What does car insurance cover?
It depends on the type of policy you have, but car insurance typically covers your vehicle, the damage that you might cause to other vehicles, to the property of other drivers and to other motorists generally.
Car insurance can also include, or can be extended to include, cover for a host of different items, including personal belongings, medical expenses and breakdown assistance.
Here we explain how car insurance works, including for drivers headed overseas.
What are the main types of car insurance?
There are three main types of car insurance policy:
Third party is the lowest level of cover, protecting you against damage that's caused by you or one of your passengers to others.
That includes damage to other drivers and their vehicles as well as accidental damage to lampposts and walls. Third party does not cover your own car – you'll have to foot the bill yourself if it's damaged, stolen or vandalized.
Third party, fire and theft
Third party, fire and theft covers everything included in third party cover, but it will also pay to repair or replace your car if it's stolen or damaged/destroyed by fire.
Comprehensive car insurance
Comprehensive car insurance is the widest level of coverage available, including third party and third party, fire and theft, but also covering wider damage to your own vehicle.
Some policies will also cover you to drive the cars of others – and sometimes hire cars – but usually only up to third party level.
- Find out more: car insurance policies rated by our experts
How is my car insurance premium worked out?
Insurers set the amount you'll pay based on a number of factors, including your record as a driver, your personal circumstances and your car itself.
For example, if you're an older driver with years of experience, living in a relatively safe area and driving a sensible car, your premium will be relatively cheap.
However, if you're a young, inexperienced driver with a high-performance car, the cost of your cover will be much higher.
The premium may not be the only price you'll pay, so also note insurers' add-ons, fees and charges.
What is an excess?
An excess is the amount you pay towards any claim you make on your car insurance policy. For example, if you have a claim worth £500, and you have a £100 excess, you'll only receive £400 from your insurer.
Most car insurers have two types of excess. A compulsory excess, which they set and can't be modified, and a voluntary excess, which you can set yourself.
Remember to set your voluntary excess carefully. Your insurer will offer you a lower premium if you opt for a lower excess - but in turn, you'll be committing to paying more if you claim. Where damage to your car has been minor, a high excess can mean it's not worth claiming at all.
- Find out more: the best car insurers for customer service
Am I covered to drive overseas?
Yes. Your car insurer will automatically provide third party cover (the legally required minimum) if you're driving in the European Economic Area.
However, in advance, you'll need your insurer to issue you with a Green Card to prove that this cover is in place.
It's recommended that you contact your insurer about a month ahead of travel to ensure the Green Card reaches you in time.
If you don't have a Green Card, the only way you can drive legally in the EU is to buy insurance locally in the country you're driving in. However, this may be more expensive than UK cover.
What is a no-claims bonus and should I protect it?
A no-claims bonus, or no claims discount, is a discount that will be taken off your premium if you can stay claim-free for an extended period of time. The longer you remain claims free, the larger the discount.
Your no-claims bonus will be cut if you make a claim - but the size of that cut varies between insurers. Insurers also have different policies on whether a claim that isn’t your fault will affect your bonus.
You can limit the impact of claims on your bonus by paying extra to 'protect' it. With 'no-claims bonus protection', a set number of claims will be exempted from affecting your discount. A maximum of two or three claims over a three year period is common.
Protection shields you from losing discount as a result of a claim - but the insurer can still raise the premium to which that discount is applied. This means that while you will be saving some money, protection is no guarantee that the premium you pay won't go up if you claim.
- Find out more: insurers' no-claims bonus policies in detail
Can I drive other vehicles under my policy?
Some comprehensive policies will allow you to drive the cars of your friends and family and may also allow you to drive hire cars, too – although, this is usually only up to the level of third party coverage.
You can also add other drivers to your policy, known as 'named drivers', so they're also covered to use your car.