Understanding car insurance: CTP, comprehensive and third party car cover explained

• Compulsory Third Party (CTP) is mandatory in Australia – for some it’s built into your registration; in some states you buy it separately
• Third party property damage car insurance covers the legal liability arising from damage to someone else’s property caused by the use of your car – but it doesn’t cover damage to your car
• Comprehensive car insurance covers damage to your car, as well as the legal liability arising from damage to someone else’s property caused by the use of your car

When choosing car insurance, it’s important to understand the types of cover to help you make an informed decision. In this article, we explain the differences between the three key products: CTP, third party property damage and comprehensive car insurance.

1. CTP insurance

Australian drivers need compulsory third party insurance (also known as CTP green slip in NSW) by law. CTP insurance covers personal injury claims arising from an accident you’ve caused.

In most states and territories, it’s automatically built into your rego costs. In New South Wales, Queensland, South Australia and the Australian Capital Territory, you can choose your insurer when taking out CTP cover.

CTP doesn’t cover car or property damage costs – that’s where comprehensive or third party property damage insurance comes in.

2. Third party property damage car insurance

Third party property damage car insurance covers the legal liability that arises from damage to someone else’s property caused by the use of your car.

It’s not CTP cover.

3. Comprehensive car insurance

Comprehensive car insurance offers the highest level of protection.

It covers accidental loss of, or damage to your car from incidents such as collision or impact, theft or attempted theft. You’ll also be covered for the legal liability arising from damage to someone else’s property caused by the use of your car.

You can choose either a Market Value or Agreed Value policy.

Market Value

This is the value of your car in your local area immediately before the incident. To determine the market value, the insurer will use recognised industry guides and consider the car’s make, model, age and kilometres travelled. They’ll also look at both factory-fitted and legal after-market modifications and accessories, and the general condition of your car.

Agreed Value

This is the amount you and your insurer agree to insure your car for, during the period of insurance shown on your certificate of insurance or policy schedule.

Deciding between comprehensive vs third party property damage car insurance

The policy you choose will come down to how much protection you need and the premium you’re willing to pay. Consider the value of your car, how you use it and who drives your car.

If you want to be covered for damage to a new or expensive car, you might want a comprehensive car insurance policy. If you’re only concerned about avoiding a hefty repair bill for someone else’s car, third party property damage car insurance might be enough for you.

If you’d like to chat through your options, we’re here to help. Call us on 133 723.