Different Types of Car Insurance
Broadly speaking there are four different types of car insurance in Australia: CTP, third-party property, third-party fire and theft, and comprehensive.
Compulsory Third Party or "CTP" Insurance
Third-party CTP insurance is a minimum requirement to drive in Australian states... and for good reason.
It provides coverage for other people who get injured or die in an accident.
Third Party Property
Third party car insurance is sometimes called "bomb insurance" because it's designed to offer protection for.... well... bombs.
Most third-party car insurance policies cover other people's property and cars, but not your car. So if you crash and you're at fault, wave goodbye to your bomb.
TIP: insuring your car is super important so if you absolutely cannot afford comprehensive car insurance (see below), you should at least have 3rd party property insurance. Imagine the look on your partner's face if you t-bone Kyle Sandilands' Ferrari without any insurance.
Third Party Fire and Theft
This is the same as Third Party Property except you're covered if your car is stolen or damaged in a fire.
Depending on the policy, you may be able to 'agree' on a fixed value of the fire and theft level of cover or it may be market value (whatever the insurer says it's worth).
As they say in Mexico, "the whole enchilada".
Comprehensive car insurance provides cover for your car, the other person's car and property, and covers you if your wheels catch fire or get stolen.
You can sometimes agree on a fixed level of cover or a market value, which can be determined as the current value of your car when it was crashed.
Be warned: there are limits to the level of cover. Usually, the cheapest cover is cheap for a reason. Do some online searches for reviews to hear the stories of other customers.
In addition, you should read ALL policy documents (like the PDS) and the policy certificate which sets out what you are covered for and the amount.
6 Ways To Make Your Insurance Cheaper
- Don't crash
- Park your car in a secure area
- Don't put 'mods' or aftermarket parts on your car (they look lame anyway)
- Add security features
- Shop around each year -- some insurers reward NEW customers before loyal customers (can you believe it?!)
- Consider buying your policy online - some offer cheaper policies online
Car Insurance is NOT...
- Life insurance. Life insurance is a different form of insurance.
- Income protection. Car insurance doesn't pay your wage if you're off work because of an accident.
- Car insurance is NOT going to cover you for doing illegal things behind the wheel (like driving while drunk, under the influence of drugs, speeding away from Police, doing burnouts, taking part in a race, you get the idea...), or
- Deliberate damage. Did you deliberately break it? You buy it.
Help! I Can't Afford Comprehensive Insurance!
That's okay, everyone experiences financial difficulty at some time in their lives. Call your insurer.
Or, you should know the team at Good Shepherd, AAI and Suncorp have teamed up to offer insurance policies to people who think they can't afford the high costs of full/comprehensive cover for their cars. Click here to visit their website.
If I claim, Will I Lose My Driver Discount?
The Financial Rights centre has quick online tool to assess if it's worth lodging a claim.