How to choose the best car insurance
Car insurance is not only a legal requirement, its a safety net to ensure you're properly recompensed should the worse happen. Choosing the right cover can be a minefield, so we explain all...
Despite steadily falling, the cost of car insurance is still a concern for many drivers. According to figures from the price comparison service Money Supermarket, the average driver paid £540.18 for car insurance during May 2025.
While insurance prices are primarily based on factors that are difficult to alter, such as the type of car being covered and the owner’s address and occupation, there are still a number of ways you can reduce the cost.
One of the easiest is to choose the right type of cover. Here, we’ll discuss the three main types of car insurance policy and share exactly what they cover.
What types of car insurance can I buy?
The three common types of long-term car insurance all offer different levels of cover, and prices to match.
They include:
Third-party insurance
This is the most basic type of cover, and the minimum legal requirement for car insurance. It covers the cost of accident damage suffered by any third party (including your passengers) and their vehicle and/or property, but it doesn't cover damage to your own vehicle. So, if an accident is your fault, you will have to pay for your own repairs. If it's not your fault, you can claim against the other driver's insurance policy.
Third-party cover is usually taken by owners of older vehicles whose value is less than the cost of any likely repairs. Newly qualified drivers go for third party insurance, too, because they believe it will be the cheapest option.
In fact, because insurers price for risk, and claims statistics show that new drivers are more likely to be involved in an accident than those with more experience, the cost of third-party cover has increased significantly in recent years.
Indeed, it can often be more expensive than more comprehensive policies, with Money Supermarket stating that the average third party insurance policy in May 2025 was £764.42 – over £220 more expensive than the typical comprehensive price. As a result, it’s always worth checking for both types of policy to see which is cheaper.
Third party, fire and theft insurance
Stepping up from third-party insurance, this type of policy adds cover for your vehicle if it's stolen, damaged or destroyed by fire, but it still won't cover your costs if an accident is your fault.
Much like standard third party insurance, drivers typically choose a fire and theft policy because they believe it’s cheaper than comprehensive cover. However, in reality, it could be considerably higher.
Fully comprehensive insurance
As the name implies, comprehensive insurance covers pretty much everything, including you, your vehicle, your passengers and property, as well as that of any other party/parties. It will provide cover if your car is stolen, damaged or set on fire, and insure you to drive other vehicles. Compared to third party insurance, comprehensive policies also cover more of the car’s components, such as the windscreen.
Three-quarters of UK drivers opt for fully comprehensive motor insurance, typically because it gives them peace of mind that most forms of damage they cause to their car will be covered. That said, not all comprehensive insurance policies offer the same level of cover, with most companies selling optional extras for further protection. As a result, it’s a good idea to read the small print to see exactly what is covered in each policy.
It’s worth noting that some car finance lenders will insist on fully-comprehensive cover as part of the agreement. That’s because they’ll need to be satisfied that the finance can be settled should the car be badly damaged or written-off.
What is the best car insurance?
Generally speaking, fully comprehensive is the best car insurance cover. That's especially true if you have a newer or a high-value car; indeed finance lenders may insist on fully-comp cover to ensure any outstanding loans are covered should the car be stolen or written-off.
Indeed, quirks of car insurance costs means in many cases, it's actually cheaper to choose fully-comprehensive cover over third party fire and theft — cover we'd only suggest if you have a very cheap car. Basic third party cover is best avoided.
What extras do car insurers offer?
Drivers who choose a comprehensive insurance policy will typically be given the option to buy additional perks, which typically offer further protection in a wide range of circumstances. Common extras offered by insurers include:
- Legal protection covers the cost of any legal expenses that resulted from an insurance claim and recovering any uninsured losses
- Personal accident cover offers a payout if you are injured or killed in a car accident. The severity of the accident and the level of cover will determine how much you or your family receive
- Medical expenses will cover medical treatment costs if you or your passengers are injured in an accident
- Named driver cover gives named drivers the same level of cover as the policy holder when they use your car
- Excess cover reimburses any excess you need to pay when making a claim. This is usually up to a pre-determined amount
- Protected no claims safeguards your no claims bonus (NCB) if you need your insurer to cover the cost of a repair. NCB is the number of years that you have not made a claim to your insurance provider, with a high figure helping to reduce the cost of cover. However, while it protects your NCB, it won’t necessarily prevent future premiums increasing on the basis that you’ve made a claim
- Uninsured driver protection protects a driver’s no claims bonus (NCB) if their car is damaged by an uninsured driver
- Breakdown cover gives you the ability to call for assistance if your car breaks down at the roadside. This cover is commonly provided by a larger breakdown services, such as the AA or RAC.
- Courtesy car cover provides a courtesy model to drive whilst your vehicle is being fixed or has been written-off. In most cases, this will not be an equivalent model and may be subject to a lower level of cover compared to your typical policy.
- Driving abroad cover provides comprehensive cover when travelling in Europe. All insurance companies will provide third party cover across the continent as standard.
Some optional extras will also offer protection for a wider range of vehicle components. These include:
- Replacement key cover provides drivers with a free replacement if their car key is lost, damaged or stolen
- Personal belongings cover covers the value of any personal belongings that are damaged in an accident or stolen. The cover limits insurance companies can provide are not always as high as a home contents insurance policy, though.
- In-car audio cover provides a payout for any permanently-fitted stereo equipment that’s stolen or damaged. These policies also commonly provide cover for other expensive devices, such as satnavs and phones.
- Misfueling cover pays for the costs involved in repairing your car if you put the wrong fuel in it. This always covers expenses for draining and flushing the fuel tank, while some insurers will also factor any mechanical repairs that need to be made into the cost.
- Windscreen cover covers the cost of repairing or replacing the windscreen if it is chipped or cracked. Fully comprehensive policies will generally include this as standard; however, you’ll still likely be charged an excess figure for windscreen repairs.
- Child car seat cover supplies a replacement child seat or a cash sum for a replacement if your car is involved in an accident.
While it may seem tempting to add a wide range of optional extras to your insurance policy, it’s important to consider whether there is a genuine potential that you’ll benefit from them. It’s also a good idea to see if certain options, such as breakdown cover, are available elsewhere for a lower price.
What Car? says…
Content editor for What Car?, Jack Mortimer, says, “The key to getting the best price for car insurance is to keep an open mind and shop around. Just because a certain type of policy offers less cover doesn’t mean that it’ll be cheaper.
“It’s also vital that you think about any potential issues that may arise in the long run. Choosing the right optional extras may cause the overall policy price to rise but could avoid a hefty bill, should anything go awry.”
