As the cost of living continues to bite, many Aussies are looking for ways to reduce household spending.1 If you’re considering spending less on your car insurance, it’s important to understand what is and isn’t included in different types of insurance – and some effects of reducing your level of cover.
But first, to answer the question, “Is car insurance compulsory in Australia?” Yes – Compulsory Third Party (CTP) insurance – known as Green Slip insurance in New South Wales – is mandatory in all states and territories for cars to be registered for driving on public roads.2 However, there’s plenty that CTP doesn’t cover, and this is where general car insurance comes in.3
In this guide, we’ll explore the types of car insurance, look at how CTP works around the country, and ask if additional car insurance might be worth it for you. Remember, when buying any type of insurance, you should consider your own circumstances.
Do I need car insurance in Australia?
At an absolute minimum, you need CTP insurance to register your vehicle and legally drive it on public roads in Australia.2 CTP provides legal liability cover for drivers for injuries or death caused to a third party in the event of a car accident.
“CTP provides coverage for claims made by any drivers, passengers, pedestrians and other road users not at fault in a motor vehicle accident and covers costs such as treatment, care and rehabilitation,” explains Glen Robinson, Youi’s Head of Product – CTP. “It may also cover loss of income and damages in some states.
“In New South Wales, for example, there is also limited coverage for injuries to the driver of the motor vehicle at fault. It’s important you check what you’re covered for in the state you drive in.”
It’s worth noting that CTP insurance doesn’t cover you for damage to your own vehicle, the third party’s vehicle or other property damaged in a car accident. This is where additional types of car insurance – such as Comprehensive, Third Party Fire & Theft or Third Party Property Only insurance – have a role to play, as these may cover items that CTP does not.4
How does CTP differ across the states and territories?
In most states and territories around Australia, CTP insurance is included as part of your car registration fee. In some instances, you might be able to select a specific insurer from a list, whereas other states operate with a single CTP provider.
In NSW, Green Slip insurance must be purchased separately, prior to renewing your car registration.5
CTP cover varies across the different states and territories based on a number of factors such as fault, liability and compensation benefits payable. There might also be different requirements for car safety and personal identity checks prior to registering a vehicle, so it’s worth checking your state or territory’s registration requirements.
Here’s a quick run-down on how CTP works in each state and territory:
Compulsory third party car insurance in the ACT
In the Australian Capital Territory, CTP insurance is managed by the Motor Accident Injuries (MAI) Commission. Drivers have a choice of insurers with the premium paid as part of the registration process.6
Is car insurance compulsory in the NT?
In the Northern Territory, CTP insurance is included in the registration fee and managed by the Motor Accidents Compensation Commission (MACC). The MACC operates under a no-fault CTP scheme, so there’s no need to prove fault to make a claim.7
Understanding the NSW Green Slip
In NSW, CTP is overseen by the State Insurance Regulatory Authority (SIRA). A Green Slip can be purchased from a range of insurers, including Youi,8 and must be bought prior to registering your vehicle.4 Green Slip premiums differ based on a range of factors, including driver age, vehicle age, claims history and driving record.9
Depending on the age of your vehicle, it might also need a safety check, known as a Pink Slip, before it can be registered.10
Compulsory third party car insurance in Qld
The Motor Accident Insurance Commission (MAIC) is the regulatory authority in Queensland. The CTP fee is included in the cost of registration, and you can choose from a range of insurers.11
How does CTP insurance work in SA?
South Australia CTP insurance is regulated by the CTP Insurance Regulator. Your CTP premium is paid along with your registration, and you can select from a choice of insurers, including Youi.12
CTP cover in Tasmania
CTP cover in Tasmania is compulsory and is operated by the Motor Accidents Insurance Board (MAIB). The premium is included in the registration fee.13
Understanding CTP in Victoria
Is car insurance compulsory in Victoria? Yes, CTP is, and the Transport Accident Commission (TAC) is the sole CTP insurer in the state. It is funded through the TAC charge as part of the registration fee, which you can find on your registration renewal notice from VicRoads.14
WA CTP scheme
In Western Australia, the Insurance Commission of Western Australia (ICWA) is the sole CTP insurer. Your insurance premium is included in your registration fee.15
Youi offers CTP in New South Wales and South Australia.
What other car insurance options are available at Youi?
While only CTP insurance is mandatory, there are other types of car insurance you might want to consider, depending on your personal circumstances.
“You can choose from three levels of cover: comprehensive, covering your car and any third party property damage; third party property damage plus cover for fire and theft; or you can choose just to cover third party property damage,” says Marni Jackson, Youi’s Head of Product – Vehicle and Lifestyle.
“When buying car insurance, it’s important to take the time to understand exactly what you’re being covered for and what your options are so you can make the choice that suits your situation best.”
Here’s a simplified look at what each of these optional insurance types covers at Youi:
| Policy type | Damage to your own vehicle16 | Fire17 and theft18 | Damage to other vehicles or property19 | Injury to others3 |
| Comprehensive | ✔ | ✔ | ✔ | ✘ |
| Third Party Fire & Theft | ✘ | ✔ | ✔ | ✘ |
| Third Party Property Only | ✘ | ✘ | ✔ | ✘ |
| CTP (NSW & SA) | ✘ | ✘ | ✘ | ✔ |
Insurance cover does vary across providers and policies, so always check your Product Disclosure Statement (PDS) to make sure you have the right cover for your needs.20
What happens if you drive without car insurance?
While you’re only legally required to have CTP insurance in order to drive on Australian roads,21 driving without additional cover could leave you exposed to some expensive risks.
For one thing, CTP doesn’t cover damage to other people’s property or vehicles. So, if you cause an accident and have no insurance other than CTP, you might be liable for thousands of dollars in repair and replacement costs.21 And, if you’re unable to pay, the matter could become a legal issue.22
Also, CTP doesn’t cover damage to your own vehicle.21 This could leave you out of pocket if you are faced with replacing or repairing your car – if you can’t afford those upfront costs, you could be left with no vehicle at all.3
Is it worth getting additional insurance?
Is comprehensive car insurance compulsory? No, it’s not. But having a general car insurance policy such as comprehensive, could help buffer you financially.21 Here, we’ve explored some of the reasons why people might consider reducing or cancelling their car insurance, and the risks involved in doing so.
I can’t afford general car insurance
With the cost of living rising,1 saving money might be on your mind. But the real question is, can you afford to be without car insurance?
The Australian Government’s Moneysmart website recommends asking:3
- Can I afford to repair, replace or go without my car if it’s damaged, stolen or written off?
- Can I afford to pay for other cars or property I might damage?
- If I have a loan on the car, could I afford to repay that if I had to purchase another car?3
I’m a safe driver
Being a safe driver is great, but there are some events even the most attentive drivers can’t avoid. For example, your car could be stolen, scratched or damaged by a third party in a hit and run, or you could be involved in an accident with an uninsured driver. In these scenarios, additional car insurance might help you avoid hefty out-of-pocket expenses.21
My car isn’t worth much
Got an old runaround? You might be wondering, “Do I need comprehensive car insurance?”
If you’re not worried about the cost of repairing or replacing your own car, there may still be some value in a third party policy. This type of insurance may help cover the cost of other people’s cars or property if you damage them in an accident.3
So, is car insurance compulsory in Australia? Well, only CTP is - but while choosing the minimum insurance might seem cost-effective, it could end up being an expensive decision in the long run.21
For more ideas that could help you save, check out our top tips for reducing your car insurance premium. Or, you can visit our car insurance page to discover our you-shaped insurance options and find out if they’re right for you.
1 Source: ABC News – Australia is in a cost-of-living nightmare: what can the new Albanese government learn from its last term?, May 2025
2 Source: Moneysmart – Buying and running a car
3 Source: Moneysmart – Choosing car insurance
4 See the Car PDS for full details.
5 Source: State Insurance Regulatory Authority – Compulsory Green Slip insurance, April 2025
6 Source: Motor Accident Injuries Commission – Learn about your MAI insurance policy
7 Source: MACC – About the MAC Scheme
8 Source: State Insurance Regulatory Authority – How to buy a Green Slip, April 2025
9 Source: State Insurance Regulatory Authority – How prices are set, January 2025
10 Source: Service NSW – Get a safety inspection report (pink slip), March 2025
11 Source: Motor Accident Insurance Commission – About CTP insurance, November 2024
12 Source: CTP Insurance Regulator – Purchasing CTP
13 Source: MAIB – How to pay your MAIB insurance premium
14 Source: Transport Accident Commission – Indemnity provided by the transport accident charge
15 Source: Insurance Commission of Western Australia – Insurance Policy
16 Available with Comprehensive policies only. Limits and exclusions may apply. For full details, see the PDS.
17 Exclusions and limits may apply. Where you have increased your cover or reduced your excess within 72 hours of a flood, storm, hail or bushfire occurring, cover will be limited to the amount that was effective prior to the change. Loss, damage or legal liability caused by, resulting or arising from flood, storm, hail or bushfire during the first 72 hours of your policy first being purchased is excluded unless certain conditions apply. For full details, see the PDS, TMD and your policy schedule.
18 Available with Comprehensive and Third Party Fire & Theft policies only. Limits apply. For full details, see the PDS.
19 Available with all levels of car insurance except CTP. Limits and exclusions apply. For full details, see the PDS.
20 See the Car PDS for full details.
21 Source: Canstar – Do I need car insurance in Australia?, May 2025
22 Source: Drive – Why Australians are still driving around without insurance, July 2025
