What is third party car insurance?

What is third party car insurance?

If you happen to injure someone in a car accident, you will likely be liable to pay for their treatment. You may also need to pay them compensation. Since such liability can involve a steep cost that not everyone can cover out of the blue, third party insurance is mandatory everywhere in Australia.

Such a policy is also called compulsory third party (CTP) insurance or a green slip and is a policy that must be purchased before you can renew your vehicle's registration. Some states have the cost of this policy included in the vehicle's registration fees. In other states, you can compare third party car insurance offered by a select group of insurers and buy a policy that you consider affordable. 

What does third party car insurance cover?

A CTP insurance policy will likely only cover your liability as an at-fault driver for injuries caused to other people in a car accident. It includes paying for the cost of any treatment and, in some cases, any compensation owed to them. The policy won’t pay for any injuries you may suffer in the accident, nor will it cover the damage caused to any of the vehicles or property involved. You’ll have to purchase additional coverage to cover property damage caused by you, any damage to your vehicle or injuries to you.

In Australia, each state’s Insurance Regulatory Authority manages the states CTP scheme. If you live in Queensland, New South Wales or the Australian Capital Territory, you can buy CTP insurance from one of several insurance providers authorised to offer a policy.

Having this option means you can compare CTP insurance quotes to see which insurer also covers injuries suffered by even the at-fault driver before buying a policy. If you’re a resident of Western Australia, South Australia, Northern Territory, Tasmania or Victoria, your vehicle registration fees will likely also include the cost of CTP insurance if you want to check the details of the policy. 

How much does third party car insurance cost?

If you live in a state where you can buy CTP insurance separately what you pay for the policy can cost up to a few hundred dollars per year. According to data published by the New South Wales State Insurance Regulatory Authority, in 2019 the average CTP insurance premium was $486, with those residing in metro areas paying $575 on average. The actual cost of your CTP insurance policy can vary based on multiple factors, including whether the policy covers the at-fault driver as well.

Irrespective of whether CTP insurance is part of your vehicle registration or bought separately, the price of such a policy is usually regulated. This regulation keeps prices reasonably consistent to ensure that any person injured in a vehicle accident can receive treatment, whether or not they caused the accident.

The cost is calculated based on existing data regarding the risks posed by different kinds of vehicles and various types of drivers. For instance, a commercial truck operated daily in a metro area may pose a greater risk than a family car reserved for casual family outings. Accordingly, the exact amount you pay for CTP insurance depends on the vehicle you drive, your driving experience and where you are.

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

CTP insurance only covers injuries to the other person. You often have the option of buying third party property damage insurance which can take care of any vehicle or property damage as well.

If you want to include coverage for your vehicle or other property as well, you can buy a third party fire and theft insurance policy. Which, as the name suggests, can cover your vehicle and its contents for specific incidents. If you want to get the maximum coverage for your car, you will need to purchase a comprehensive car insurance policy, which is the top-level cover in terms of what it covers and the costs.

A comprehensive car insurance policy usually covers damage caused by natural disasters, vandalism, riots, theft of your car, theft of any belongings kept in your car and more. Depending on the insurer, the policy may also include roadside assistance and coverage for emergency expenses such as travel or accommodation after an accident.

You may opt to buy a comprehensive policy only if your car is of high value or is often in situations that may cause damage. You may also need to buy a comprehensive car insurance policy if your car loan lender requires you to do so. Most opt for a comprehensive car insurance policy as a peace of mind in case of an accident or issue.

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Learn more about car insurance

Can you insure your car for 6 months?

Most Australian insurers won’t offer you a 6-month car insurance policy, so you may need to buy a policy that covers your car for damages and cancel it after six months. You will need to purchase comprehensive car insurance to protect your car from accidental damage, theft, vandalism, or natural disasters.. 

Consider checking whether your 6-month comprehensive car insurance will cost more if you pay monthly or six-monthly premiums instead of a one-time annual premium. Another question to ask the insurer is whether you’ll need to pay administration or cancellation fees when you cancel the policy.

Alternatively, you can look for a suitable ‘pay as you drive’ car insurance policy, which usually offers you the coverage of a comprehensive car insurance policy but only requires you to pay for the distance driven. Such a policy may not be the ideal 6-month car insurance plan as it is based on how much you drive rather than for how long. If you need to drive a lot, you may end up paying more than you’d pay for regular car insurance. 

Does insurance cover a stolen car if keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car, even if the keys were in the car’s ignition.

However, your insurer may deny the claim if you live in an area where there have been several car robberies reported recently. They will see you leaving the keys in the car as a case of negligence. In such cases, your insurance provider may even expect you to have installed anti-theft security measures in your car. 

You may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced, before filing your car insurance claim. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item.

If you can confirm that your car keys were stolen, mention this in your claim as this will help establish that your car was not stolen as a result of your negligence.

Can I drive a new car without insurance?

It is illegal to drive a car in Australia without insurance. Most states require that you get your insurance in place before you drive the car off the dealership’s plot. So, the answer to whether driving a new car without insurance is no, it is not allowed.

The only time you can possibly legally drive an uninsured car is when you have to get the vehicle registered. You should drive straight to an inspection station or your state's vehicle registry. You must also make sure that you take the most direct or convenient route possible.

It is important to note that your compulsory third party insurance (CTP or green slip) isn’t valid until your car is registered.

Driving an unregistered or uninsured vehicle can have severe legal repercussions. If you are involved in an accident, and are driving an unregistered and uninsured vehicle, you will be personally liable to pay compensation to anyone hurt, as well as for damages. If you are caught driving a vehicle without insurance, you may be fined or even have your vehicle seized.