For many Australians, their house and their car rank as the top two most valuable assets they own. That’s why having the protection of quality car insurance is so important. But with so many insurance companies offering so many products, how do you know which one is the best fit for you?
Well, let’s start with two of the more popular forms of car insurance: comprehensive car insurance and compulsory third party car insurance. Knowing the differences between these two products will be important when you come to choosing the insurance coverage you purchase for your vehicle.
So, what exactly is compulsory third party car insurance?
Compulsory third party car insurance (CTP) is as the name suggests — compulsory insurance that protects third parties. It’s unique in that it only protects you from third party personal injury liability and does not cover injury to you as the owner or driver of the vehicle or damage to any property.
All Australian States and Territories have legislation in place that makes it a requirement for all registered vehicles to be covered with CTP.
If you are in New South Wales, the ACT or the Northern Territory you are required to organise CTP insurance upon registering your vehicle and you can generally choose from one of five insurance companies who are legally entitled to offer it (Suncorp, Allianz, QBE, Zurich and Insurance Australia Limited).
In Queensland, the same requirement applies but you’re free to choose from any insurer you like. In Victoria, Tasmania, Western Australia and South Australia, CTP applies automatically and the cost is included in either the vehicle registration fee (Victoria and Tasmania) or the licence registration fee (South Australia and Western Australia).
And comprehensive car insurance?
Comprehensive car insurance offers you cover for any accidental loss or damage to your vehicle up to the set value agreed between you and your insurance company or the market value of the vehicle (the cost of replacing your exact vehicle, taking account of its make, model, age and condition).
It might also cover the cost to repair the damage and loss caused to someone else’s vehicle or property, and it covers you (generally up to $20 million) for your legal liability in the case of you causing damage to another person’s property.
The difference between comprehensive car insurance and compulsory third party car insurance?
The key differences between compulsory third party insurance and comprehensive car insurance are these:
- All registered vehicles must be covered by CTP insurance, whereas comprehensive car insurance is optional;
- CTP insurance only protects you from the personal injury liability that might arise if you injure anyone involved in an accident you cause;
- CTP insurance does not protect or allow you to recover costs associated with any property damage you cause; and,
- Comprehensive car insurance generally protects you for the loss or damage you cause to your vehicle, any other vehicles, and any other property.