Like buying a car, there is no single best solution when it comes to buying insurance. Make sure that price is not the only factor you think about when you choose your motor vehicle insurance. You have a wide choice of policies, and you should shop around to make sure that you choose a product that suits your needs and circumstances.

As with all insurance, before signing the insurance contract you should carefully read the policy document and product disclosure statement and make sure you ask your insurer about any aspects of the policy that you don’t understand.

Types of car insurance

If you own and operate a private motor vehicle in Australia, there are four main types of general motor vehicle insurance you need to be aware of:

  • Compulsory Third Party (CTP)/mandatory motor vehicle accident personal injuries insurance – required by each state and territory. It protects any person that you might injure while you are driving. It is not an alternative to taking out a motor policy to cover your financial liabilities, such as damage to another vehicle or property, or your own vehicle
  • Comprehensive – covers damage to your own vehicle and other people’s property, as well as theft and some other risks, plus legal costs
  • Third Party Property – covers damage to other people’s property and legal costs, but not damage to your own vehicle
  • Third Party Fire and Theft – Third Party Property with some add-on features that cover your vehicle

Compulsory Third Party/mandatory motor vehicle accident personal injuries insurance

Each state and territory has a mandatory motor vehicle accident personal injury insurance scheme. In some states it’s known as Compulsory Third Party Insurance (CTP). In New South Wales it is called a Green Slip. In Victoria it’s the Transport Accident Charge.

This form of insurance protects any person that you might injure while you are driving a vehicle, including pedestrians, cyclists and other road users. Each jurisdiction’s scheme has different rules, operates in a different way and covers different things.

It is important to know:

  • This form of insurance is mandatory in every state and territory
  • You must take it out at the time you register your car (in some places such as South Australia, the insurance is part of your registration fee so you are automatically covered but in many other places, it is a separate fee)
  • It is illegal to drive a vehicle that does not have this form of insurance

However, you are not covered for damage to your vehicle, other vehicles or property, or theft of your vehicle or its contents, nor does this form of insurance cover your legal liability other than in respect of personal injury caused to another person while you are driving.

In some places, the mandatory motor vehicle insurance will only cover third parties who are injured and not an at fault driver who is injured in a motor accident that they are responsible for.

Vehicle owners risk significant financial and personal loss, potentially in the millions of dollars, if they fail to take out other forms of motor vehicle insurance alongside their mandatory cover

Comprehensive car insurance

Comprehensive insurance offers the greatest peace of mind to vehicle owners. It covers the repair or replacement of your vehicle for events including theft, collision, fire, malicious damage and weather-related damage.

It can also cover the repair and replacement of any other vehicles that are damaged by your vehicle in an accident, and damage to property.

You would usually choose comprehensive insurance if your car is in good condition. If your car is not in a good state of repair, or if it has issues such as rust or unrepaired damage, insurers might not cover you.

Comprehensive car insurance is highly competitive, with companies offering a wide range of inclusions and optional extras, ranging from windscreen protection to use of hire cars.

Third party property only car insurance

This kind of insurance can provide cover for damage caused by your vehicle to other vehicles or property, but does not provide cover for your own vehicle.

You would usually take out this type of cover if you have a low-value vehicle, so that you are not left financially exposed to having to pay for the damage your car might do to a more valuable vehicle or other property that belongs to someone else.

Some insurers will also cover a specified amount of damage caused to your vehicle if you are in a collision with an uninsured driver.

Third Party Fire and Theft car insurance

This offers the protection of third party property policies, as well as additional fire and theft protection for your vehicle up to a specified limit.

Notable Car Insurance Companies

Some of the notable car insurance companies are listed below

  • Santam car insurance
  • OUTsurance car insurance
  • Old Mutual car insurance
  • Momentum car insurance
  • MiWay car insurance
  • King Price car insurance
  • Standard Bank car insurance