What is car insurance?

Car insurance in Australia is a type of insurance you can take out to protect you from the financial costs if your car is involved in an accident, is stolen, or is damaged in a weather event or another risk included on your policy. If your car is damaged or written off, or you damage someone else’s vehicle in an accident, the cost to you could be significant, and a car insurance policy is designed to cover those costs.

Comprehensive car insurance is the highest level of car insurance coverage in Australia. It provides a level of financial cover for damage to other people’s cars and property in an accident, damage to your own vehicle caused by fire or theft, and accidental damage to your own vehicle, regardless of who caused the damage. It may also provide additional types of cover, such as damage to your car from storms or vandalism, depending on the insurer and policy you choose.

A comprehensive car insurance policy may also let you choose between market value and 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 choice may affect your premiums.

Note that comprehensive car insurance does not cover you for injury or death caused to other people in an accident – that’s where compulsory third party (CTP) insurance comes in.

Finding the car insurance policy that’s right for you could depend in part on what you can comfortably afford, so it may be worth considering the type of cover that suits your needs and your budget. For example, would you prefer the high level cover generally offered by a comprehensive policy, or would a lower level of cover be enough?

If you decide that comprehensive cover is right for you, you can start your search by comparing car insurance policies with Canstar or viewing our latest Car Insurance Star Ratings Report before getting a quote online.

What does car insurance cover?

Car insurance covers policyholders for damage caused or costs incurred by unforeseen accidents or events involving the car they insure. The exact risks that are covered will depend on the level of cover that you have. For example, third party cover generally only covers costs if you damage someone else’s property in an accident, whereas comprehensive car insurance provides protection for a more extensive range of risks. Depending on the insurer and policy you choose, comprehensive car insurance could cover:

Accidental damage
Theft/vandalism
Storm/flood
Fire damage
Earthquake
Towing costs
Transport from an accident
Hire car costs following theft
Hire car costs following a no-fault accident

Types of car insurance available in Australia

There are four main types of car insurance available in Australia: compulsory third party (CTP), third party property damage, third party fire and theft, and comprehensive.

What is comprehensive car insurance?

Comprehensive car insurance policies have the highest level of policy coverage available in Australia and covers drivers for a range of risks, whether it’s the cost of damage you have caused to someone else’s vehicle in an accident, or damage or loss of your own vehicle due to an insured event.

Other forms of cover generally only cover drivers for damage they cause to other people’s property, or damage or loss of their own vehicle in limited circumstances (usually fire and theft). Comprehensive cover generally extends to other risks on top of these, such as damage caused to your own car by extreme weather or in an accident.

In addition, a comprehensive policy may cover you for some of the other costs associated with an accident or other insured event. For example, depending on the policy, it may cover the cost of a replacement vehicle like a hire car while yours is being repaired or replaced, or some insurers may let you purchase this as an optional extra.

What is third party, fire and theft insurance?

Third party, fire and theft insurance is a policy that covers damage to the property of others, and some limited cover for your own vehicle if it is damaged or lost because of fire or theft. It generally does not cover damage to your own car caused by a car accident.

What is third party property insurance?

Third party property insurance is a policy that covers the cost of repairing damage caused by your vehicle to other people’s property, such as their car. It generally also covers your legal costs if they sue you over that damage. It does not cover damage to your own car, however.

What is compulsory third party (CTP) car insurance?

Compulsory third party (CTP) car insurance is a type of policy that covers you if you injure or kill someone in a motor vehicle accident. The specific conditions on this type of cover are different from state to state, but no matter where in Australia you are, it is compulsory to hold CTP in order to register your vehicle.

What is an excess in car insurance?

An excess is an amount of money you pay your insurer towards the cost of your claim. Different excesses might apply to different types of claims, so you should check your policy for details. You may be able to pay a lower premium if you agree to a higher excess, but you need to be sure that you could afford to pay the excess unexpectedly in an emergency.

How do I compare car insurance quotes online?

If you’re looking to compare comprehensive car insurance policies, Canstar’s Star Ratings could be a good place to start. Our Ratings use a sophisticated and unique methodology that compares both price and features across products on our database. You can compare policies based on their Star Ratings using our comparison tables.

In addition, these are some of the other factors you may want to take into account when comparing car insurance policies:

The premiums being charged
The level of cover you are getting
Whether the risks most relevant to you are covered by the policy (e.g. if your area is prone to flooding, you may want a car insurance policy that covers this)
The level of service the insurer offers (e.g. its claims service)
Whether the insurer allows you to pay monthly at no extra cost
Any discounts offered by the insurer
Are there any additional inclusions, either complimentary or at at any extra cost (e.g. roadside assistance)

What’s the best car insurance for me?

The best car insurance policy for you will depend on your circumstances and the level of cover you are looking for. In assessing policies, you may like to ask yourself questions such as:

Are you looking to keep premium costs down or are you willing to pay more for a higher degree of cover?
How often do you think you’ll need to claim on the policy? Opting for a higher car insurance excess could save you some money on premiums, in exchange for leaving you with higher out-of-pocket costs should you have to make a claim.
How often do you drive your car? If you rely heavily on your car, you might want to prioritise a higher level of cover so you won’t be off the road for too long if your car is damaged.
Are there any particular risks that you want cover for? For example, is your area prone to flooding or car thefts?
Would it be better for your budget to pay your premiums monthly or annually, and would you be prepared to pay more overall for the convenience of monthly payments?
If you are looking for comprehensive cover, how have Canstar’s expert researchers rated the policies you are considering? This can give you an idea of which policies offer the best value for money overall, based on the factors considered.

Looking for the cheapest car insurance?

When you’re shopping around for cover, you may simply want to find the cheapest car insurance policy. It can be important to also keep in mind the level of protection you’re getting for your money. For example, with optional forms of cover, third party property may be the cheapest car insurance in most situations, but it won’t cover you if your car is damaged in an accident or stolen.

Even if you decide on a higher level of cover, like comprehensive, there may be ways to keep the cost down. Some insurers offer discounts if you pay your premium annually or take out the policy online as opposed to over the phone, or you could opt to pay a higher excess if you need to make a claim. It can also help to shop around and compare quotes online from a number of insurers. These techniques may help you get value for your money, while still getting a higher level of cover than the cheapest car insurance might offer.

How to save on car insurance?

If you’re looking to cut living expenses, now could be a good time to compare car insurance policies. If you’ve been with the same provider for a while, it’s possible you could save money or find cover that better suits your needs with a different policy.

About our car insurance experts

Steve Mickenbecker, Group Executive, Financial Services & Chief Commentator

Bachelor of Economics, University of Queensland; Master of Business Administration (MBA), University of Melbourne

Steve Mickenbecker is Canstar’s Group Executive, Financial Services & Chief Commentator, and sits on Canstar’s executive. As Canstar’s resident expert on car insurance, Steve’s insights on car insurance have been featured on leading evening TV news programs including Seven News, Nine News (9News), Sunrise, Today Show, Today Tonight, A Current Affair, and by some of Australia’s best-known media outlets and publishers, including The Sydney Morning Herald, The Age, The New Daily, Drive, the Herald Sun, The Daily Telegraph and Domain.

Steve has more than 40 years of experience working in the financial services industry, holding senior positions at NAB and one of Australia’s largest insurers, Suncorp. Steve joined Canstar in 2007, with his earlier responsibilities including managing operations and developing the future strategy for the business, as well as leading the ratings, PR and editorial teams.

As a member of Canstar’s Star Ratings Committee, Steve plays a central role in shaping our Car Insurance Star Ratings methodology and strategy, which in turn empowers Australian consumers to compare their options with confidence. This role has seen him work closely with the car insurance industry to stay close to the changing needs of consumers for the past 10 years. Steve regularly speaks at leading finance conferences, and presented on the topic of innovation in the General Insurance industry at the RFi Mortgage Innovation Summit in 2020 and RFi Annual Insurance Workshop.

Josh Sale, Car Insurance Ratings Manager

Joshua Sale, Ratings Manager

As Canstar’s Ratings Manager, Josh Sale is responsible for the methodology and delivery of Canstar’s Car Insurance Star Ratings and Awards. With tertiary qualifications in economics and finance, Josh has worked behind the scenes for the last three years to develop Star Ratings and Awards that help connect consumers with the right car insurance policy for them.

Josh is passionate about helping consumers get hands-on with their car insurance, always reminding people who are considering purchasing car insurance of how competitive pricing can be between providers. Josh also developed and launched Canstar’s Most Satisfied Customer Awards for Car Insurance in 2019, which reveal how content customers are with their car insurance provider. These Awards are designed to complement Canstar’s Car Insurance Star Ratings and Awards, which are determined by Canstar’s expert researchers. Josh has been interviewed by media outlets such as the Australian Financial Review, news.com.au and Money Magazine on finance trends.

You can follow Josh on LinkedIn, and Canstar on Twitter and Facebook.

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