Third party, fire and theft car insurance

SEAN CALLERY
Deputy Editor · 20 August 2021
When comparing car insurance, not only is it important to shop around different insurers, it’s also worth giving some thought to the type of policy you take out. Third party, fire and theft insurance is one of the options. Let’s take a look at how it compares to the other types of cover.

In this article:

What is third party, fire and theft car insurance?

Third party, fire and theft car insurance is a type of policy that covers drivers financially for certain risks, but it comes with some notable exclusions. Out of the four most common forms of car insurance available in Australia, it is generally considered to be the second most comprehensive form of policy – behind ‘comprehensive’ car insurance, but offers a higher level of cover than compulsory third party (CTP) cover and third party property cover.

Many car insurers in Australia offer third party, fire and theft cover so drivers have a range of providers to choose from. Among the factors you might want to consider when shopping for cover are the premiums charged for the cover, the level of protection you get, what extras are offered as part of the policy and the level of service the insurer is likely to provide if you need to make a claim.

What does third party, fire and theft car insurance cover?

As the name suggests, this kind of policy will typically cover an insured driver for damage they cause to the property of a third party, such as another driver’s vehicle, as well as providing financial protection if your car is stolen or damaged in a fire.

Beyond these three main risks, some insurers may offer additional cover, or optional add ons to the policy, in return for increased premiums.  It’s important to read the policy’s product disclosure statement (PDS) or speak to your insurer so you’re aware of what is and isn’t covered by your policy and what limits may apply. Here’s a selection of the risks that may be covered by a third party, fire and theft policy, depending on the insurer and policy:

  • hire car after theft
  • towing costs
  • transport costs (to your destination if your car can’t be used following an insured event)
  • emergency accommodation costs following an insured event
  • damage caused to your vehicle (up to a limit) as a result of an accident involving an uninsured driver who is at fault
  • damage to personal property in your car (such as electronics) due to an insured event
  • damage caused to baby capsules and car seats in your car due to an insured event
  • third party property damage caused by a caravan or trailer being pulled by the insured vehicle

Importantly, third party, fire and theft insurance usually does not cover the cost of repairing or replacing your vehicle in an accident where you are at fault. A number of other risks, such as damage caused by certain weather events, are also typically excluded.

How does third party, fire and theft compare to other car insurance policies?

Let’s take a look at how third party, fire and theft cover compares to:

Compulsory third party (CTP) car insurance

Whereas third party fire and theft cover you if you damage another person’s property (as well as for the other risks explained above), it does not cover you for damages you might need to pay if you injure someone on the road. This is the purpose of CTP insurance, the type of policy that is mandatory for all registered vehicles in Australia.

Third party property car insurance

Third party property insurance typically only covers the policyholder if they accidentally cause damage to another person’s property. It does not cover risks to your own vehicle, such as fire and theft.

Comprehensive car insurance

In addition to the risks covered by third party, fire and theft car insurance, comprehensive cover is designed to protect you financially if you cause damage to your own car in an accident, or if your car is damaged by a range of other weather-related risks, such as storm damage. Depending on the policy, comprehensive car insurance may also cover other costs you may incur following an accident, such as a replacement hire car while your car is being repaired.

10 tips to help you find the cheapest third party fire and theft car insurance policy

If you’re looking for the cheapest deal on a third party, fire and theft car insurance policy, here are some steps you could consider taking:

  • shopping around a range of providers to compare premiums, ensuring you are looking at what’s covered by the policies, as well as their price
  • opting out of optional cover that you do not need
  • considering increasing your excess, but remember you will have higher costs if you need to make a claim

Some other factors that could help you keep your premiums low could include:

  • parking your car in a secure location overnight (and let your insurer know so it can be factored into how your premium is calculated)
  • keeping your mileage down (the more your drive, the higher your premiums may be)
  • driving safely – your premium could well be cheaper if you have a clean claims history and driving record
  • minimising the number of drivers under 25 nominated as additional or listed drivers on your policy
  • considering if it’s cheaper to buy an annual policy and pay upfront, rather than pay monthly premiums
  • reviewing whether you use market or agreed value to insure your car
  • keep an eye out for insurers offering discounts to customers who purchase their policy online instead of over the phone

Main image source: e2dan (Shutterstock.com)


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