Finding car insurance in Australia can be as confusing as a mob of emus trying to navigate Sydney’s CBD.
Australia is covered by 800,000 kilometres of road, according to the Australian Bureau of Statistics (ABS). In addition, more than 18 million cars are registered for these roads. Combine that with some awe-inspiring scenery, and it’s easy to get excited about getting behind the wheel!
And yet, it’s also easy to forget that each state and territory has very different drivers, laws, and roads.
Even the insurance you buy in each state varies (to a point). For example, did you know in Queensland, New South Wales and the ACT, you can choose your Compulsory Third Party (CTP) insurer, but you can’t in all other regions?
We detailed everything you should know about car insurance based on where you live.
What types of car insurance are available in Australia?
There are several types of car insurance available to you, each offering a different level of cover. Only one option in this list is compulsory for all owners, so it’s up to you which of the other three you’d like to take out. The exact details of each type of cover will be listed in the relevant Product Disclosure Statement (PDS).
Comprehensive car insurance covers you in more circumstances than any other type of car insurance. With a comprehensive car insurance policy, you can claim if you’re in an accident and your vehicle (or someone else’s vehicle or property) is damaged or destroyed, regardless of who’s at fault. It also covers other types of damage such as vandalism, theft, storm or hail damage and accidental damage.
While Third Party Fire & Theft (TPFT) policies don’t cover you for repair costs to your own vehicle if you’re at fault, it covers damage and repair costs for other vehicles you hit (or property you damage). It also pays for repairs or replacement when your car is stolen or damaged by fire.
Unlike Third Party Fire & Theft insurance policies, Third Party Property Damage (TPPD) policies will only cover you for the damage you’ve caused to other people’s property, be it their vehicle or something else.
Everyone in Australia requires Compulsory Third Party (CTP) insurance, which is also known as Green Slip Insurance or the Transport Accident Charge in some states. It covers your liability if a driver or pedestrian is injured or killed by your actions on the road. It’s typically paid for when you renew your registration.
Why is car insurance important in Australia?
Drivers are constantly surprised with the unexpected when out on the roads and even at home. To ensure your vehicle is protected in more circumstances, it’s essential that you take out the right level of insurance for your current needs.
When making your decision, consider the following and always check the PDS to confirm your cover:
Theft. Even with modern anti-theft devices, cars can still get stolen, leaving you without a ride and a hefty cost to replace it. Car insurance can help you get back on the roads by (potentially) paying out the value of a stolen car.
Traffic accidents. Your car can be damaged in a collision or you could be responsible for damaging the property of other people. Having car insurance can help cover your legal liability for any damages caused. Also, with comprehensive car insurance, you’ll be covered for damage to your own vehicle.
Storms and natural disasters. Severe storms may be a fact of life in Australia, but that doesn’t mean you can’t do something about it. Comprehensive car insurance policies can cover you against monetary losses caused by storm water, falling trees, cyclone, flood and hail damage.
Fire. Whether it’s caused by arson or natural in origin, a fire can leave your car a smoking wreck. TPFT and comprehensive car insurance can have you covered.
Breakdowns. A car breakdown can be a very stressful experience. Fortunately, car insurance providers sometimes offer roadside assistance, emergency accommodation and even a hire car to help you get moving again in an emergency. Keep in mind this may be an optional extra that costs more to add to your policy.
Frequently asked questions about car insurance in Australia
How does car insurance differ per state?
While your postcode can influence your premium (e.g. rates of theft and traffic congestion in specific areas may impact drivers’ likelihood to claim), your state or territory doesn’t tend to make much difference to your premium. The only thing that drivers in NSW should be aware of is that they must take out CTP insurance separate to registering their car.
What about car insurance optional extras?
If you want a little bit of extra cover for the premiums you pay, many Australian car insurance policies will offer you optional extras. These extras can provide you with broader cover, complimentary services and more.
Hire car cover. Your insurance provider can set you up with a hire car to keep you moving after an accident while your car is being repaired or replaced.
Windscreen protection. Whether it’s a tiny chip or a large crack, repairing a damaged windscreen before it gets any worse is crucial. Luckily, you can make a claim and get it fixed fast.
Roadside assistance. Unless you’re a deft hand at fixing your own vehicle with only the tools in your car, roadside assistance is a crucial purchase. It may be bought separately as a standalone product or as an extra with your car insurance policy.
Personal effects. If someone smashes your window and steals something locked securely inside your vehicle, personal effects cover can replace your property (up to a certain value).
How can I find the right car insurance for my needs?
Most drivers want to find the best car insurance available, or at least the cheapest!
We always recommend you set out to find policies that suit your needs, not just your budget. When looking for a policy, ask yourself the following:
Does the policy cover you for your own vehicle’s repairs?
Does it bundle with your home insurance policy to save you money on premiums?
What exclusions (things you aren’t covered for) are listed in the policy?
There’s a lot to consider, so it’s important you first shop around for more than one option before you even consider the costs. Once you compile a list of suitable policies, you can then start narrowing down your options.
Regardless of which level of cover you have, your car insurance policy can cover learner drivers. You may need to list them on your car insurance to avoid paying an unlisted drivers’ excess (on top of a younger driver excess and the basic excess) in the event of a claim.
Does car insurance cover towing?
Comprehensive car insurance policies typically include cover for towing after an accident. Other car insurance products generally don’t, although there may be a provision for towing if you can prove that you weren’t at fault.
Do I have a choice of repairer?
Some car insurance providers do give you a choice of repairer, typically with comprehensive cover. Not all insurance providers offer this in their list of policy benefits and inclusions.
Can I keep my no claim discount if I switch car insurance providers?
If you have a no claim discount (a discount for not making an insurance claim within a set period), you may be able to keep it when switching to a different provider. This may also be known as a safe driver rating or no claim bonus.
Will I get a replacement vehicle if my car is written off?
Generally, comprehensive car insurance is the only type of cover that can include a brand-new replacement vehicle if your car is a total loss. There are conditions regarding this benefit, namely that it’s a new car which is only a few years old and you’re the first owner.
Can I insure my car for an agreed value?
A choice between an agreed value and market value when insuring your car is one of the more common car insurance options providers offer. This option will not be available with every type of cover or insurer, but if you want to insure your vehicle for an agreed value (as opposed to the market value, which can change over time), you typically need to contact the insurance provider before purchasing.
As General Manager of General Insurance at compare the Market, Stephen Zeller is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. There are different types of car cover: comprehensive, Third Party Fire and Theft (TPFT) and Third Party Property Damage (TPPD).
Stephen has more than 30 years of experience in the financial services industry, and is an Allied Member of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and helps review general insurance content on Compare the Market to ensure it accurately breaks down complex insurance topics.
Stephen’s car insurance tips
Take a look at your policy’s excess. You can change the standard excess payment amount, which will influence how much your premiums cost. A higher excess payment often means a cheaper premium, and vice versa. Consider the pros and cons of a higher excess payment to reduce premium.
Many insurers provide storm warning messages via SMS. Make sure the contact is saved to your phone so you can have warning of potential hail or storms.
It’s important to make sure you’re taking proper care of your vehicle. It not only helps you be safe on the road, save money on expensive repairs, but can help you avoid issues if you need to make a claim. For example, ensure that your tyres are in a roadworthy state, as having a non-roadworthy vehicle can void your claim.
National Road Asset Reporting Pilot. Infrastructure Australia, Australian Government. 2013.
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