Car insurance, also known as motor insurance, is a type of insurance that is used to cover cars and other motor vehicles such as vans, lorries and motorbikes. You can also get motor insurance for specialist cars, high performance cars and caravans.
Like other insurance products, car insurance insures you against the risk of anything happening to your car. Depending on the type of policy you have you can be insured against the cost of repairs to your car if it is damaged in an accident; the cost of replacing the car if it sustains damage and is unfit to drive; or the cost of any liability if you are the cause of an accident. If you own or drive a car in the UK, then you are legally required to have car insurance.
Different car insurance policies provide different levels of cover and it is important to understand what your requirements are before taking out a policy. The three main types of car insurance policy available in the UK are third party only; third party, fire and theft; and fully comprehensive.
A car insurance policy that is third party only covers you for claims made against you by others (known as third parties) for injury or property damage resulting from using your vehicle on public roads. This is the minimum level of cover you can have to meet your legal obligations.
A third party, fire and theft policy increases your level of cover. Not only are you covered for liability arising from injury or damage to others or their property, but you are also covered if your car is stolen or damaged by fire.
Finally, there is a fully comprehensive insurance policy. In addition to covering all the risks covered by third party, fire and theft car insurance policies, a fully comprehensive policy also covers injury and property damage to your car and your passengers. There may be other types of cover included in a comprehensive policy as well, such as coverage for personal belongings.
Car Insurance Premiums
The premiums for comprehensive insurance policies are usually higher than those for third party car insurance policies. For this reason, many people get a third party policy when they first own a car, then move to a comprehensive policy when they can afford to.
All insurance premiums vary according to the age of the driver, the gender (women get better premiums because they are lower risk drivers) and the length of time since making a claim (known as the no claims bonus). The type of car and insurance group also play a part in the equation.