Most of us own at least one car, but how many of us understand how to best insure our vehicles?

Generally, there are three levels of car insurance, all including protection against most claims for damage that you cause to someone else.

Third Party Only: This is really “Help, I damaged someone else’s stuff while driving and it’s my fault” cover.

If you make contact with someone else’s property while driving (reverse into building, misjudge a car park, don’t see a car in front stopping) and you are responsible for the damage, then Third Party Insurance will respond and work with the other person’s insurer to sort out costs. You will be responsible for your agreed excess.

This is the lowest cost cover, but only protects other people. It does save you from having to pay for someone else’s repairs/replacement, possibly over many years.

Third Party, Fire & Theft: This is Third Party Only car insurance plus cover for your vehicle if it is stolen (or damaged in an attempted theft) or catches fire. It can include some cover for damage to your vehicle if caused by another identified driver.

This policy type covers any damage that you are legally responsible for while driving and either an agreed value or market value cover that will pay out if your car is stolen or burnt out.

It gives you some protection for what is often one of your biggest assets, but generally doesn’t cover your car against accidents while driving. For domestic cover, you may be able to extend this to include windscreen/glass cover.

Comprehensive: This includes everything already mentioned, plus it will cover the cost to get your car back into the condition it was in prior to an accident (or to replace your car to agreed value/market value). Cover includes storm/flood damage, replacement of lost or stolen keys, and protection against uninsured drivers (financial, not physical).

Market value is the reasonable retail value of your vehicle, immediately before it was damaged/lost/stolen. This is usually set by an independent valuer after a loss, but insurers will review figures if you can show different value. If your car is special (e.g. classic, low volume, prestige) you may be able to obtain your own insurance valuation and have an agreed value cover.

Comprehensive cover has a higher annual premium than either Third Party or Third Party, Fire & Theft covers because it’s covering your car for more potential issues.

There is also Windscreen/Glass insurance which can be included in covers or added as an optional extra. This covers repairs and replacement of any glass in the car, generally without an excess applying (if claim is for glass only). Be aware that it can cost thousands to have windscreens replaced and sensors recalibrated in modern cars.

What cover is right for you? Think about what you could afford to lose in the event of theft, fire or a car accident and consider the risk.

Policies will only respond if you are driving within the terms of your licence (e.g. the rules for a restricted licence) and the law (e.g. alcohol limits).

Your local insurance brokers at C&R Insurance are happy to have a chat about options.