Third Party Car Insurance explained – Forbes Advisor Australia

No driver wants to think about disaster hitting the road, but everyone should be prepared for it. Third party car insurance ensures that you have the financial protection to cover costs associated with injuries or damage to your vehicle and property that you may cause while driving.

Both compulsory and optional levels of third party insurance usually do not cover you if your own car is scratched or rendered useless in an accident. So be sure to assess the value of your trip and how you use it before opting exclusively for third party insurance.

If your budget wheels don’t warrant the higher annual premium of a comprehensive policy with wider coverage, then a third party might suit you just right. To help you decide, here’s everything you need to know about third party car insurance.

Different types of third party car insurance

There are three levels of third party car insurance in Australia that cover you for different driving circumstances: Compulsory Third Party (CTP), Third Party Property Damage and Third Party Fire and Theft. Let’s explore each:

Compulsory third party motor insurance (CTP)

It is mandatory to take CTP in Australia. Although its name varies from state to state—it’s sometimes called a “green slip” or “motor vehicle injury insurance”—and the exact details of the policy vary, generally speaking, it covers your liability and anyone driving your vehicle , for injuries caused to others in a motor vehicle accident. It also usually covers you for any personal injury claims arising from the accident.

See details for in your state or territory here:

• New South Wales: The State Insurance Regulatory Authority controls the CTP in NSW, where it is also called a ‘green card’. Drivers buy coverage through private insurance companies, which means prices can vary. The amount and schedule of compensation varies depending on the severity of the injury, but can last for life if necessary, regardless of fault.
• Victoria: The Transport Accident Charge is included in the cost of registration in Victoria, with the Transport Accident Commission (TAC) insuring drivers. TAC does not look at fault and providers cover things like medical care, rehabilitation, counselling, home modifications and income support.
• Australian Capital Territory: Motor Accident Injuries (MAI) Insurance is administered by private insurance companies and controlled by the state government. It is paid on registration and includes treatment, care and benefits for lost income for up to five years, regardless of who is at fault (including you, other drivers, cyclists and pedestrians).
• Queensland: The Motor Accident Insurance Commission (MAIC) regulates Queensland’s CTP insurance scheme, which is administered by private companies. It covers medical treatment, rehabilitation and “just compensation”. However, if the injured person is responsible or no one is at fault, the MAIC says you will need to rely on sick leave, Centrelink benefits, Medicare and a private or public health system.
• Tasmania: CPT is arranged through the government body, the Motor Accident Insurance Board (MAIB), and is paid with the registration of the vehicle. It provides medical benefits, disability benefits and no-fault income.
• Western Australia: Motor Vehicle Injury Insurance is arranged by the Insurance Commission of Western Australia and must be paid for on registration. It consists of two components: Compulsory Third Party Support (CTP) and Catastrophic Injury Support (CIS). The former covers other drivers’ expenses related to injury and death, while the latter covers more severe or disabling injuries that require lifelong care. You can still claim if you were the at-fault driver, but there are some restrictions around this.
• South Australia: You can nominate a CTP insurance provider during rego for cover for personal injury or death caused by you. You will only be able to claim compensation if you were not at fault for the accident or are only partly responsible.
• Northern Territory: CTP is included in the rego fee of your vehicle, covering medical and rehabilitation costs as well as financial support. It is administered through the NT Motor Accident Compensation Commission and is a no-fault scheme (meaning anyone can get compensation regardless of fault) covering pedestrians, cyclists, drivers, passengers, motorcyclists.

Car insurance for third party property damage

This is the basic level of third party insurance that drivers can choose if they want cover for damage they may cause to other people cars or property while driving. For a single incident, most major insurance companies set a payout limit of $20 million.

Some policies may include a smaller amount (usually around $5,000) to cover your own vehicle if the accident was caused by an uninsured driver and you can prove that they were completely at fault. But generally, primary third party insurance does not cover your own car.

Third party fire and theft

As the name suggests, this level of insurance adds coverage for damage to your vehicle that results from fire or theft. Most insurance providers set a limit of around $10,000 to pay out in these circumstances, but you’ll usually need to choose the exact amount to match the value of your car. A higher level of coverage will increase your premium.

Some providers include additional types of coverage under this broader umbrella. This can include covering the cost of towing your fire or theft-damaged car to a workshop, a rental car while it is being repaired or replaced (usually up to 21 days) and cover for certain valuables stolen from or damaged in your car (usually up to $500).

What is not covered by third party insurance?

Even when you have CTP cover and a basic third party policy, your car will not normally be covered for any damage, including wear and tear, electrical or mechanical damage and any damage caused during illegal activities (eg driving under the influence )—unless you choose fire and theft coverage and the claim meets those parameters. If you want extra peace of mind, consider comprehensive car insurance.

Third party vs comprehensive car insurance

In short, comprehensive car insurance includes everything in a third-party policy and adds coverage 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 additional fee). This can range from full replacement cover if your vehicle is written off, to towing, travel and accommodation cover after an accident.

Like third party cover, comprehensive policies still don’t cover costs related to general wear and tear or damage, and there are likely to be other exclusions: be sure to check the product disclosure statement (PDS) for details.

How to make a third party car insurance claim

Be sure to record as many details as possible at the time of the accident – this provides evidence to support your insurance claim. Once you have ensured the safety of all involved and reported the incident to the police, be sure to collect:

• The name, contact details, vehicle registration numbers and insurance information of all road users involved.
• The date and time of the incident.
• The road conditions and sequence of events leading up to the accident.
• Any photos of vehicle damage.
• Contact information for all witnesses

For a CTP claim, seek medical treatment as soon as possible (keep any documentation), then go through the relevant CTP provider or government authority to make a claim. If you are making a claim on third-party ownership, call your supplier at the time of the incident to check if there are any steps you need to take (such as towing damaged cars to a specific repair shop). Then submit your claim with supporting evidence as soon as possible.

Frequently Asked Questions (FAQ)

How much does third party car insurance cost?

CTP premiums depend on your location (state and zip code) and the size of your vehicle. There is a flat rate in states and territories where CTP is organized through government bodies, while premiums vary somewhat where private insurance companies administer policies (although competition is still controlled by the government).

Other third-party policies may take additional factors into account when determining premiums, such as your age, gender, driving history, insurance history, and the make and model of your vehicle. You may be able to access discounts if you stay loyal to the same insurance provider or if you don’t make any claims on your policy, so be sure to check what you’re eligible for.

How much third party car insurance do I need?

Every driver must take a CTP, but the rest is optional. Even if your car is in last place, it’s recommended that you at least maintain basic third-party title coverage 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 higher crime rates, you may want to consider a fire and theft policy, especially if you park your car on the street where it is more vulnerable to vandalism.

What are the disadvantages of third party insurance?

Like any insurance policy, there are always circumstances where your coverage may not apply. But the most obvious disadvantage is that your own car is usually not protected by this type of insurance.