower the premium you’ll pay. But insurance is a funny old beast, and seemingly obvious logic doesn’t always apply. Read on to find out why, and the pros and cons of comprehensive versus third party car insurance.

What is comprehensive car insurance?

Comprehensive cover is the gold standard of car insurance. As the name suggests, it offers the highest level of cover available, giving you the confidence that your insurer will pay out for (almost) any damage to or theft of your car, plus any harm you cause to other people or their property.

There are 2 lower levels of cover available: third party, fire and theft and, the most basic level, third party.

What does comprehensive car insurance cover?

Comprehensive car insurance covers, at a minimum:

• Damage to your own car following an accident or collision
• Injury to other people and damage to their vehicles and property following an accident or collision that was your fault
• Theft of your car
• Vandalism or malicious damage to your car
• Damage to or destruction of your car due to fire
• Flood, hail or storm damage (an “act of God” or unavoidable damage)

With comprehensive car insurance policies, you often get extra benefits thrown in as part of the deal. These may include windscreen repair, the use of a courtesy car if yours is out of action and getting repairs, or (in some cases) the ability to drive other people’s cars on a third-party basis.

What doesn’t comprehensive car insurance cover?

Comprehensive car insurance is good, but it’s not perfect. Exclusions to be aware of that are common to most comprehensive policies include:

• Wear and tear. You won’t usually be able to claim for damage that happens gradually over time, such as rust or worn brake pads.
• Negligence or carelessness. If your belongings are stolen from a car you’ve forgotten to lock, you won’t be able to claim.
• Driving under the influence. If you cause an accident after drink or drug driving, you won’t be able to claim.
• Car modifications. If you don’t inform your insurer about any modifications made to your car, any future claims could be rejected.
• Driving a car that isn’t roadworthy. Failure to keep your car in good nick – for example, not replacing worn tyres or broken lights – could render your insurance invalid.
• Driving without a licence. You won’t be able to claim if you don’t have a valid licence when you get behind the wheel of your car.
• Allowing others to drive your car. Unless someone is specifically named on your policy or has their own insurance for your car, your comprehensive policy won’t cover them.
• Using your car for business purposes. For anything other than your regular commute, you’re likely to need business car insurance.
• Motor sports or race days. If you feel the need for speed, you’ll need specialist insurance for this.

And bear in mind that some comprehensive policies are more, well, comprehensive than others. For example, some will include things like breakdown cover, legal cover or the ability to drive other cars as standard. With others, these may be optional add-ons that cost extra.

What is third party car insurance?

Third party car insurance is the minimum level of cover you need to legally hit the road. It’s the most basic of the 3 levels of cover (after comprehensive and third party, fire and theft).

What does third party car insurance cover?

Say you hit another car, or you veer off the road to avoid a kamikaze cat and plough into someone’s house. This insurance will cover any damage you cause to other people’s vehicles and property. After all, it would be pretty unfair if someone had to claim on their own insurance if they’d been minding their own business when you crashed into them.

Third party insurance will also cover applicable medical costs for any third parties, plus any passengers in your car, should they get injured.

What doesn’t third party car insurance cover?

Here’s the kicker: Any damage to your vehicle will not be covered by third party insurance.

• If your car is dented or even trashed following an accident that was your fault, unfortunately, you’re going to have to foot the bill.
• If you’re hurt in the collision and need to pay for any medical costs – for example, physiotherapy – this will come out of your pocket too.
• You won’t be covered if your car or its contents are stolen or damaged due to fire or extreme weather.

All of the general exclusions that apply to comprehensive cover will also apply to third party insurance, and you’ll be much less likely to have any extra benefits thrown in as standard.

What are the key differences between comprehensive and third party cover?

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Which is cheaper: comprehensive or third party cover?

There is no hard and fast rule here – it really depends. In theory, third party insurance should be cheaper. After all, you’re getting less protection.

However, while logically this means you should pay less for third party cover, this is not always the case. Some people may find that comprehensive cover is just as cheap, if not cheaper, than buying third party cover for the same car. So never go straight for third party cover without checking all your options.

Why is comprehensive cover often cheaper?

In the past, things worked as you would expect: The most basic level of cover (third party) was also the cheapest.

Over recent years, insurance companies have cottoned on that young drivers (or those with poor records) were the ones mainly taking out third party insurance in a bid to keep costs down. Youngsters are more likely to have an accident and make the insurer pay out. The stats don’t lie.

Even if an insurer only has to pay for a third party’s costs, that can still be pretty expensive. So, in response to the fact that high-risk customers are more likely to take out lower-protection policies, some insurers raised the premium costs for drivers taking out third party or third party, fire and theft cover. This has led to a somewhat bizarre situation, with comprehensive insurance sometimes working out as cheaper.

It’s not always the case, though. Particularly if you fall into a lower-risk category – say you’re a driver in your forties or fifties with a good claims history – comprehensive cover may be the most expensive option. It’ll still be a lot cheaper than any level of cover for high-risk drivers, though.

What this all boils down to is that you need to really compare all your car insurance options carefully. You may find you can get the top level of protection at a competitive price.

Example: Comprehensive vs third party quotes

To see if opting for third party cover could save us money, we used a price comparison site to get car insurance quotes for a teacher living in Bristol, with a clean driving record and 5 years without claims. Our teacher drives a Peugeot 208 to and from school every day.

We also adjusted our teacher’s age to see if this made a difference in what they were offered.

Not only did comprehensive cover prove cheaper, based on the top 5 quotes, for both ages, but we were offered a greater choice of providers when we opted for comprehensive cover.

Are there any other levels of cover?

Yes, there is a middle ground between third party and comprehensive cover: third party, fire and theft insurance. As with third party insurance, you’ll be covered if you cause damage or injury to someone else, their car, or their property. It also pays out if your car is stolen or damaged by fire.

You still won’t be covered for damage to your car following an accident you caused. For that, you need comprehensive insurance.

What level of car insurance cover should I choose?

Ultimately, it’s up to you. Your age and driving experience, the car you drive, where you live and many other factors will all play a part.

But you certainly shouldn’t make a decision without checking all your options. If you assume you’ll be better off with third party insurance and don’t even bother getting a comprehensive quote, you could end up paying more for a lower level of cover.

How can I save on my car insurance?

Some factors that influence your premiums, such as age, are outside of your control. But regardless of the level of cover you choose, there are plenty of tactics you can use to cut the cost of car insurance. Here are just a few:

• Shop around. Different insurers will assess risks differently and tailor their quotes accordingly. Even if a specific car insurer has been a great choice for years, it doesn’t mean they will always be. Always compare car insurance when it’s time to renew.
• Up your security. Either on the car itself – for example, by fitting an alarm – or by parking your car in a more secure spot.
• Pay annually. If you can afford it, this will usually be cheaper than paying monthly, which will incur extra interest charges.
• Increase the voluntary excess. A higher excess usually results in a lower premium, and vice versa. Just make sure it’s not set so high that you can’t afford it in the event of a claim.
• Consider “black box” insurance. Officially known as telematics insurance, this tracks your driving habits and rewards safe, careful drivers (but watch out, it might penalise less careful driving).

Pros and cons of comprehensive insurance

Pros and cons of third party insurance

Frequently asked questions

• Is third party insurance cheaper than comprehensive?

  It really depends. Theoretically, third party should always be cheaper. However, insurance companies know that younger, higher-risk drivers are more likely to opt for this type of insurance. So, given they’re more likely to have an accident and claim, insurers have raised the prices of third party cover over the years. Sometimes, you can get comprehensive car insurance more cheaply.

• Is it worth having comprehensive cover?

  Putting price aside, there’s an argument that opting for third party cover could be a false economy. If you have an old banger of a car and third party insurance is much cheaper, then if it’s damaged or written off in an accident, you might not be too put out. But if you have an expensive car, taking out comprehensive insurance might mean you save more in the long term if it’s stolen or damaged in a crash.

• Which is better: Comprehensive or third party, fire and theft?

  On paper, at least, comprehensive cover is better in terms of quality of cover. Like third party cover, third party, fire and theft won’t pay for repairs to your car if it’s damaged in an accident. But you’ll need to balance off the upfront costs against the benefits of having fuller cover.

• I have comprehensive cover – do I need third party too?

  No. Comprehensive car insurance includes everything that third party insurance offers, and more.

• What happens if you're in an accident and only have third party cover?

  It depends on whether the accident is your fault or not.

  • If the accident was your fault, any harm to other people, their vehicles, or their property will be covered by your insurance. However, you’ll have to pay for any damage to your car or personal medical expenses out-of-pocket.
  • If the accident wasn’t your fault, you won’t be liable for the other person’s expenses, and their insurance should pay for any damage to your car plus any medical costs you incur. You may need to deal directly with their insurer to claim costs, though, and your insurer may not be willing to help.

Written by

Ceri Stanaway

Writer

Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes. See full bio