Car insurance is simply a contract between you and your insurer, specifying each party’s rights and obligations. Essentially your car insurer will promise to provide specific cover in return for payment of your car insurance premium. Car insurance is designed to protect you and other parties against risks associated with driving a car. Not only are car insurance premiums able to cover you and the car but insurers, (depending on the policy – see below) are able to provide a range of supporting services, such as a courtesy car if your vehicle is under repair from accident damage.
In the UK there are three main types of car insurance policy. These are, Third Party Only insurance, Third Party Fire & Theft insurance and Comprehensive insurance, sometimes called Fully Comprehensive insurance.
‘Third Party Only’ car insurance covers the policyholder against any damage to a third parties property or to the third party themselves. The policy will NOT pay out if your vehicle is stolen or is destroyed by fire, a Third Party Only policy will NOT make any payment toward the theft or repair of the vehicle.
‘Third Party Fire & Theft’ car insurance is exactly the same as Third Party Only insurance, however a Third Party Fire and Theft policy will pay out if your vehicle sets on fire or is stolen.
‘Comprehensive’ or ‘Fully Comprehensive’ insurance cover is a policy that will pay out for third party damages and injuries, it will also pay out in the event of your vehicle being stolen or set on fire and will also pay out for any damage to your vehicle (regardless of whose fault the accident was).
The Road Traffic Act requires ALL motorists to be insured against their liability for injuries to others (including passengers) and for damage to other people’s property resulting from the use of a vehicle on the road. It is an offence to drive your car or allow others to drive it without valid car insurance.