Car Insurance Guide

Types of Car Insurance

Car insurance is a legal requirement in the UK.

There are three standard types of motor insurance cover. Which of these you choose is up to you – all of them meet the minimum legal requirements:

  • Third Party Only (TPO): This is the lowest level of car insurance cover you can legally have. It covers your liability to other people but doesn’t cover your vehicle.In other words, if you cause an accident, your insurance company will pay for the other people’s vehicles to be repaired and compensate them for any injuries they might have suffered.Third party only cover will not pay for repairs to your vehicle if the damage is your fault and it won’t pay out if you lose the vehicle due to fire or theft.
  • Third Party Fire & Theft (TPFT): This is the next level of cover. In addition to providing third party liability cover (paying for damage you cause to other people’s vehicles), TPFT insurance also covers your vehicle for damage and loss due to fire or theft. So if it’s stolen, your insurance will payout (as long as it was locked!).
  • Fully Comprehensive: Comprehensive insurance, or ‘fully comp’ as it is often known, is the top level of car insurance cover available. It includes all the features of TPFT insurance and also includes cover for your own car.In other words, if you have an accident that is your fault, your insurer will pay for the repairs to your own car as well as everybody else’s.

Unless you could afford to lose your car and replace it at your own expense, I would always recommend fully comprehensive car insurance.


No Claims Bonus

Like most types of insurance, you always hope that you won’t have to claim on car insurance – and most of the time, you don’t. Unlike some other types of insurance, you are at least rewarded for this care and good fortune when you don’t claim on your car insurance.

The No Claims Bonus is an industry-wide system for recognising drivers who have not claimed on their insurance for one or more years.

For each consecutive year you complete without making a claim, your car insurance company will award you one year’s no claims bonus (NCB). They will also give you a discount for every year you don’t claim. This is usually around 10% per year, in my experience, up to a total limit of perhaps 50% or 60% discount.

If you change insurance companies, your current insurance company will send you a proof of no claims certificate stating how many years’ no claims bonus you have. Your new insurance company will usually ask you to send this to them to prove your NCB entitlement.

What If I Make A Claim?

If you make an ‘at fault’ claim – one where it was your fault – your NCB will be reduced. Different insurance companies have different policies for this, so how much of your NCB you lose will depend a little on which insurance company you are with, and how many years’ NCB you have.

If the claim is not your fault, then your no claims bonus will be restored once the claim has been settled (but not before).

Windscreen claims do not affect your NCB. Always claim for windscreen damage through your insurer, as it’s much cheaper than paying the full cost yourself and will not affect your NCB.


Car Insurance Extras

In addition to the insurance itself, most car insurance providers offer several optional extras that you can add to your insurance policy for a small fee. Here are a few of the most useful and popular extras.

Legal Expenses Cover

Legal expenses cover provides you with free legal representation if you need the services of a solicitor to assist with a claim you have made.

The most common scenario is when you have been in an accident and you and the other person are disputing what happened or whose fault it is. In these cases, having legal representation can be very useful and having legal cover as part of your insurance policy will save you a lot of money in legal fees.

I consider legal expenses cover an essential option on car insurance – it hardly costs anything but can save you thousands.

Guaranteed Courtesy Car

This option is often only available with comprehensive insurance but can be very useful if you depend on your car and cannot manage without one.

As the name suggests, it means that your insurer will provide you with a guaranteed replacement car if your car is off the road following an accident or for some other (insurance-related) reason such as theft.

Check the terms and conditions of this service – not all companies offer the same thing. You probably won’t get a car the same size as your own but should at least be able to stay mobile.

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3 thoughts on “Car Insurance Guide

  • April 16, 2016 at 11:00 am

    Good overview, I noticed you’ve touched on no claims bonus, and how it can reduce your premiums, and also how an at fault claim can remove all or part of your ncb.

    I noticed you didn’t go further into this though, and feel your readers may benefit further if you add a piece on dash cams, not only can they prove you weren’t liable for an accident (therefore saving your no claims) they can also reduce your yearly insurance premiums if you use one of the dashcam friendly insurers!

    Just a thought, keep up the good work.

  • November 27, 2016 at 2:46 pm

    As Jamir already mentioned many companies are offering lower premiums if you’re using a dash camera, Swiftcover for example are offering up to a 12.5% reduction on your insurance if you’re using a Nextbase Dash Cam, that’ll add up to quite a bit of money saved as the camera paying for itself multiple times over.

  • May 11, 2018 at 1:34 pm

    Great post, gives a good look at what you may come across in your search for an affordable car insurance quote. One thing I would like to mention is that more and more brokers are not will to insure aged cars (over 10 yo) or want to charge a premium. I find this very frustrating especially when the value of the car has obviously dropped and their payout would reflect this.


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