Omari Gates
If you're a driver in Australia, you'll need to take out Compulsory Third Party (CTP) insurance, also known as 'green slip' insurance. This is a legal requirement in every state and territory and covers the costs of injuries or deaths resulting from a road accident for which you are liable. However, CTP insurance doesn't cover damage to your car or someone else's, so you might want to consider additional insurance to cover these scenarios. There are several options to choose from, including comprehensive insurance, third-party property insurance, and third-party property, fire, and theft insurance. Each type of insurance offers different levels of cover, so it's important to understand what is and isn't included in each policy before making a decision.
| Characteristics | Values |
|---|---|
| Compulsory insurance | Compulsory Third Party (CTP) Insurance, also known as Green Slip Insurance, is mandatory in every state and territory in Australia. |
| CTP Insurance coverage | Covers the costs of injuries or deaths resulting from a road accident for which you are liable. It does not cover damage to vehicles or property. |
| CTP Insurance cost | The cost of CTP Insurance depends on factors such as the type of vehicle, its age and performance, and the driver's age and history. |
| Additional insurance options | Comprehensive, Third Party Fire and Theft, and Third Party Property Damage insurance are optional but recommended for additional coverage. |
| Comprehensive insurance | Covers a wide range of incidents, including accidental damage, theft, fire, and vandalism. It is the highest level of insurance and typically has a higher premium. |
| Third Party Fire and Theft insurance | Covers damage to other people's property and your car if it is damaged by fire or stolen. |
| Third Party Property Damage insurance | Covers damage to other vehicles and property but not your own vehicle, except in limited circumstances. |
| Insurance considerations | Factors to consider when choosing insurance include the value of your car, whether you can afford repairs or replacement, and where you park your car. |
| Premium determination | The insurance premium is determined by factors such as your age, driving history, and the likelihood of making a claim. |
| Excess | The excess is the amount you contribute towards a claim and can be adjusted to affect your premium. |
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What You'll Learn
Compulsory Third Party (CTP) insurance
In NSW, if you are moving interstate, you will need to purchase a CTP Green Slip and obtain an eSafety check before registering your vehicle. Similarly, if you are moving away from NSW to another state or territory, you will need to refer to the local requirements for transferring your vehicle registration. For example, in South Australia (SA), CTP insurance is paid for when renewing a vehicle's registration, and you can choose your CTP insurer. In Tasmania, CTP insurance is provided through the Motor Accidents Insurance Board (MAIB) as part of the vehicle registration process.
CTP insurance covers the financial impact of causing injury or death in a motor vehicle accident anywhere in Australia. It is important to note that CTP insurance does not cover damage to property or other vehicles, nor does it cover your own injuries outside of third-party claims. For this reason, drivers in Australia have the option to choose additional levels of cover, such as comprehensive insurance or third-party property damage insurance, to suit their specific needs.
CTP insurance is regulated by the government, and the prices are submitted to SIRA for approval. The premium, or cost of insurance, is determined by various factors, including the vehicle's age, make, model, and shape; the driving history of all drivers of the vehicle; and the registered usage of the vehicle. CTP insurance can usually be purchased for either a 6- or 12-month term, depending on the insurer and the vehicle type.
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Third-party property insurance
Some companies offer Third Party Property, Fire and Theft insurance, which covers the same as Third Party Property but also includes cover for loss or damage to your car if it is stolen or catches fire. This type of insurance may be worth considering if you park on the street.
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Comprehensive insurance
Comprehensive car insurance is not compulsory in Australia, but it does provide the highest level of cover available. It covers damage to your own car, as well as other vehicles and third-party property in motor accidents that are your fault. It commonly protects against theft, fire, vandalism, and weather-related damage to your car.
The cost of comprehensive insurance, or the premium, is based on how likely you are to make a claim. Factors such as your age, vehicle type, and how much you drive will influence your premium. You can also choose to pay for extra benefits that extend your cover, such as accident hire car cover, roadside assistance, and windscreen cover.
If you have taken out a loan to purchase your car, your financial institution might require you to have comprehensive insurance.
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Agreed value vs. market value
When it comes to car insurance in Australia, there are three main types of insurance: comprehensive, third-party fire and theft, and third-party property damage. Comprehensive insurance offers the broadest coverage, protecting against theft, fire, vandalism, and weather-related damage, as well as damage to other people's property. Third-party fire and theft insurance cover property damage and your car if it's stolen or damaged by fire, while third-party property damage insurance covers damage to other vehicles and property but not your own.
In addition to these three main types of insurance, there is also Compulsory Third Party (CTP) insurance, which covers the costs of injuries or deaths resulting from a road accident for which you are liable. CTP insurance is mandatory for all drivers in Australia and is usually included in your car registration cost, except in New South Wales, where it is purchased separately.
When deciding on the level of coverage that suits your needs, you may also come across the terms "agreed value" and "market value". These terms refer to the amount your car is insured for and will determine how much you receive if your car is written off or stolen and not recovered.
Agreed value is a fixed amount that you and your insurer agree on for the worth of your car when you take out a policy. This means that you know exactly how much the payout will be if your car is a total loss. However, agreed value policies tend to come with higher premiums.
On the other hand, market value is based on how much your insurer determines your car is worth at the time of the claim. This value is usually calculated by looking at the price of similar cars on the open market and considering factors such as make, model, age, and condition. Market value policies generally have cheaper premiums than agreed value policies, as the value of your car normally depreciates over time.
Ultimately, there is no right or wrong answer when choosing between agreed value and market value car insurance. It depends on factors such as how you value your car in relation to the market, your budget for premiums, and the age of your car.
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Optional extras
While Compulsory Third Party (CTP) insurance is mandatory for all drivers in Australia, there are several optional extras and benefits you can choose from to extend your level of cover. The availability of these optional extras will depend on the type of car insurance you have and your insurance provider. Some of these extras may even come as standard features in your insurance policy.
Agreed value
You and your insurer decide on a fixed amount as the agreed value. If you use the market value, you won't know how much you'll receive if you claim, and you won't be able to change the amount. You will pay a higher premium if you use an agreed value.
Excess
The excess is the amount you agree to contribute toward the cost of a claim. Depending on your car insurance policy, you may be able to choose the amount of your excess. While reducing your excess may save you money on your claims, it will cost you more in premiums.
Low kilometre policies
If you don't drive your car often, you might be able to restrict the number of kilometres you drive on your policy to reduce the price of your insurance.
Roadside assistance
Some insurers offer roadside assistance as an optional extra.
Accommodation and transport
Some insurers cover accommodation and transport costs if you have an accident away from home.
Personal property
While most policies don't cover cash, many will cover jewellery, sporting equipment, mobile devices, and electronics such as phones and tablets.
Replacement or re-coding of keys
Some insurers cover the cost of replacing or re-coding keys after theft, and some even cover lost keys.
Replacement child seats
Child seats must be replaced after an accident, as it's not possible to determine if they've been damaged. Some insurers cover the cost of replacement child seats.
Towing
If your car needs to be towed due to an accident, your comprehensive car insurance may cover the cost.
Engine damage
Some insurers cover engine damage caused by contaminated fuel, but not if you use the wrong type of fuel.
Damaged or stolen trailers
Some insurers cover damaged or stolen trailers, and some even cover caravans.
It's important to carefully read your insurer's Product Disclosure Statement (PDS) and Target Market Determination (TMD) to understand what is and isn't covered by your policy.
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Frequently asked questions
CTP, or Compulsory Third Party insurance, covers the costs of injuries or deaths resulting from a road accident for which you are liable. It is a legal requirement in every Australian state and territory. In most states, CTP is included in the cost of your vehicle's registration, but in some, like New South Wales, it must be purchased separately.
There are four types of car insurance in Australia: comprehensive, third-party fire and theft, third-party property damage, and CTP insurance. Comprehensive insurance offers the broadest coverage and is the most popular, while third-party property damage is the lowest level of insurance.
Comprehensive car insurance covers a wide range of events and incidents that can damage your car, including theft, fire, vandalism, and weather-related damage. It also covers damage to other people's property and the costs associated with accidents, including damage to your own vehicle.
Third-party property damage insurance is the most basic level of voluntary insurance. It covers the costs of damage you cause to other people's property, including their cars, but not your own vehicle. This type of insurance can be crucial for covering potentially high costs if you're at fault in an accident.
To keep your car insurance premiums affordable, consider shopping around for quotes from different insurers, as premiums for renewals are often higher than those for new policies. Look out for special offers and online discounts, which can be as high as 15%.
