Driver Knowledge Tests

Comprehensive vs third-party car insurance: a guide for new drivers

Are you gearing up to get your driver’s licence? If so, what an exciting time! Finally being able to call yourself ‘road legal’ can come with its fair share of advantages, including greater autonomy to get yourself where you need to go. 

But as is the case with any liberty, owning your own car comes with a good chunk of responsibilities. For example, you should not get behind the wheel without some form of motor insurance. With the right car insurance cover in place, you can help ensure that you’re financially protected in the event of a motor collision or other insured event. 

Car insurance can also help cover you for any liabilities arising from vehicle damage. For instance, if you smashed into another car, your insurance may cover the costs of any damage experienced by the other party. And without insurance, you may find yourself personally liable for the bill, which could be in the thousands.

Even so, as a new driver you might be unsure if you should get comprehensive or third party car insurance. Lucky for you, we’re here to explain the difference. So read on to determine which type of car insurance is the right fit for you and your automobile.

What is comprehensive car insurance?

In the simplest terms, comprehensive car insurance is a type of car insurance that covers both your vehicle as well as third party vehicles in the event of a car accident. So comprehensive car insurance includes cover for damage to your car as well as damage to other people’s property or even any injuries resulting from a motor accident. 

With a comprehensive car insurance policy available to you, you can be rest assured that your insurance provider will likely pay for the repairs to your car in the event that it accrues damage during an insured motor incident. And depending on the limits of your policy (or the total dollar amount that you’re insured for), your insurance provider may even be able to cover the costs of buying a new car. 

You can opt for an agreed limit for your comprehensive insurance package, or you can simply insure your car for its market value. This means if they need to give you a payment, it will be assessed at the current market value for comparable cars.

Why choose comprehensive insurance?

You may want to choose comprehensive insurance if you have a valuable car that you would struggle to replace or afford a replacement if it were written off in an accident. For instance, if you’re looking to buy a brand new car that’s worth around $50,000-$60,000, then it’s worth purchasing a comprehensive insurance policy. It may not be as worthwhile if your car is only worth a few thousand dollars.

Some comprehensive insurance policies also have other benefits, such as a free hire car in the case of an accident, windshield cover in the event of a cracked or broken windshield, and other perks that are likely to be handy for all motorists. A policy may also include towing, roadside assistance, replacing stolen keys or fobs, and even emergency transport and accommodation if your car is rendered immobile after an accident. 

Keep in mind, however, that comprehensive car insurance policies can be more expensive than third party insurance. Policy premiums will range but can be into the thousands per year if you have an expensive vehicle or are deemed to be a high risk driver, perhaps due to your age, previous insurance claims, or due to a history of accidents. 

What is third-party insurance?

Third party insurance is a type of insurance policy where you are covered for damage to any third party property only. In other words, third party insurance does not cover any damage to your car. So if you crashed into a building, your insurance would cover the cost of repairs to the building. However, if you caused damage to another person’s car during a motor accident, then your insurance company would likely cover those costs.

Some insurance providers There is an option some insurers have, which is a third party, fire and theft. This means that in addition to third party damage, your car is covered for damage caused by fire or if it gets stolen. Third party insurance with additional fire and theft cover can be a suitable policy for many first-time drivers who are operating low-value ‘starter cars’. And so long as you can avoid accidents on the road, there’s simply no reason why third party insurance cannot provide adequate cover for your first few years on the road or for the duration of your probationary licence period.

Why choose third-party insurance?

As we mentioned, third party insurance policies can be highly cost-effective for those with second hand vehicles and low-value cars. You’d choose third party insurance if you’re on a tight budget or if your car doesn’t require the extra protection and higher premiums of comprehensive car insurance policies. 

Third party car insurance policies are also typically designed to be more affordable for younger drivers. So if you do feel like you don’t have the budget for a comprehensive policy, have a look into the third party fire and theft insurance policies that are available to you. Save taking out comprehensive car insurance for when you buy your first new car or grab that dream luxury car you’ve always wanted.

A note on excess

For those who are looking to save money when securing an ideal car insurance policy, it’s well worth considering the variation between your premium and your excess. Your premium is the monthly or annual amount you pay directly to your insurance provider in order to maintain your cover. Contrastingly, your excess refers to what you must pay in the event that you do make a claim with your insurance provider. 

All insurance policies will have an excess payable if you claim as the at-fault party in a motor accident. This is also how your driving behaviour can impact on your insurance premiums, as repeat claims can lead to an increase to your premium. If you are a responsible driver, however, and don’t foresee making claims on your insurance policy as an at-fault party, then opting for a policy with a larger excess may help you save in the long term – granted, so long as there are no motor accidents in your future.

For instance, you may choose an excess ranging between $500-$1500 dollars. The higher the excess sum, the cheaper your policy premium tends to be. But if you do have to make a claim, then your premium can increase as a result. 

On that same note, it’s worth considering if you can afford a high excess in the event that you do have to make a claim. If your excess is too high, then you may experience financial barriers on top of having to navigate the stressful aftermath of an auto collision. With that, young drivers are encouraged to keep their excess and premium balanced and firmly within their own budgets.


We’ll end this car insurance guide with a final warning that you should never drive uninsured. If you do, and you damage an expensive car, the repair costs could be so substantial that you may find yourself paying them off for months if not years to come. Imagine you were uninsured, and you rear-ended a high-end sports car. The damage bill could be well over $50,000. This is not an expense that you should ever expect yourself to bear. So be sure to compare all the car insurance policies available to you in the lead-up to buying your first car. That way, you will be able to select a policy that’s perfectly suited to your needs.

Darren is an expert on driving and transport, and is a member of the Institute of Advanced Motorists

Posted in Advice