Since the 1930s it has been a legal requirement in the UK for drivers to have car insurance when using the public roads. Not every individual needs their own policy, so long as they have adequate cover. This could mean that they are a named driver on a partner’s policy, for instance, or part of a fleet policy if they use a company vehicle. Insurance policies vary greatly and individual insurers have some things that they cover that others do not. Nevertheless, the policy basics are the same.

The entry level insurance policy you can purchase to make you legal is called third party. As the name implies, it covers a driver for any accidental damage they cause to a third party, that is, somebody else. Third party insurance covers the cost of damage to another vehicle and any injuries sustained by its occupants, which may include medical bills. It does not cover damage to your own car, nor your own medical or legal costs. It is also worth knowing that this policy type does not cover damage from fire or the theft of the car.

A step up from the cheapest form of insurance is third part, fire and theft. Again, it will not cover the costs of repairing your own car in the event of an accident. It does, however, pay out should your car be stolen or damaged by accidental fire.

Comprehensive car insurance is a policy type that all insurers offer and covers everything listed above. It also includes cover for damage to your own vehicle if you accidentally cause damage to it. If you have a crash, it will cover reasonable medical bills and many policies also include some legal assistance. Many insurers add value to their comprehensive cover by including extras, like roadside assistance or international cover.

Most insurers will compete on the price of the policy they offer, so it is worth checking which sort of insurance is being sold when you ask for a quotation. Prices tend to vary based upon your age, gender and driving experience. If you have not claimed under any car insurance policy in previous years this can bring the cost of your policy down. The industry refers to this as a ‘no-claims bonus’. Some policies pay out only after the driver has covered the initial part of the costs of an accident. This is called the excess and a larger one will usually mean a cheaper policy.