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The latest estimates put the number of uninsured cars on the UK's road at more than two million. This suggests that insuring your car is viewed more as an optional extra than a necessity by many motorists * kind of like the heated mirrors of motoring charges. But this is not the case. Car insurance is a legal requirement, and one the police are taking increasingly seriously. Last year they seized and impounded a record 150,000 cars - giving owners 14 days to pay a *200 fine or see their car crushed.

What is more it is not just Ford Cortinas and Fiat Pandas that have been getting this treatment. A pound in west London reported Porsches, Lamborghinis and even a Hummer being brought in for having no insurance. So presumably elements of society ranging from city bankers to gangster rappers are trying to avoid covering their vehicle. This is looking more and more like a bad percentage play, and for all Clarkson's telling you that drivers should be above the law, they are not just yet.

Now it would be simplistic to suggest that there are two million people in the UK who do have car insurance because they do not understand how it works. But it is certainly a complicated area, with all the terms, conditions, clauses and tick boxes you would expect of a product designed by bankers. But our guide to insuring your car should at least give you an idea of the key terms insurers use, and help you separate your third party, fire and theft from your elbow.

Types of Cover

There are three types of cover available from most insurers, each giving different levels of protection:

Third party

This is the lowest level of cover and meets all legal requirements. It will pay out for any damages or injuries that you cause to another person in an accident. However, it does not offer any compensation for damage to your car or injuries to yourself.

Third party, fire and theft

This is pretty much the same as third party cover but will also pay to repair or replace your car when it is stolen, or if it is damaged by a fire.

Comprehensive

The complete package. It has all the benefits of third party, fire and theft insurance but also covers any damage or injury caused to you or your car by an accident.

No claims discount

Insurers will give you a discount on your policy if you do not make a claim over a certain length of time. The amount of no claims discount you get varies widely from company to company but if you have not claimed for three years or more then it may be worth looking at firms who specialize in insuring safer drivers. One year's claim-free motoring can equate to a discount of between 27 and 57 per cent, and many firms offer discounts of up to 70 per cent for longer periods.

Protected no-claims discount

This is basically insuring your insurance, and ensuring that you keep your no-claims bonus even if you do have to make a claim. Typically you pay between 10 and 15 per cent on top of your policy to protect the years of no-claims discount you have built up. It is usually available only when you have been with the same insurer for four years, and generally covers the discount for even if you make one claim a year.