InfoChoice’s easy guide to third party car insurance

What is TP?

TP, or third party insurance, is a type of car insurance that covers you for liability if you damage someone else’s property, be it a car, building or shop. It only covers others’ property and each policy will have its limit – usually $20 million.

It can also cover you for any legal costs you might face if someone makes a liability claim against you.

What is CTP?

Compulsory third party insurance (CTP) is the minimum legal insurance requirement which covers other drivers or pedestrians for any injuries you may cause them while you’re driving. CTP is a legal requirement for all vehicles on the road in NSW, Vic, QLD, SA, WA, TAS and NT, although there are slight variations in how you obtain it in each state.

What is TPP?

TPP is another way to refer to third party property insurance.

Who is the third party in a car accident?

The third party is anyone who’s injured, or whose property is damaged, by your car while you’re driving.

Finding the cheapest third party insurance

There’s no one cheapest TP provider as your premiums will vary according to your profile and circumstances. Newer drivers will pay more than more experienced drivers, for example, and women generally pay less than men. Your location, driving record, your mileage and even your profession also make a difference.

Looking for your cheapest TP insurance involves shopping around. Remember, too, that the cheapest might not be the best for you, so make sure you look at a few similar policies and read the product disclosure statement before signing anything. 

There are a few ways to reduce your premiums, including:

  • Comparing several quotes so that you know you’re getting the best price and the cover you need
  • Opting for a larger excess, as this will reduce your monthly premiums
  • If you’re including other drivers in the policy, make sure they’re all over the age of 25
  • Try to get your insurance as part of a bundle, for example, from the same provider you use for your home insurance, as this could mean a discount
  • Buy your policy online, as many providers offer attractive discounts for online purchases, such as the $20 discount on AAMI third party fire and theft car insurance, and
  • Make sure your car is as secure as possible with either a security system or a garage.

Is TP insurance right for you?

If your car isn’t worth much, or if you’re on a tight budget, then third party insurance is a good option.

If you have a more valuable vehicle, live in a high crime area or a flood, fore or storm-prone area, then third party, fire and theft or comprehensive policies may be better.

Comparing third party insurance policies

Here’s what you need to look at and think about:

Your excess

The higher your excess – the amount you pay out of your own pocket when you make a claim – the lower your premiums. If you have a high excess then it might be too expensive in the event of a claim, especially if the claim isn’t for a huge amount.

Loyalty discounts

If you go with the same provider as you have other policies with, you may get some decent discounts. If you roll over your policy you may also get a discount.

The no–claims bonus

The longer you go without making a claim, the bigger your discount (or bonus) may be. For five years without making a claim, you could get as much as a 50 per cent discount.

The actual cover you’ll get

You need to head to a comparison site to look at the different options of cover you could get. Some TP policies will cover you for up to $5,000 if your car is damaged by an uninsured driver, while your total cover for at–fault accidents is up to $20 million.

Always read the small print

Even if your policy offers a no–claims bonus protection, for example, any at–fault claims could affect it. There may even be circumstances in which events that aren’t your fault, like storm damage, could affect your bonus. For example, if you forgot to lock your car in your garage and it’s damaged by hail, you could be penalised.

What are common third party insurance exclusions?

Some modifications, such as bike racks, souped–up engines and even customised paintwork can exclude your vehicle, so always let your provider know before you make any changes to your car.

If your car is overloaded by people or objects you may be excluded.

Using your vehicle for “hire and reward” can invalidate your policy.

If the driver is under the influence of alcohol or drugs, or refuses to provide a sample to police.

If you leave personal items in the car and they’re stolen.

If your car has a breakdown some policies won’t help.

Tyre damage due to sudden braking, nails on the road or tyre cuts (malicious or accidental).

Reckless acts or driving on your part.


This update is not financial advice. This article is general news and information.

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