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What is third party insurance?

When you're shopping for car insurance, you'll get to a point in your quote where you have to select a level of cover. Generally, the options will be 'Comprehensive', 'Third-party, fire, and theft' (TPFT) or 'Third-party only'.

Third party car insurance is a type of cover that only pays out for damage caused to other peoples' vehicles if an accident is your fault. Damage to your own car is not included.

Since third-party insurance doesn't offer the protection you'd get from fully comprehensive or TPFT policies, you might expect it to be the cheapest way of covering your car. In truth, third-party insurance cover may not always be the cheapest and it is advisable to not only compare insurers, but also types of polices and find the cover that is right for you.

Here, we'll explore third-party cover in more depth; looking at the pros and cons; the costs involved; why this type of cover is often more expensive; and exactly how third-party car insurance works.

What exactly is third party insurance cover?

Third-party cover is the minimum level of cover you can have on a vehicle. In actual fact, it's the only level of insurance you're legally required to have as a car driver on UK roads.

In the world of insurance, the 'first party' is the driver who is insured; the 'second party' is the insurance company that provides the cover; and the 'third party' is any vehicle, property, or person who is involved in an accident or incident that is your fault.

So, with third-party car insurance, only the damage done to the third-party's property is covered. In the event of an accident that's your fault, you'll be expected to pay for repairs to your own car.

For example; if you cause an accident and someone else's car is damaged, they are considered to be the third party. Alternatively, if you drove into someone's garden wall and damaged it, the home-owner would be considered the third party. Their damage will be paid for - but yours won't.

What's the difference between third-party and comprehensive car insurance?

Fully comprehensive car insurance is the greatest level of protection available - covering third-party costs and any damage done to your vehicle.

With comprehensive policies, you're covered regardless of who caused the accident - so your insurer will cover all the costs involved; even if you're at fault.

Since third-party insurance doesn't cover any damage done to your vehicle, it may not be the best choice if you're got a particularly new or expensive car.

What's the difference between third-party cover and third-party, fire and theft insurance?

With a third-party only policy, you are literally only covered for damage done to other people's property or vehicles. This means that damage done to your car isn't covered - even if you're not at fault.

Therefore, if your car is stolen or catches fire, you will not be covered.

However, as a compromise between third-party car insurance and fully comprehensive policies, insurers generally offer a TPFT option. With a TPFT policy, the other person or property is covered - and if your car is stolen or catches fire, you'll also be covered.

 

What does third-party car insurance cover?

As long as you're driving the car that's listed on your policy, a third-party policy will cover the cost of:

  • Any damage done to another person's vehicle
  • Any treatment or compensation required for an injury done to another person
  • Damage done to another person's property (i.e. bikes, houses, etc)

What isn't covered by third-party insurance?

Third-party insurance doesn't cover you for:

  • Damage done to your car when you're at fault
  • Personal injury cover - i.e. any treatment or legal costs relating to your own injuries
  • Any of your own personal belongings damaged in an accident you cause
  • Windscreen damage
  • Fire damage to your car
  • Damage or loss through theft or attempted theft

 

It's also very important to remember that this type of cover doesn't provide insurance cover if you're driving another car. Therefore, if you're driving a car not listed on your policy, you're likely to face prosecution for driving without insurance.

Is third-party car insurance cheaper than comprehensive cover?

Since this level of insurance doesn't cover as much as a TPFT or comprehensive insurance policy, you'd perhaps expect it to be the cheapest available - but it often isn't.

Why not?

Well, it's all down to the level of risk that a driver with third-party insurance represents to the insurance company. The higher the risk an insurer considers you to be, the higher the policy cost will be. Since insurers have found that they're more likely to pay out on this type of policy, the price has been driven up.

Why choose third-party car insurance?

Since insurance costs are greater for this level of cover, you might wonder why anyone chooses it over fully comp insurance quotes.

Although the actually annual or monthly costs of third-party insurance are higher than the alternatives, the cost of a claim is generally a lot less to an insurer. So for instance; if you caused an accident that wrote your car and another car off, your insurer is paying for both cars to be replaced - rather than just the other person's car.

As such, you may find that with third-party only cover, your insurance cost doesn't increase after a claim as much as it would if you had a comprehensive policy.

Finding the right level of insurance

When you're shopping for insurance, it's very easy to look at the price of the policy and not a great deal else. While it's important to budget as a driver, it's also vital that you make sure you're getting the right level of insurance cover - and not all policies are created the same.

It might not be the most exciting thing you'll ever read, but you should always make sure you've explored the small print of your insurance policy to ensure you have the right cover for you. Every insurer operating or registered in England is required to provide a detailed policy breakdown as part of being authorised and regulated by the Financial Conduct Authority (FCA).

While the type of insurance we've looked at here is the legal minimum required in the UK, it doesn't mean it will always suit your circumstances perfectly and you should consider the options available to you and your individual circumstances.

Other related FAQs

Looking for more related content to this? We’ve picked a selection of related topics that you may find helpful

In the UK, car insurance is a legal requirement to have a policy in place if you own a vehicle. It provides you with financial protection if you have an accident.

The majority of UK car insurance companies will automatically renew your cover when it ends so you don’t accidentally end up uninsured. By law, your provider must notify you that your insurance will renew – and they must show you last year’s price too – so you can decide whether you’re getting a good deal.

Yes, it is possible for two car insurance policies to overlap. This can happen when you switch to a new policy with a different provider before your previous policy has come to an end.

The vast majority of insurance companies will let you choose between paying monthly or yearly for your policy. Your policy will therefore expire at midnight on the expiration date, unless your policy auto renews.

It’s important to keep track of car insurance expiry dates – so you never find yourself driving without adequate cover. To find out when your insurance ends, you can check your paperwork, call your provider, wait for your renewal notice to arrive, or check the Motor Insurance Database.

Yes, car insurance can be paid monthly. In fact, many people pay for their car insurance by monthly instalments.

Don’t panic if you can’t remember who your car insurance is with. The best way to find out is by checking your paperwork – but if you don’t have it to hand, you can look at who your monthly payment is made to through your banking app or search your emails for electronic copies of your documents.

Yes, your no claims bonus (NCB) can expire – and will do so 2 years after your last car insurance policy comes to an end. If you want to make sure you keep your NCB, you’ll need to take out a new policy within 2 years.

Motor legal protection is an optional extra that can help cover the cost of legal expenses that might be needed if you’re involved in an accident that’s not your fault.

As long as you have made a Statutory Off-Road Notification for the car in question, you don’t need SORN insurance – but you might decide you want to insure it; depending on your circumstances.