RateCity.com.au
  1. Home
  2. Car Insurance
  3. Articles
  4. What is the difference between comprehensive and third-party car insurance?

What is the difference between comprehensive and third-party car insurance?

Mark Bristow avatar
Mark Bristow
- 4 min read
What is the difference between comprehensive and third-party car insurance?

When looking for car insurance, the two main factors you may consider are how much coverage you want, and how much different coverage options may cost. Compulsory third-party insurance (CTP) is a legal requirement when registering your car, but any cover beyond that is optional. This means you may only buy the cover you can afford, rather than the cover you need.

For instance, you may only choose to cover your liability, as an at-fault driver, for fixing the damage to the car or property of others by buying a third-party property damage policy. Alternatively, you may want more coverage that includes damage to your car from storms or other unpredictable incidents.

What types of car insurance are available?

There are several types of insurance cover that you could consider. These include:

  • Compulsory Third Party (CTP) car insurance: The minimum amount of insurance that’s required by law to register a vehicle. This covers injuries caused to others in an at-fault motor accident.
  • Third Party Property Damage car insurance: Covers the cost of accidental damage to somebody else’s car in an at-fault motor accident, but not your own. Not the same as CTP insurance, which only covers injuries to others.
  • Third Party Fire and Theft car insurance: Covers the cost of accidental damage to somebody else’s car in an at-fault motor accident, and also covers your own car if it is stolen or catches fire.
  • Comprehensive car insurance: Covers the cost of accidental damage to somebody else’s car or property in an at-fault motor accident, as well as damage to your own car.

Does comprehensive car insurance include third-party coverage?

A comprehensive car insurance policy includes the coverage offered by both Third Party Property Damage Insurance and Third Party Fire and Theft insurance. On top of these third-party costs, it also covers your personal costs and costs for damage by almost all natural incidents. Also, many insurers will include roadside assistance and offer the ability to rent a car after an accident. Some insurers may also cover temporary income support after an accident. 

A comprehensive car insurance policy will often include:

  • Injuries to the other driver(s) and you in an accident caused by you
  • Damage to cars and property damaged in an accident caused by you
  • Incidents such as fire, theft, hailstorms, floods, vandalism, riots etc
  • Roadside assistance
  • Hire-car costs
  • Emergency accommodation
  • Glass breakage and emergency repairs
  • Ridesharing costs
  • Temporary income-support payments

A third-party property damage policy will typically only cover damage to other cars and property, while a third-party fire and theft policy can cover damage to other cars and property, as well as situations where your car is damaged in a fire or stolen. You may also be able to add extra coverage to a third-party policy, such as covering car hire after a theft, or loss of personal items kept in the car.

Should I get comprehensive or third-party car insurance?

Given the lower level of coverage, a third-party car insurance policy is usually more affordable than comprehensive car insurance. But when choosing between the two, you should consider your needs as well as the costs involved.

As an example, imagine you got into an accident, and your car was badly damaged to the point you can’t drive it. You need to consider if not having a car, for even a few days after such an incident, is going to critically affect your life or business. If it would, you may want to consider comparing comprehensive car insurance policies, which is more likely to include cover for a hire car after an accident. 

You may also want to think about how much you drive. If you don’t drive often and feel you’re unlikely to get into a serious accident, then you may decide that third-party insurance offers enough coverage for your needs.

Plus, you may not need comprehensive car insurance if you don’t plan to repair or replace your car after an accident. However, if your car is a high-end, classic or vintage model that you’ll want to repair or replace, a comprehensive policy can support your budget and give you peace of mind.

Finally, if you buy a car with the help of a car loan, the lender may require you to hold a comprehensive car insurance policy as a condition of the loan, to help reduce the lender’s risk in case the car is damaged or written off. Remember to compare car loans and consider the eligibility criteria before you make your purchase.

Compare car insurance

Product database updated 14 Apr, 2024

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.