Buying a car can be super exciting. Understanding the different types of car insurance may not be quite as fun, but it’s an important topic to get your head around.
Here, we explore the differences between the various policy options to help you make an informed choice about the right cover for your circumstances.
Is car insurance compulsory?
In Australia, you are required to have compulsory third party (CTP) insurance if you register a motor vehicle. In NSW, this is also known as a Green Slip.1
CTP is the most basic form of car insurance and helps cover the costs of compensation claims if you injure or kill someone in a car accident. Youi offers CTP in New South Wales and South Australia.
All other types of car insurance are optional, and whether they’re right for you or not depends on your personal circumstances.
How do I know what type of car insurance I need?
When deciding which type of car insurance will suit you, the Federal Government’s Moneysmart website recommends thinking about whether you can live without your car if it’s written off or stolen, and if you can afford any expenses associated with damage to someone else’s car if you have an accident.2
Youi’s Head of Product – Vehicle, Marni Jackson, suggests the type of policy you choose should be guided by the level of coverage that you’re after.
“Whether that’s very basic cover, only covering you for the damage you cause to someone else’s property, or you might be looking for a more comprehensive cover, which covers your car, and has optional extras you can include, like hire car,” Jackson says.
“Considering the optional extras is a great way for you to tailor your policy to your personal situation. For example, business items or hire car may not suit everyone, so you can choose whether or not they are included. Then you’re only paying for the extras that suit you.
“You should also think about the excess that needs to be paid at claims time. You can reduce the excess, which will increase the premium that you pay. Or you can increase the excess, which will reduce the upfront premium you pay.”
The premium is the agreed amount you pay to an insurer to keep your insurance policy active. The excess is the first amount you’re liable to pay for each claim you make.
It might be a good idea to familiarise yourself with some of the language used by insurers. To make things easier to understand, check out our glossary of car insurance terms.
What are the different types of car insurance?
Other than CTP, there are three main types of car insurance to choose from:
- Comprehensive
- Third party fire and theft
- Third party property only
Here is an explanation of each type of car insurance, including what it can cover and how to know if it’s right for you.
Remember, insurance cover tends to differ across providers and policies, so always check your product disclosure statement (PDS) to make sure you have the right cover for your needs.
Comprehensive car insurance
What is comprehensive car insurance and what’s included?
Comprehensive car insurance is typically the highest level of cover available. In fact, you could say it’s… well, comprehensive!
With this level of cover, most insurance companies can help cover you for a wide range of damage caused by insured events, such as:
- Car accidents
- Theft
- Intentional damage and fire
- Severe weather events such as storms, hail and floods
Comprehensive car insurance generally doesn’t cover mechanical faults; damage due to poor materials or workmanship; or provide coverage for unlawful use (for example, a driver under the influence of drugs or alcohol, or a driver with a suspended licence).
Anything else I should know about comprehensive car insurance?
When you take out comprehensive car insurance, you can typically choose how your car is valued.2 The value is the amount you'll get if your car is written off or stolen, and you can choose between an agreed value or a market value.
“Agreed value is an amount that is agreed upon at the time you take out the policy, and is a set amount for that policy term,” Jackson explains. “Market value is not a set amount. It’s assessed at the time of the loss.”
Moneysmart lays out things you might want to take into consideration before choosing between these.2 If you opt for market value, you won't know how much you'll get if you claim, and you can't change the amount. If you use an agreed value, you might pay a higher premium.
It’s also important to keep in mind that comprehensive car insurance is typically only attached to your vehicle. It does not follow you around if you drive other people’s vehicles. You can learn more about Youi’s Comprehensive car insurance here.3
Third party fire and theft car insurance
What is third party fire and theft insurance and what’s included?
You can think of third party fire and theft as the mid-level cover offered by most insurance companies.
“This level of insurance covers the damage your vehicle causes to other people’s property, plus it covers your vehicle in the event of a fire or theft,” Jackson explains.
It’s worth remembering that third party fire and theft car insurance typically doesn’t cover you for any accidental damage caused to your vehicle. This means that if you cause an accident, you’ll usually be covered for the damage you’ve caused to another person’s property, but you’ll be responsible for paying for your own car’s repairs.
Anything else I need to know about third party fire and theft car insurance?
The cost of third party fire and theft car insurance is generally calculated by taking a range of factors into account. Some of these include:
- Your age
- The make, model, value, age, condition and even colour of your car
- Where you live
- Any demerit points on your licence
- Where your car is usually parked in the day and overnight
- Your insurance and driving history
The main thing you can do to potentially reduce the cost of your third party fire and theft car insurance policy is to increase your excess. A higher excess likely means you’ll pay more when you have to claim, but on the other hand, you’ll likely reduce your premium. Learn more about Youi’s Third Party Fire & Theft car insurance here.4
Third party property only car insurance
What is third party property only car insurance and what’s included?
Third party property usually only covers you if your car causes damage to another person’s car or property.
“This is the lowest level of cover,” Jackson says. “While it doesn't cover the damage to your vehicle, it provides cover for the damage your vehicle causes to third party property.”
If you don’t have third party property insurance, you could face big bills if you cause damage to another vehicle or property as the result of an accident.
Anything else I need to know about third party property only insurance?
It doesn’t usually cover damage to your own car caused by yourself or someone else, unless the other driver is uninsured.5
You may be required to pay an excess for every third party property insurance claim you make under your policy. Learn more about Youi’s Third Party Property Only car insurance here.6
Compulsory third party (CTP) insurance
What is CTP insurance and what’s included?
CTP insurance helps cover the costs of compensation claims if you injure or kill someone in a car accident and is a mandatory requirement for all cars registered in Australia.
Youi’s Head of Product – CTP, Glen Robinson says that in some states, your CTP is paid along with your vehicle registration.
“Alternatively, in NSW, CTP insurance is purchased as a separate transaction prior to completing your vehicle registration,” Robinson notes.
Anything else I need to know about CTP insurance?
CTP insurance is handled differently in each state and territory. Here’s a quick rundown:
- Australian Capital Territory: The Motor Accident Injuries (MAI) Scheme helps cover everyone injured in a motor vehicle accident. Drivers have a choice of insurers, with the premium paid as part of the registration process.7
- Northern Territory: CTP insurance is included in the registration fee under the Motor Accidents Compensation (MAC) scheme.8
- New South Wales: CTP insurance is also referred to as a Green Slip in NSW and must be purchased separately from your vehicle registration. Choose between a range of insurers, including Youi, before registering your vehicle.9
- Queensland: The Motor Accident Insurance Commission (MAIC) is the regulatory authority. The CTP fee is included in the cost of vehicle registration and drivers can choose between a range of insurers.10
- South Australia: CTP insurance is paid at the same time as your motor vehicle registration and can be selected from a choice of insurers, including Youi.11
- Tasmania: CTP cover is administered by the Motor Accidents Insurance Board (MAIB). The premium is included in the registration fee.12
- Victoria: The Transport Accident Commission (TAC) is the sole CTP insurer. CTP is paid alongside the registration fee.13
- Western Australia: The Insurance Commission of Western Australia (ICWA) is the sole CTP insurer. The insurance premium is included in the registration fee.14
If you’d like to learn more about your car insurance options, consider contacting Youi to see if there’s a policy that’s right for you. For answers to some of our most frequently asked questions, take a look at our car insurance page.
1 Source: NSW Government – CTP insurance (Green Slips)
2 Source: Moneysmart – Choosing car insurance
3 Available with Comprehensive policies. See our Car PDS for full details.
4 Available with Third Party Fire & Theft policies. See our Car PDS for full details.
5 Available with Third Party Fire & Theft and Third Party Property Only policies. Conditions apply. For more details, see the Car PDS
6 Available with Third Party Property Only policies. See our Car PDS for full details.
7 Source: ACT Government – Your MAI insurance
8 Source: NT Government – About MAC
9 Source: NSW Government – What is a Green Slip?
10 Source: Qld Government – About CTP insurance
11 Source: SA Government – About CTP Insurance
12 Source: Tas Government – About the MAIB
13 Source: Vic Government – Indemnity provided by the transport accident charge
14 Source: WA Government – Compulsory Third Party
