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The journalists on the editorial team at Forbes Advisor Australia base their research and opinions on objective, independent information-gathering.
When covering investment and personal finance stories, we aim to inform our readers rather than recommend specific financial product or asset classes. While we may highlight certain positives of a financial product or asset class, there is no guarantee that readers will benefit from the product or investment approach and may, in fact, make a loss if they acquire the product or adopt the approach.
To the extent any recommendations or statements of opinion or fact made in a story may constitute financial advice, they constitute general information and not personal financial advice in any form. As such, any recommendations or statements do not take into account the financial circumstances, investment objectives, tax implications, or any specific requirements of readers.
Readers of our stories should not act on any recommendation without first taking appropriate steps to verify the information in the stories consulting their independent financial adviser in order to ascertain whether the recommendation (if any) is appropriate, having regard to their investment objectives, financial situation and particular needs. Providing access to our stories should not be construed as investment advice or a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction by Forbes Advisor Australia. In comparing various financial products and services, we are unable to compare every provider in the market so our rankings do not constitute a comprehensive review of a particular sector. While we do go to great lengths to ensure our ranking criteria matches the concerns of consumers, we cannot guarantee that every relevant feature of a financial product will be reviewed. We make every effort to provide accurate and up-to-date information. However, Forbes Advisor Australia cannot guarantee the accuracy, completeness or timeliness of this website. Forbes Advisor Australia accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in our stories or any other information made available to a person, nor any obligation to furnish the person with any further information.
Updated: Sep 12, 2022, 2:44pm
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No driver wants to think about disaster striking on the road, but everyone should be prepared for it. Third party car insurance ensures you have financial protections in place to cover costs related to injuries or vehicle and property damage you may cause while driving.
Both mandatory and optional levels of third party insurance generally don’t cover you if your own car is scraped up or rendered useless in a crash. So, be sure to assess the value of your ride and how you use it before opting exclusively for third-party insurance.
If your budget-friendly wheels don’t warrant the higher annual premium of a comprehensive policy with broader cover, then third party could suit you just right. To help you decide, here’s everything you need to know about third party car insurance.
There are three tiers of third party car insurance in Australia that cover you for different circumstances while driving: compulsory third party (CTP), third party property damage and third party fire and theft. Let’s explore each:
It’s mandatory to take out CTP in Australia. While its name differs between states—sometimes it’s called a ‘green slip’ or ‘motor injury insurance’—and precise policy details vary, it broadly, speaking, covers your liability, and anyone who drives your vehicle, for injuries caused to others in a motor vehicle accident. It also generally covers you for any personal injury claims arising from the accident.
See the details for in your state or territory here:
This is the basic level of third party insurance which drivers can opt for if they want cover for damages they may cause to other people’s cars or property while driving. For a single accident, most major insurance companies set a pay-out limit of $20 million.
Some policies may include a smaller amount (usually around $5000) to cover your own vehicle if the accident was caused by an uninsured driver and you can prove they were completely at fault. But generally, basic third-party insurance doesn’t cover your own car.
As the name suggests, this level of insurance adds on coverage for damages to your car that are the result of a fire or theft. Most insurance providers set a limit of around $10,000 for pay-outs in these circumstances, but you’ll generally get to choose the exact amount to match the value of your car. A higher coverage level will increase your premium.
Some providers include additional types of cover within this broader umbrella. This could include covering costs for towing your fire or car damaged by thieves to a repairer, a hire car while it’s being repaired or replaced (usually up to 21 days), and cover for certain valuables stolen from or damaged inside your car (usually up to $500).
Even when you have CTP cover and a basic third-party policy, your car generally won’t be covered for any damages, including wear and tear, electrical or mechanical faults, and any damages caused during illegal activities (e.g. driving while under the influence)—unless you opt for fire and theft cover and the claim fits those parameters. If you want extra peace of mind, consider comprehensive car insurance.
In short, comprehensive car insurance includes everything in a third-party policy, and adds cover for your own wheels on top for a higher premium. What’s included will depend on your provider, policy and any optional extras you agree to add (for an extra fee). This could span from total replacement cover if your vehicle is a write-off, to cover for towing, travel and accommodation after an accident.
Like third party cover, comprehensive policies still don’t cover costs related to general wear and tear or breakdowns, and there will likely be other exclusions: be sure to check your product disclosure statement (PDS) for details.
Be sure to note down as many details as possible at the time of the accident—this provides evidence to support your insurance claim. After you have ensured the safety of everyone involved and reported the incident to police, be sure collect:
For a CTP claim, seek out medical treatment as soon as possible (saving any documentation), then go through the relevant CTP provider or state body to make a claim. If you’re making a third-party property claim, call your provider at the time of the incident to check if there are any steps you need to take (like having damaged cars towed to a specific repairer). Then, submit your claim with accompanying evidence as soon as possible.
CTP premiums are dependent on your location (state and postcode) and the size of your vehicle. There’s a flat rate in states and territories where CTP is organised through government bodies, while premiums vary somewhat when private insurance companies administer policies (although competition is still overseen by government).
Other third-party policies may take extra factors into account when setting premiums, such as your age, gender, driving history, insurance history and the make and model of your car. You might be able to access discounts for staying loyal to the same insurance provider or not making any claims on your policy, so be sure to investigate what you’re entitled to.
Every driver must take out CTP, but the rest is optional. Even if your car is on its last legs, it’s advisable to at least hold basic third-party property cover so you don’t rack up a huge repair bill for other people’s vehicles and property. If you live or drive in areas with a higher crime rate, you may want to consider a fire and theft policy, especially if you park your car on the street where it’s more vulnerable to vandalism.
Like any insurance policy, there are always circumstances in which your cover may not apply. But the most obvious drawback is that your own car generally has no protection with this kind of insurance.
Olivia Gee is a Sydney-based writer and editor working across personal finance, lifestyle and sustainability. She is an insurance expert with ASIC RG146 Tier 2 Certification to provide general insurance advice. Her work has been published in Time Out, Money magazine and Guardian Australia, among other publications.
Third Party Car Insurance explained – Forbes Advisor Australia – Forbes
