It's understandable to be confused about precisely how different levels of car insurance vary - especially if you have only recently passed your driving test or usually just opt for third party cover.
Third party insurance is the minimum legally permissible level of cover if you own a car, almost regardless of whether you drive it, says the Money Advice Service. However, you could be surprised by the financial benefits of choosing a fully comprehensive policy instead.
You are required to choose between three levels of protection: the aforementioned third party; third party, fire and theft; and comprehensive. As the level offering the narrowest breadth of coverage, third party is sometimes referred to as "third party only".
"Third party only" is so-called as it covers strictly other people without accounting for you specifically. Imagine if, when driving, you injured someone or damaged their property. While the insurance could fund recovery or repair for them, you would have to pay for any necessary repairs to your own car.
The next level up - third party, fire and theft - is much like third party. However, the difference is that, should your car be stolen or damaged by fire, the insurance would cover this.
Fully comprehensive goes even further in letting you claim for repairing damage to your own car, even if you were to blame for the accident. This type of motor insurance would also enable you to fund repairs to a car that has been vandalised, such as through being deliberately scratched.
Though we have often described this form of cover as "fully comprehensive", it's worth emphasising that comprehensive policies are not all entirely standardised in what they offer. As a result, when you look for such cover, you should take careful account of the attached terms and conditions.
Particular comprehensive policies - but not all - let you legally drive other people's cars. Of course, you would need permission from those people, and you would typically only have third party cover; the comprehensive cover wouldn't wholly transfer to the other car.
In any case, keep in mind that not all comprehensive policies would allow you to drive other vehicles in this way anyway. If a particular policy catches your eye, you should also check if it would cover you for speakers, a sat-nav or personal belongings that are in the car but later stolen or damaged.
You might also be tempted to rule out a particular policy if it requires you to use a specific repairer approved by the insurer. Choosing a repairer other than the approved one could restrict the windscreen cover to which the insurer entitles you, for example.
That might seem a logical conclusion to reach, but it isn't always borne out by the facts. In fact, you could slash your motor insurance bill by nearly 50% by selecting fully comprehensive cover, says The Sun. Though this insurance provides more protection than other options, it can be much cheaper.
This is judging from research revealing that, by choosing the comprehensive option, you could lower your average annual premiums from £1,414 right down to £781. In that instance, you would be shaving £633 off the yearly bill, but how can such a large discrepancy in cost be explained?
Quite simply, it turns out. Statistics indicate that people limited to strictly third party coverage are likelier to crash than fully covered drivers, who are considered more responsible.
Graeme Trudgill, executive director of the British Insurance Brokers' Association, has also highlighted the lesser expense of damage claims in comparison to injury claims. He told The Sun that this gap has lowered the expense of comprehensive car insurance, as "insurers now have access to much more data and can understand the pattern of insurance claims and their costs."
Trudgill has observed insurers' possible preference to "avoid providing accidental damage cover to those that are a higher risk for bumps and claim repairs to their own car". These drivers may instead be offered third party policies that "are likely to cost more than comprehensive cover due to the statistically proven high rate of young driver personal injury claims."
However, if you are a young driver yourself, you could still make savings on third party cover - such as through tasking Call Wiser with sourcing a quote from insurers with which we partner.
Meanwhile, if comprehensive is an option for you, it's possible to make further savings on that via the same means. Click the link to learn how to source a car insurance quote from our Hampshire-based company, which is authorised and regulated by the Financial Conduct Authority.
Author: Call Wiser
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