Do I need car insurance?
Yes you do! And you need to understand the different types of car insurance.
Compulsory Third Party insurance is compulsory in Australia for all registered vehicles and might be included in your registration or known as a CTP or Green Slip. This covers other drivers and individuals for any costs incurred by injuries caused by your driving or your vehicle.
Other types of car insurance are not legally required but highly recommended if you want o be covered in the case of accident, injury, damage, theft or breakdown.
Where do you buy CTP insurance from?
You’re covered by CTP automatically when you register your vehicle in most states, apart from NSW, ACT or QLD, where you’ll have to find your own provider.
While CTP is the legal minimum, comprehensive car insurance covers all your accident and damage expenses as well. If you write off your car or have medical bills yourself, this insurance will cover you so you’re not left struggling.
Is the extra insurance really worth it?
If you’re an uninsured driver driving an unregistered vehicle on the road, you are breaking the law in Australia. If you cause an accident, you’re liable for any repairs and medical bills for anyone else involved.
If you have just CTP and you cause an accident, you’re liable for your own medical costs and for the other person’s property.
However, if someone vandalises your uninsured vehicle and isn’t apprehended, you probably won’t get your money back.
This is why, if you can’t afford the cost of comprehensive car insurance, you can think about TPP fire and theft insurance – as it is cheaper but still covers major expenses.
Why you need car insurance
Vehicle accidents can be very expensive. While your TPP will cover you for any damage to other people’s property, including walls, shopfronts, lawns and pets, it won’t cover you for your own damage. Your own repair bills will come out of your pocket.
Your TPP may not cover you for incidents where no–one is actually responsible for the damage to your car. Your car could be damaged by hail, or a flood, or someone could hit your car and drive off, or vandalise or steal it. In these cases, you’ll have to pay to repair or replace your car and this might not be possible straight away.
Very often, a car loan and insurance above and beyond CTP have to come as a package.
Your lender may need you to have TPP or comprehensive insurance as part of the agreement to protect the asset (the car).
The different types of car insurance
There are three different types of car insurance above and beyond CTP.
Third party property damage car insurance, also known as TPP or TPPD, covers you for the damage to others’ property, including homes, gardens, personal items and even pets or animals.
TPFT covers the other driver and covers your car from theft and fire.
Comprehensive insurance covers you for everything that TPP and TPFT will, as well as storms, uninsured drivers, hit–and–run incidents, vandalism and even accidents that you cause.
Which car insurance is best for me?
Ideally, everyone would have comprehensive insurance, but it can be expensive, so you need to think about your car and your driving habits and record before settling on your most cost–effective level of cover.
Here’s some of the questions you need to ask yourself.
Do you owe money on the car?
The chances are that the lender will make your mind up for you here, as it’ll want to protect the loan and the asset that guarantees it, which is the car. It’s also very much in your interests because you don’t want to end up paying for the loan and the repairs or, in the worst–case scenario, the original loan and the loan on the replacement vehicle.
How much is the car worth?
If you’re driving an old vehicle and you’re thinking about replacing it within the next year anyway, then CTP or TPP will probably suffice.
You won’t be stung for anyone else’s repairs in an at–fault accident and you won’t break the