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Top 3 things to know about car insurance in Australia

Protect your car with the right cover

Cars are generally not cheap, so regardless of where you live in Australia, protecting your investment with the right type of car insurance can make a difference.

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Consider the different levels of cover

Car insurance policies can vary depending on the level of cover you take out, so weigh up what cover is right for you.

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Optional extras can extend cover on your car

As well as the standard inclusions in your policy, many car insurance products offer optional extras that extend the cover for your car.

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Want to know more about car insurance in your state? Read our guides below

 

QLD

 

NSW

 

VIC

 

SA

 

WA

 

ACT

 

TAS

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Car insurance

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A guide to car insurance in Australia

Last updated 21/02/2024

Kenneth Young
Written by Kenneth Young

Adrian Taylor, General Manager of General Insurance
Reviewed by Adrian Taylor

Find out more about car insurance in Australia

What types of car insurance are available in Australia?

There are several types of car insurance available to all car insurance customers, each offering a different level of cover. Only one type of insurance is compulsory for all car owners, so it’s up to you which of the other three you’d like to take out for additional protection.

The full details of each type of cover will be listed in the relevant Product Disclosure Statement (PDS) of a new policy or your existing motor vehicle insurance. It would also pay to read through the Target Market Determination (TMD) with any policy to ascertain if the product is right for you.

Comprehensive

Comprehensive car insurance covers you in more circumstances than other types of car insurance. With a comprehensive car insurance policy, accidental damage to your own car as well as your liability for damage to any other driver’s vehicle is covered regardless of who’s at fault for the accident that caused it. It also covers other types of damage to your car such as vandalism, theft, fires and hail damage.

Third Party Fire and Theft

While Third Party Fire and Theft (TPFT) insurance policies typically don’t cover you for repair costs to your own vehicle if you’re at fault, they cover damage and repair costs for other vehicles you hit (or property you damage). They offer cover for repairs if your car is stolen or damaged by fire or theft.

Third Party Property Damage

Unlike TPFT insurance policies, Third Party Property Damage (TPPD) insurance will usually only cover you for the damage you’ve caused to other people’s property, be it their vehicle or something else. Some insurers may offer limited cover for your car in a not-at-fault accident with an uninsured driver.

Compulsory Third Party

Every vehicle driven in Australia requires Compulsory Third Party (CTP) insurance, known as Green Slip insurance in NSW or the Transport Accident Charge in some states. CTP insurance covers your liability if a driver or pedestrian is injured or killed by your vehicle on the road. It’s typically paid for when register your vehicle.

Car insurance in Australia

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Why is car insurance important in Australia?

Drivers are constantly surprised with unexpected road hazards and weather events 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:

Is car insurance in Australia compulsory?

The only form of insurance required for all drivers on Australian roads is CTP insurance to cover your legal liability for deaths or injuries caused by your registered vehicle. But even though the other types of car insurance aren’t compulsory, it’s still a wise idea to take out an additional level of cover for your car besides CTP insurance.

How does car insurance in Australia differ per state?

While your postcode can influence your car insurance premium, your level of coverage won’t change depending on where you live in Australia. The only difference between the states and territories is in how CTP insurance is paid for and taken out. For example, the states and territories may have differing government charges and levies that can be included in your CTP insurance fees.

Furthermore, drivers in NSW must take out CTP/Green Slip insurance separate to registering their car, while in Tasmania, your CTP insurance is provided by the Motor Accidents Insurance Board (MAIB). It’s a ‘no fault’ scheme covered by registration fees, regardless of who is at fault in a car accident.

How can I find the right car insurance for my needs?

We always recommend you choose policies that suit your needs, not just your budget. When looking for a policy, ask yourself questions like:

There’s a lot to consider, so it’s important to be aware of the policy inclusions and options before you consider the costs.

How car insurance works

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Can I insure my car for an agreed value?

A choice between agreed value and market value when insuring your car is one of the more common car insurance options providers offer. If you want to insure your vehicle for an agreed value (as opposed to the market value, which can change over time) you and your insurance provider will agree to a set value before taking out a policy. This way, you know what to expect in the event you are paid out if your car is a total loss. Some insurers may have qualifying criteria that must be satisfied before you are offered an agreed value policy (e.g. you must hold comprehensive cover).

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 discount may also be known as a safe driver rating or no claim bonus depending on the insurer, so remember that when looking to switch.

What are optional extras in car insurance?

If you want to extend the cover for your vehicle, many Australian car insurance providers will offer you optional extras to give you further peace of mind by providing you with broader cover. Some common optional extras can include:

Does car insurance in Australia cover learner drivers?

Regardless of which level of cover you have, your car insurance policy may cover learner drivers. With some insurers, you might need to list them on your policy to avoid paying an unlisted driver excess on top of a young driver excess and the basic excess.

Does car insurance in Australia cover towing?

Comprehensive car insurance policies typically include cover for towing after an accident. While the other types of car insurance products generally don’t, there may sometimes 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 when you have comprehensive cover. Not all insurance providers offer this in their list of policy benefits and inclusions.

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 to this benefit, though, typically it’s for a new car which is only a few years old and you’re the first owner.

Adrian Taylor, General Manager of General Insurance

Meet our car insurance expert, Adrian Taylor

As Executive General Manager of General Insurance at Compare the Market, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.

Adrian has over 13 years’ experience in the financial services industry. He helps review general insurance content on Compare the Market to ensure it accurately breaks down complex insurance topics.

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