Once upon a time the majority of motorists bought third party fire and theft (TPFT) insurance, purely and simply because fully comprehensive insurance was so much more expensive. Then two things happened; cars became far cheaper in real terms, and the Internet came along making car insurance a much more competitive business. This meant that even the least well off members of society could often be able to afford to run a car. Because these cars were not usually worth a great deal it made a lot of sense for them to get the cheapest possible insurance on them, which was third-party only.
Why did it go up in price?
Unfortunately – and it may not be politically correct to say this, even if it is true – the type of clients who bought third-party insurance were often far less careful in maintaining and generally looking after their cars than their more affluent counterparts. A higher than average number of vehicles were abandoned, stolen or vandalised leading to stonking great losses for a lot of insurers. In addition many younger drivers chose the cheapest possible cover out of sheer financial necessity, and it is a sad fact that younger drivers ON AVERAGE tend to have more accidents, and more serious ones, than older drivers with more experience. Not surprisingly, It was not long before insurers started to realise that this was a market they did not really want to be in.
As a consequence, whilst comprehensive car insurance premiums increased over the years, the premiums for TPFT rose at a slightly higher rate whilst third-party only rates went up by much bigger leaps and bounds and so we are now at a crazy stage where anyone who buys one of these policies could well be paying several times as much as people who had comprehensive policies, even though those third-party policies offered far lower benefits.
Is it still worth buying?
From a purely financial point of view fully comprehensive cover is often a better deal for both the insurer and the insured. The client knows that if the car is badly damaged or written off in an accident the insurer is likely to meet at least most of the cost, and the insurer knows that the car owner who takes out one of these policies cares enough about the car to spend a little extra to protect it, and is therefore likely to be at far less risk of being involved in an accident than someone who didn"t give a fig about it.
Bearing in mind the different benefits on offer a comprehensive policy can usually offer far better value for money than a TPFT for clients whose cars are worth a fairly substantial amount, whilst the lower level of cover (which, in the test we ran, only averaged about 15% cheaper) may be considered satisfactory by those running much cheaper cars which would be easier to replace. Thanks to more efficient mass production and better manufacturing standards good, roadworthy cars with many years of use still left in them can be picked up quite cheaply these days so in many cases the claims excess could easily go a long way towards covering the cost of a replacement vehicle; if your £1000 car is written off and you have a £500 excess to pay yourself there may be little point in paying out for a comprehensive policy if it is only going to benefit you by a very small amount if you need to make a claim. Only you can make the choice.
What about third-party-only?
Third-party only cover however is to be avoided at all costs. Apart from the ludicrous premiums, who wants to be labelled as a potentially high risk customer?