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Costs and money , Buying a used car , Paperwork and ownership · Posodobljeno 2026-10-18

Car insurance types explained

Car insurance has a reputation for being confusing, partly because the names differ and the details are in small print. The basic ideas, however, are simple. Insurance protects you from large, unpredictable costs in return for regular payments. This guide explains the main kinds of cover in general terms. Which cover is required, how it works and what it costs differ by country, so check with the competent authority and your insurer for the rules that apply to you.

The main kinds of cover

Third party liability

This cover pays for damage or injury that you cause to other people, their vehicles or their property. It does not pay to repair your own car. In many countries a form of this cover is legally required to drive on public roads. Without it you could face heavy personal costs after even a minor accident, as well as penalties. It is the minimum cover and the cheapest.

Comprehensive or own-damage cover

This goes further and also pays towards damage to your own car. Names vary, and it is often sold as a package that can include several of the following:

• Collision: damage to your car in an accident, whether or not you were at fault.
• Theft: payment if the car is stolen, and sometimes damage from an attempted theft.
• Fire and natural events: such as hail, flood, storm or falling trees.
• Glass: repair or replacement of windscreen and windows, sometimes with a separate or lower excess.
• Vandalism: deliberate damage by others.
• Animal collisions.

Not every policy includes all of these, and some can be added or removed. Read what your policy lists, not only its name.

Optional extras

Many insurers offer add-ons. Some are useful for some people and a waste for others:

• Roadside assistance and towing.
• A replacement car while yours is repaired.
• Legal protection.
• Personal accident cover for driver and passengers.
• Cover for personal belongings in the car.
• Cover for use abroad.
• Protection for tyres, keys or similar items.

Check what is already included and whether the extra overlaps with something you already have, for instance through a bank card or a motoring club.

Key terms to understand

• Premium: what you pay, usually yearly or in instalments. Paying in instalments can cost more.
• Excess or deductible: the amount you pay yourself on each claim. A higher excess usually means a lower premium, but you must be able to afford it.
• Sum insured or value basis: how the insurer calculates what the car is worth. Check whether it is the market value, an agreed value or another basis, and how it changes over time.
• Exclusions: situations that are not covered, such as driving under the influence, using the car for hire, drivers not listed or use outside the permitted territory.
• Bonus and malus: a discount for years without claims and a surcharge after claims. Rules differ by insurer and country.
• Named drivers: the people allowed to drive. Letting someone else drive when they are not covered can cause a claim to be refused.

What affects the price

Insurers consider the car (value, power, repair costs, theft risk), the driver (age, experience, claims history), where the car is kept, how much you drive and the cover you choose. Young drivers often pay more, as covered in buying a car for a new driver. Because the premium depends on the model, check quotes before buying a car, not after. The total yearly cost is part of the real cost of owning a car and can be tested in the cost of ownership tool.

Choosing the right cover

1. Start with the legal minimum required by your country.
2. Consider the car's value. For a new or valuable car, own-damage cover is usually worth it. For an old, cheap car, the premium may cost close to what a repair or replacement would, so basic cover can be enough.
3. Consider your ability to absorb a loss. If paying for a replacement car would be a serious problem, broader cover gives peace of mind.
4. Compare at least three quotes with the same cover and the same excess, so the figures can be compared.
5. Read the exclusions and the claim process before signing.

If you buy a car with a loan or lease, the lender may require specific cover. See car loan, savings or leasing.

When you make a claim

After an accident, stay safe, document the scene and inform your insurer within the time stated in your policy. Do not admit fault without advice and do not sign statements you do not understand. The steps are described in after an accident. Keep copies of everything and ask how repairs will be paid and who chooses the workshop.

Insurance is not a warranty

Insurance pays for events such as accidents, theft or fire. It does not cover normal wear, maintenance or a mechanical breakdown. Those need maintenance money, or an extended warranty, if one is available and its terms are clear. For maintenance planning see how often to service.

Reviewing your policy

Review insurance once a year, and whenever something changes: you move, change jobs, drive more or less, or the car's value drops. Tell the insurer about important changes, because a wrong detail can lead to a refused claim. Cancel or transfer the policy correctly when you sell the car, following the local rules.

What to remember

• Liability pays for damage you cause to others; comprehensive cover also pays for your car.
• Read exclusions, excess and the value basis, not only the headline price.
• Compare quotes like for like, and check them before you buy a car.
• Only listed drivers should drive, unless the policy says otherwise.
• Insurance is not a replacement for maintenance.

Accident Beginner Costs Documents Insurance Warranty