What is third party property car insurance?

Finance Writer · 16 June 2021
Third party property car insurance could be a cost-effective option if you want to avoid potential cost blowouts from an at-fault car accident.

In Australia, we have different types of car insurance, and working out which one is right for you may be tricky at times. Here, we take a look at the most basic level of optional car insurance, third party property. In this article, we cover:

What is third party property car insurance?

Third party property car insurance is the most basic level of optional car insurance available to drivers in Australia. It provides financial cover towards expenses if you cause damage to someone else’s property, such as their car, home, caravan or boat, and towards the other person’s repairs or replacement costs for an eligible claim. It can also include financial assistance to pay money towards any legal proceedings that may occur following an accident in relation to damage to the other person’s property.

Although it is optional, third party property insurance can bring consumers greater peace of mind than not having any optional car insurance. A car accident can be a traumatic experience, separate to the additional worry of being sued for damages to repair or replace another driver’s property.

What does third party property insurance cover?

The cover provided by third party property car insurance protects you financially in the event of an accident where you are at fault, and have caused damage to someone else’s property. If this occurs and you make an eligible claim to your insurer under your policy, this insurance should help towards repairs or replacement costs incurred by the other party. But, keep in mind your policy may contain a pre-agreed limit as to how much the insurer will pay out.

For this reason, it’s a good idea to check any limits or exclusions your policy may include, and to read the product disclosure statement (PDS) and other relevant documentation from your insurer. A third party property policy may also include liability cover, with legal costs you may incur as a result of property damage from the accident potentially being covered by your insurance provider.

It’s important to know that third party property car insurance does not cover the costs of repairing or replacing your own vehicle. For this type of cover, you may choose to look into a more extensive type of car insurance, such as a comprehensive car insurance policy.

What’s the difference between third party property car insurance and CTP or Green Slip insurance?

Compulsory third party (CTP) insurance, also known as Green Slip in New South Wales, is compulsory insurance required for all registered vehicles in Australia. It provides personal injury liability cover to protect you financially if anyone injured or killed in an accident caused by you. This differs from third party property car insurance, which is an optional type of insurance that provides financial and legal liability cover for damage you may cause to someone else’s property, such as a car, caravan, house or boat.

Put simply, CTP protects other people and third party property protects other people’s property. It’s important to remember that neither CTP nor third party property covers you or your vehicle. If you want protection for you, other nominated drivers and your vehicle, you will generally need to purchase additional insurance such as a comprehensive car insurance policy, although you may be able to access some cover for your own medical treatment via CTP, depending on where you live and the circumstances of your accident.

Each state and territory government requires all vehicles to be registered and have CTP insurance in place before being driven on our roads. It is then up to you how much additional insurance cover you take out to protect yourself and others, should an accident occur. While some states allow you to choose CTP insurance from a range of providers, others offer it through government-owned insurance commissions.

If you are interested in taking out third party property insurance, there is a wide selection of policies offered by different insurance providers. You can compare policies and premiums on offer and consider selecting the one most suited to your needs. You may also be interested in finding out more about Award-winning comprehensive car insurance providers, as rated by Canstar’s Research team in our Car Insurance Star Ratings and Awards.

What isn’t included in third party property car insurance?

Third party property car insurance is the most basic level of optional car insurance. For this reason, it’s a good idea to check out what is and isn’t included. Essentially, it doesn’t include any cover for events and problems that may happen to you or your vehicle. If you want cover for theft, malicious or accidental damage to your car, fire, storm or hail damage, then you will need to purchase a higher level of cover, in the form of third party, fire and theft or comprehensive car insurance.

Additionally, bear in mind that extras such as roadside assistance, windscreen replacement, hire car use and personal effects cover are usually only available when you purchase a comprehensive car insurance policy.

How is the cost of third party property car insurance calculated?

The cost of third party property insurance is calculated based on a number of variables and differs for drivers in different situations. One consideration is the age of the driver, with premiums usually higher for younger drivers, generally due to the perception that they are more likely to be involved in an accident.

Research by Transport for NSW showed that drivers under the age of 25 are most at risk of causing car accidents that result in either injury or death. Gender is also a factor, given males made up 73% of all road fatalities in Australia from 2013 to 18, according to research by insurer Budget Direct.

In calculating what premiums to charge you, insurance providers will also typically factor in the make, model and age of your car; your driving history; your address; how many kilometres you typically drive in a year; and whether or not you use the vehicle for commercial purposes, or to provide rideshare services.

Can I reduce the cost of third party property damage cover?

If you are trying to reduce the cost of your third party property damage insurance premiums, it’s a good idea to call your provider and find out what options are available to you. For example, you may be eligible for a price reduction if you don’t allow anyone under the age of 25 to drive your car and are willing to increase the excess you pay, should you need to make a claim.

In addition, premiums are usually cheaper if you have a clean driving history and low annual kilometres. If you aren’t satisfied with your current insurer’s response, it could be worth considering what options may be available to you from other providers.

How often do I pay insurance premiums?

Depending on your insurance provider, you might be able to pay your insurance premiums monthly, quarterly or annually. You may be able to secure a car insurance premium sign-up discount, deal or offer, or a saving if you decide to pay your car insurance premium annually instead of monthly or quarterly.

Main image source: AMPG/Shutterstock.com

Thanks for visiting Canstar, Australia’s biggest financial comparison site*