Car insurance explained
How to pick the right insurance for your needs
You’ve passed the driving test and bought your first car - the only thing left before you hit the road is to sort out car insurance.
But, what type of car insurance is right for you?
If you’re confused by all the options available, you’re not alone.
We’ve put together a quick guide to the different types of car insurance available.
Compulsory third party (CTP) insurance
CTP insurance is often paid at the same time you pay vehicle registration and is designed to cover the cost of compensation claims of anyone involved in a crash who is not at fault.
As the name suggests, it’s compulsory to have CTP for every vehicle registered in Queensland and drivers can choose between four providers.
CTP insurance does not cover the damage caused to vehicles or property as the result of a crash, or injuries to the person who is at fault.
Drivers who choose to just pay for CTP should consider whether they could afford repairs to their car, property (such as signage or road infrastructure) or a third party’s car.
Third party liability car insurance
Third party liability car insurance covers damage caused to a third party’s vehicle (or other property such as signs, fences etc) in a crash where you’re the at fault driver.
As it doesn’t cover your car at all, third party liability car insurance may be suitable if your car’s not worth much or if you can manage without a car in the event of a crash.
Fire, theft and third party liability car insurance
It’s easy to confuse CTP, third party liability car, and fire theft and third party liability car insurance but they’re very different insurance products.
Just like third party liability car insurance, Fire theft and third party liability car insurance covers damage to other cars (or other property such as signs, fences etc) if you cause a crash.
The major difference is it also covers your car if it is stolen or damaged by fire.
It’s important to be aware that it doesn’t cover your car if you’re in a crash that’s your fault so consider whether you would be able to afford repairs to your car.
Comprehensive car insurance
Comprehensive car insurance covers repairs to your car and other people’s property or vehicles, even if the crash is your fault. In most cases, it also covers your car if it’s stolen or damaged by fire or flood.
While comprehensive car insurance is usually the most expensive, it can save you money if you can’t afford to pay for repairs to your car or a third party’s car.
There’s a lot to consider when choosing car insurance so visit Moneysmart’s guide to car insurance for more information on the different aspects of car insurance, such as excess, market value and comparing costs. Make sure you always read the Product Disclosure Statement (PDS) on any insurance before agreeing on a policy.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.