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Third Party Car Insurance, Explained

Third Party car insurance

You might have heard of third party car insurance but perhaps be unaware that there are three types: compulsory third party (CTP), third party property only, and third party fire and theft. In fact, these are three different levels of car insurance, which cover you and your vehicle – and other people and their vehicles – differently.

In this article, we’ll take an in-depth look at the three types of third party car insurance, including what each type typically covers, where it fits among other ​types of car insurance, and how to decide which level of coverage might be the right fit for you.

Is third party car insurance compulsory?

​​Compulsory third party insurance, most commonly known as CTP (or Green Slip in New South Wales),1 is indeed compulsory under the law. Third party property only, and third party fire and theft, on the other hand, are optional for vehicle owners.

The other main type of car insurance not required by law is ​comprehensive car insurance, which is generally considered to be the highest level of cover available.

CTP helps cover the cost of compensation claims if you injure or kill someone in a car accident. It’s included in your car registration cost, except in NSW where you buy it separately.2 Youi offers CTP insurance in NSW and South Australia.  

While third party property only and third party fire and theft car insurance might sound similar, they are different products. Third party property insurance generally helps cover damage to other people’s property, including cars, in the case of an accident being your fault, while third party property, fire and theft insurance may also help cover your car if it’s stolen or damaged by fire.

If you’re wondering whether it’s worth taking out either of the optional third party insurance types, it might be helpful to consider what could happen if you had a car accident where you were at fault and caused damage to someone else’s car or property, or if your car was stolen. 

If you weren’t covered by third party car insurance and you were at fault, it’s possible you could be liable for the full cost to repair or replace the other person’s vehicle as well as your own. 

What does third party car insurance cover? 

There’s some common ground in what the two types of optional third party car insurance can cover, but there are also differences. Here’s a breakdown.  

Third party property only 

“This is the lowest level of third party property cover,” explains Marni Jackson, Youi Head of Product – Vehicle. “While it doesn’t cover the damage to your vehicle, it’ll help cover the damage your vehicle causes to third party property.” 

Youi’s Third Party Property Only car insurance product can cover you for up to $20 million in legal liability, and can reimburse up to $1,500 for counselling sessions for you, listed drivers and household members following an insured event and after you make a successful claim.3 

However, this type of insurance won’t cover any damage to your own car caused by yourself or someone else, unless the other driver is uninsured and certain conditions are met.4 

Third party fire and theft 

Third party fire and theft is generally considered to be the mid-level car insurance option offered by most insurance companies. 

“This level of insurance helps cover the damage your vehicle causes to other people’s property, plus it helps cover your vehicle in the event of a fire or theft,” Jackson explains. 

However, this type of car insurance generally won’t provide cover for any accidental damage caused to your own vehicle. 

As well as covering third party property, Youi’s Third Party Fire & Theft car insurance can help cover emergency transport, accommodation and repair costs after an insured event which occurred more than 100 kilometres from your home and where you could no longer safely drive the car.5 It can also cover towing costs to the nearest suitable repairer for safekeeping6 and coverage for items inside your car if they’re lost or damaged due to an insured event, up to $150 per item and $750 per claim.7 

How much is third party car insurance? 

When calculating the cost of third party car insurance, insurers may take into account a number of factors, including the age of the vehicle being insured, the make and model, any security features, and whether it has any modifications.8 

Drivers’ ages can also be considered (for instance, if you’re under 25, you may pay more for your car insurance). Your driving record, including any demerit points you’ve incurred, could also impact the cost of your car insurance.8  

And if you want to find cheaper third party car insurance? One thing that might help is increasing your excess. A higher excess means you’ll pay more when you have to claim, but is usually likely to reduce your premium.8 

What are the pros and cons of third party car insurance? 

Compared to comprehensive car insurance, third party property only and third party fire and theft premiums generally cost less. The trade-off is that they provide a lower level of coverage. 

If your car isn’t worth a lot of money and you can live without it, you may decide that third party car insurance is enough for you. Either way, the decision will depend on your own needs, situation and location.  

If you’re unsure which type of car insurance might best suit you, consider contacting Youi for more information or start a quote online. 



1 Source: NSW Government – What is a Green Slip? 
2 Source: Moneysmart – Choosing car insurance 
3 Available with all levels of car insurance except CTP. For more details, see the PDS 
4 Available with Third Party Fire & Theft, and Third Party Property Only policies. Limits apply. For more details, see the PDS 
5 If your car’s unsafe to drive after an insured event and you’re more than 100km from home, we’ll reimburse you up to $1,000 for combined emergency transport, accommodation and/or repairs. Available with Comprehensive and Third Party Fire & Theft policies. For more details, see the PDS 
6 Available with our Comprehensive and Third Party Fire & Theft policies. Limits apply. For more details, see the PDS     
7 Available with Comprehensive and Third Party Fire & Theft policies, and is subject to any applicable excesses. For more details, see the PDS 
8 Source: Canstar – How much does car insurance cost?, 2023