Image via Flickr user Ian Armstrong

Drivers are being warned not to assume that third-party insurance will be the cheapest option after research by Guardian Money found they were being quoted up to £4,000 a year more for policies that offer less cover than fully comprehensive plans.

Third-party quotes obtained by the Guardian using comparison websites Uswitch.com, Comparethemarket.com and Confused.com, and from the UK’s biggest insurer Aviva, were all more expensive than fully comprehensive insurance.

In the case of a 20-year-old mechanic living in south-east London and driving a 1.6 litre Ford Focus, the gulf between the cheapest policies available was vast. While the best third-party quote on Comparethemarket.com was £5,762 a year from GO Girl, if the same driver opted for comprehensive cover they would pay just £1,531 with a More Than Smart Wheels telematics policy, where a black box is fitted to the car.

On Comparethemarket.com, third-party cover was more expensive than fully comprehensive insurance in each of the scenarios, but third party, fire and theft proved cheaper in three of the seven cases. The biggest saving for buying less cover insurance was £32 a year for a policy covering a 70-year-old Ford Ka driver from Swindon.

Martin Lewis, the founder of MoneySavingExpert, said: “There are probably hundreds of millions of pounds being wasted by people thinking third-party insurance is cheaper. The golden rule is if you’re only looking for the cheapest policy full stop, don’t just look at third party, get comprehensive quotes as well.”

Despite the low level of third-party policies being offered and sold, it appears this type of insurance will not be disappearing any time soon. Rod Jones from uSwitch.com said: “There will always be a market for third party as some consumers will persist in searching exclusively for it, and for some insurers the loss ratio will be acceptable to make it worth offering.”

Some comparison sites already include features that make it easier to see a comprehensive quote. These include preselecting comprehensive on the quote generation pages, and making it easy to switch between different levels of cover on the results page.

All drivers have access to car insurance, as Pam Quinn of the British InsuranceBrokers Association, said: “There is always a choice, but if you are confused about the insurance options available to you speak to a broker, rather than leaping in and buying an expensive and perhaps unsuitable policy.”

by Dan Moore