Are there different levels of car insurance?

The basic level of car insurance is Third Party Only. This covers you for any damage or injury to other people and their property. It does not cover you or your car at all.
The next level is Third Party, Fire and Theft. This covers other people and your car in the event of 'fire or theft'. Quite self explanatory.
But the top level, the level all driving instructors must have, is comprehensive car insurance. This covers you for any and all damage to your car, yourself and other people. Assuming the insurance company can't find a way of wriggling out of payment!

Why is Car Insurance necessary?

Many new drivers can't understand why it costs them over £1000 to insure their car, when they only paid £800 to buy the car!!
The first and most important part of car insurance to understand is that you are not insuring your car, you are insuring against damage caused by your car.
If you crash into another car, a house or even a pedestrian, you need to be covered in case you are sued for damages.
If you accidentially ran someone over and broke both their legs... 'Sorry' would not be enough. Without insurance you could be liable for tens of thousands in compensation, not to mention the hefty fine for not having car insurance in the first place.
Even the most basic Cheap Car Insurance cover would prevent this from becoming a problem.