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Comprehensive vs Third-Party Car Insurance
Comprehensive vs Third-Party Car Insurance
Written by
Kervin Mathew
Edited by
Laura Crowden
Reviewed by
Adrian BennettCompare car insurance policies the easy way
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What’s the difference between compulsory third-party (CTP), third-party and comprehensive car insurance?
Long story short
Third party car insurance mainly covers other people’s cars and property – not your car
You can get third party property or take it up a notch and get fire and theft cover with a third party property, fire, and theft policy.
Comprehensive insurance covers your own car as well
A typical comprehensive policy costs more, but offers far more coverage than third-party – even if you’re at fault.
Choosing the right policy depends on your car’s value, your risk appetite, and your budget
Though it’s more expensive, comprehensive car insurance offers wider coverage and covers a lot more than just damage to vehicles and property.
What’s the difference between compulsory third-party (CTP), third-party and comprehensive car insurance?
Comprehensive car insurance covers damage to your own car, whereas third‑party policies only cover accidental damage your car causes to other people’s property. CTP insurance only covers injuries to people, not vehicles.
CTP insurance
CTP insurance (Green Slip, if your car is registered in NSW) is mandatory legal liability cover that can help pay for the medical costs and compensation if you injure someone in a motor vehicle accident, but it won’t help cover damage repairs or replacement costs for either you or the injured party.
Third-party car insurance
If you smash into someone else’s car or damage other people’s property, then a third-party property or third party fire and theft policy can cover their repair or replacement costs, but not repairs to your own vehicle (unless the damage is caused by an uninsured driver and by no fault of your own, and in which case limits may apply).
Comprehensive car insurance
Comprehensive car insurance also covers the same things as a third-party fire and theft policy: damage to another person’s car or property, as well as theft and fire damage for your own vehicle. But it goes one step further.
If you get into a collision or a car accident, a comprehensive car insurance policy can help cover the cost of repairs for your own car. The name ‘comprehensive’ isn’t just for show either. Many policies will also cover you for damage caused by weather events such as storms, hail, and flood damage as well as malicious damage and vandalism – though this can depend on the insurer.
| Injuries to other people | Damage to other people’s cars or property | Damage to your car caused by fire or theft | Accidental damage to your own car | |
| Compulsory third-party insurance (CTP) | Yes | No | No | No |
| Third-party property | No | Yes | No | No |
| Third-party, fire, and theft | No | Yes | Yes | No |
| Comprehensive | No | Yes | Yes | Yes |
Does comprehensive insurance cost more than third party insurance?
Yes, comprehensive car insurance generally costs more than third-party car insurance, and that’s simply because it covers more than a third-party policy does.
However, it can also vary depending on a number of factors including the insurance company, the make and model of your car, as well as your personal circumstances like where you live and your claims history. For instance, a third-party property policy may cost more for a high-performance sports car than comprehensive cover for an older hatchback.
Some insurers also offer special types of comprehensive policies that can help bring down the price. For example, low-kilometre policies offer customers a reduced rate so long as they don’t drive over a certain limit (such as 10,000km) each year. Pay as you drive policies are similar, calculating premiums based on how many kilometres you drive each year.
Helpful tip
A third-party property only or third-party fire and theft policy, though cheaper, can leave you in the lurch if your car is damaged in an at-fault accident or, say, a freak hailstorm. On the other hand, comprehensive car insurance can come to the rescue with cover for accidental damage to your car (regardless of who’s at fault) and weather damage. Plus, a comprehensive policy can open the door to exclusive features such as agreed value cover and personal effects cover as well as optional extras to customise your cover.
Adrian Bennett
General Manager for General Insurance
What kind of optional extras are available?
Optional extras can vary from insurer to insurer but are generally only available to add on with comprehensive cover and not third-party policies. Typical optional extras can include:
- Hire car cover: Helps with the cost of a hire car when you make a claim for a lost or damaged vehicle. However, it usually won’t be an option with third-party property insurance.
- Vehicle contents cover: Helps cover the loss or damage of personal belongings inside your car. However, there may be cover limits and you won’t usually get cover for any jewellery, mobile phones or laptops.
- Choice of repairer: Typically, when an insurer covers the repairs for your car, they’ll get it done with one of their preferred repairers. Thisoptionalextra lets you choose your own repairer, provided the costs involved are reasonable.
- Reduced window glass excess: Adding this extra to your cover means you won’t need to pay your full excess for accidental damage claims to your windscreen or window glass.
- New car replacement: If your vehicle becomes a total loss in an accident, the ‘new car replacement’ optional extra could replace it with a new vehicle of the same or similar make – provided your claim satisfies certain conditions such as you being the registered owner and that the car has travelled less than a specified kilometre limit.
Now, here’s the kicker: some insurers will also offer these extras as standard inclusionson their policies. And because every insurer does things a little bit differently, it’s a good idea to check what cover their policy covers as standard, and what is offered as an optional extra at additional cost. And always take a careful look at the Product Disclosure Statement (PDS) to understand any exclusions and what can void your cover.
Can I switch from comprehensive cover to third-party cover?
Yes, you can switch from comprehensive cover to third-party cover. It’s not uncommon for people to scale back their insurance as their car gets older. This is because a car depreciates (meaning it loses its market value) as the years go by. And when that happens, the cost of replacing the car also tends to go down. It might even get to a point where the owner feels that the insurance to cover repairs isn’t really worth what they’re paying in premiums.
In a situation like this, the owner might decide to downgrade their cover from a more expensive comprehensive policy to a cheaper, third-party policy.
How this works can also vary depending on the insurance company. Some insurers will simply change your cover type but keep the insurance dates and policy term the same. With others, you’ll have to sign up for a new third-party policy and cancel your comprehensive cover. For seamless cover, you can also organise the new third-party policy to go live on the date your old comprehensive policy is cancelled.
What kind of car insurance policy is better for me?
No single policy type is definitely better for everyone than others. They all have different trade-offs in terms of price, level of cover, and flexibility. That being said, one policy type might be a better match for someone depending on their car, preferences, and budget.
When comprehensive cover might be worth considering
- For brand-new cars: A new car can lose 20–25% of its value in its first year and more than 50% after three years. Until that point, it’s likely going to be a lot more expensive to replace the car for what it’s worth if it’s wrecked in an accident.
- For expensive cars: Pricey cars usually cost a lot more to repair. They’ll often use expensive parts or high-tech features the old clunkers lack. That also means it might cost a small fortune to pay for the repairs out of pocket. But whether the culprit is hail, fire, or theft, comprehensive car insurance can help foot most of the bill.
- For peace of mind: As mentioned, comprehensive cover protects you for a lot more things than third-party insurance. It might also help ensure you can still get your car repaired if some hoon crashes into your car and drives off before you catch their licence plate.
When third-party cover might be worth considering
- For cheaper cars: Cheaper cars are usually made from cheaper parts. That doesn’t necessarily mean that they’re less safe, but it does make repairing them less costly. As a result, some people with cheaper cars are comfortable taking out third-party cover and taking on the risk paying the potential repair costs themselves if the car gets into a collision.
- For low-risk areas: Some suburbs see far more car crashes and thefts than others. While accidents can still happen anywhere, there’s less riskof getting into a collision if you live in an area that’s prone to fewer accidents.
- For tight budgets: Some budget-conscious drivers might find third-party cover to be a good compromise. It will give them somelevel of protection when they’re on the road, but it won’t (typically) cost as much as comprehensive car insurance.
Where can I compare car insurance policies?
Now that you’ve seen how third-party and comprehensive car insurance weigh up, you’re probably in a better position to pick a lane. Let’s see if we can help.
With the iSelect online comparison tool, you can explore policies from a range of well-known car insurance brands in Australia. It only takes a few minutes and it’s a breeze to use. So, give it a whirl! A great deal might be waiting just around the corner.
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