Different types of car insurance explained

An appropriate level of car insurance could help reduce the financial impact of being involved in a car accident. So what are the different types of motor vehicle insurance in Australia, what does each one provide cover for, and which one might be most appropriate for you?

What are the different types of car insurance?

There are four main categories of car insurance available to Australian consumers (listed in order of most cover to least).

• Comprehensive car insurance: the most extensive (and generally most expensive) form of cover. Provides a more thorough degree of cover for damage or theft to your car, as well as to the property of others during an accident.
• Third-party fire and theft cover: covers your car if it’s damaged by fire or stolen, and includes the cover provided by third party property damage insurance.
• Third-party property damage: covers you if you cause damage to someone else’s property (e.g. their car or home).
• Compulsory Third-Party (CTP) insurance: a mandatory coverage in Australia that protects you financially if you injure or kill someone in an accident. In ACT, it is known as the motor accident injuries (MAI) insurance. In NSW, the CTP insurance, also known as the green slip.

In summary: What do different types of car insurance policies cover?

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Comprehensive Insurance

As the name implies, comprehensive car insurance is the most extensive and all-inclusive form of car insurance available in Australia. Comprehensive car insurance provides all the cover that third-party property, fire and theft does, but adds cover for accidental damage to your own car, regardless of who is at fault.

Depending on the insurer and policy you choose, there are also a range of optional insured cover types you may be able to purchase, including temporary replacement vehicles during the time your car is being repaired, and no-excess windscreen replacement. A comprehensive car insurance policy may also let you choose between market value or agreed value for your policy, meaning you could get a say in how much you’ll be paid in the event that your car is stolen or written off, depending on the policy. However, your choices may affect your premiums.

That being said, even comprehensive insurance doesn’t cover everything. It generally won’t cover damage caused by someone else driving your car, unless they are authorised to do so on your policy (which could make your car insurance more expensive). It also won’t cover damage if it happened while the driver was over the legal alcohol limit or under the influence of drugs.

Comprehensive car insurance is the most expensive level of car insurance. According to Canstar Research, average annual premiums for comprehensive car insurance can range from less than $1,000 to more than $2,000, depending on how old you are and which state/territory you live in. The larger price tag means that you may want to shop around and compare policies before you buy.

One of the ways you can save on insurance is by shopping around for car insurance sign-up deals, and comparing policies in order to find one that offers you the right balance of cover and cost. You can also check out our most recent Car Insurance Star Ratings which compared a wide cross-section of comprehensive car insurance policies from different providers on Canstar’s database, and identified the ones offering 5-Star Value to consumers.

Explore further→ Car insurance deals and offers

You can also visit our comprehensive car insurance comparison tables in order to generate a shortlist list of products.

Compare Comprehensive Car Insurance

Third-Party Fire and Theft Insurance

If you don’t want to pay for comprehensive car insurance but do want some level of protection for your own car, third-party fire and theft insurance represents a step up from third-party property insurance, both in terms of the cover it provides and the cost of that cover.

In addition to covering damage to the property of other road users, third-party, fire and theft insurance also provides a degree of cover for your own car in the event that it’s damaged or lost due to fire or theft. However, like CTP and third-party property insurance, it doesn’t provide cover for damage to your vehicle resulting from a driving accident such as a crash or collision.

Learn more: Third-party fire and theft car insurance

Third-Party Property Insurance

This is the most basic level of optional car insurance, and provides you with financial assistance if you cause damage to someone else’s property – for example someone’s car, boat, caravan or home.

It also includes liability cover, meaning it will provide financial assistance if you become involved in legal proceedings as a result of the damage caused. This liability cover doesn’t extend to personal injury liability cover, however your mandatory CTP insurance will provide that.

Third party property insurance doesn’t cover the cost of any repairs to or replacement of your own car, particularly when you’re at fault for the accident. Exceptions may be possible with some insurers if you’re not at fault for the accident and the other party is uninsured.

Learn more: What is third-party property car insurance?

Compulsory Third Party (CTP) Insurance

CTP insurance provides protection against claims for financial compensation if you injure or kill someone in a motor vehicle accident. It is considered to be a type of personal injury insurance and as the name indicates, mandatory for all registered vehicles.

Generally, CTP only provides liability cover in the event of injury or death you cause to other people. CTP insurance does not insure against the cost of repairs to any vehicles or property, regardless of fault or ownership. This means that whether your car ends up slightly scratched or completely written off after an accident, your CTP insurance will not pay to have the damage repaired.

While being fairly inexpensive, generally speaking, CTP insurance also won’t cover you in the event that you damage a vehicle or other property belonging to someone else.

CTP insurance works in different ways and comes with different conditions in each state and territory. For example, some states require you to purchase your own CTP insurance policy when registering your vehicle, whereas others include it as part of the registration fees and provided by government-owned insurance commissions. CTP insurance is known as Motor Accident Injuries (MAI) insurance in ACT, and covers everybody who is injured in a motor vehicle accident, regardless of who is at fault. CTP insurance is also known as a green slip in NSW. With these variations in mind, you may want to check the specifics of how CTP insurance functions where you live when obtaining your own vehicle.

Explore further→ How to check car insurance