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

UK car insurance is usually sold at three levels. Each one includes everything in the level below it:

• Third party only (TPO): covers your legal liability for injury to other people, including your passengers, and damage to other people's vehicles or property. It doesn't pay to repair or replace your own car.
• Third party, fire and theft (TPFT): everything in third party only, plus cover if your car is stolen or damaged by fire.
• Comprehensive: everything in TPFT, plus damage to your own car in an accident, whoever was at fault, and usually extras such as windscreen cover.

The Road Traffic Act 1988 makes it a criminal offence to use a vehicle on a road or other public place without at least third-party insurance. The law is designed to make sure anyone you injure, or whose property you damage, can be compensated, so it doesn't require you to insure your own car.

Driving without insurance can lead to a fine, penalty points, the vehicle being seized and, in some cases, a court-imposed driving ban. If your car is kept off the road and declared SORN with the DVLA, it doesn't need to be insured.

The main difference is cover for your own car. If you're at fault in an accident, or there's no one to claim against — for example, if you hit a bollard or skid on ice — a comprehensive policy can pay to repair your car, or pay its market value if it's written off. With third party only, you'd normally pay for your own repairs.

Comprehensive policies often include other features, though the details vary between insurers. Check the policy summary for items such as:

• Windscreen and window repair or replacement, sometimes with a separate excess
• Personal belongings in the car, usually up to a set limit
• Cover for driving other cars, which many policies no longer include, and which is usually third party only where it is offered
• A courtesy car while yours is repaired at an approved garage

It seems logical that the lowest level of cover would cost the least, but that isn't always how it works. Insurers price on risk and on their claims experience, and the price for each level of cover reflects the drivers who tend to buy it as well as the cover itself. As a result, a comprehensive quote can sometimes be the same as, or lower than, a third-party quote for the same driver and car.

Because of this, it's worth comparing all three levels rather than assuming third party is the cheapest way to get on the road.

Third party cover may suit you if your car is worth little and you could afford to repair or replace it yourself, and the quote is genuinely lower. Comprehensive may suit you if you'd struggle to replace your car after an accident, or if your car is on finance — many finance and lease agreements require comprehensive cover, so check your agreement.

Whichever level you choose, the total excess is the compulsory excess set by the insurer plus any voluntary excess you add. Check what you'd pay towards a claim, and whether any separate excess applies to windscreen claims or to young or newly qualified drivers.