What is third party car insurance?

Mark Hooson
·3-min read
<p>Samuel Regan-Asante</p> (Unsplash)

Samuel Regan-Asante

(Unsplash)

In a nutshell, third party car insurance is the absolute minimum level of cover you must take out to drive legally on UK roads.

Here’s everything you need to know about the protection it offers, how much it costs and whether it might be the right kind of insurance for you.

Levels of insurance cover

There are three levels of cover available to drivers in the UK.

The most robust fully comprehensive policy covers damage to you and your vehicle, as well as others and their vehicle. It covers you for theft and fire damage, too.

Third party, fire and theft policies are similar but don’t pay out for damages to you or your car – just others and theirs.

Finally, third party-only car insurance protects against just damage to other people and their vehicle (when you’re deemed to be at fault).

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Risks of third party-only insurance

With only third party cover, you’ll have to pay to repair or replace your vehicle and property in the event your car is stolen or involved in a collision.

If you were to write your vehicle off or injure yourself in such a way that you needed long-term care, physiotherapy or assistance, the costs you’d have to pay out of your own pocket could be very high.

If you’re involved in a collision that’s deemed to be someone else’s fault, their insurance will cover damages to you and your property – but with a third party-only policy your insurer won’t assist the other person’s provider in any way.

This could mean paying a separate claims company for help.

The cost of third party car insurance

Since your insurer only needs to worry about paying out for damages to third parties and not to you, the amount it would have to pay if you filed a claim would be smaller.

In theory, this lesser liability should translate to cheaper premiums than if you had a fully comprehensive or third party, fire and theft policy – but that isn’t always the case.

Third party-only cover was once the cheapest type of policy you could buy as it offered the most limited coverage. As a result, it became popular with drivers that insurers considered to be high risk – such as younger drivers under 25.

But the more these drivers bought third party policies, the more ‘pooled’ risk they represented. This led to premiums increasing again and for many drivers, third party-only insurance may not be cheaper.

Other pricing factors

But car insurance premiums are priced on more than just the level of cover being offered. Your age, driving experience, number of years’ no claims discount, address, occupation and vehicle all play key roles in determining the price you pay.

There are ways you can actively reduce your premiums too, such as paying your annual premium upfront, building up a no-claims discount and choosing a higher excess (the first part of any claim that you pay) on the policy.

Using a price comparison service each time your policy comes up for renewal will also ensure you get a good overview of your options and stay on top of the cheapest car insurance deals.

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