Comprehensive vs Third Party Car Insurance

Unless you spend way too much time looking at Car Insurance (like us!), then you might find all the jargon and fine print a little bit confusing. And to be fair, who wouldn’t? That’s why it’s best to start with the basics: the difference between Third Party and Comprehensive policies.

What’s the difference between Third Party and Comprehensive Insurance?

Third Party Car Insurance

Third Party Insurance is actually a group of different policies. However, they all have one thing in common: they all cover the costs that you’d otherwise need to pay other drivers. 

Compulsory Third Party (CTP) Insurance is mandatory cover that can pay for the medical costs if you injure someone in a car accident, but it won’t help cover repair costs for either you or the injured party.¹

If you smash into someone else’s car or damage their property, then Third Party Property Cover and Third Party Fire and Theft can cover both the costs of replacement and repairs.² 

Comprehensive Car Insurance 

Comprehensive Car Insurance will cover you for 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 car. It also goes one step further. 

If you get into a collision or a car accident, a Comprehensive Car Insurance policy can help cover the repair costs for your own car. The name comprehensive isn’t just for show either. Many policies will also cover you for storm, hail and flood damage³—though this can depend on the insurer. 

Does Comprehensive Insurance cost more than Third Party Insurance?

Comprehensive Car Insurance covers more situations than the Third Party policies. This means it’s typically going to be more expensive.   

However, this can also vary depending on the insurer, as well as the make and model of your car. For instance, a Third Party Property policy may cost more for a souped-up Sports Car than Comprehensive Cover for an old, Toyota Landcruiser.  

Some insurers also offer special policies for Comprehensive Cover that can really bring down the price. Low-kilometre policies offer customers a reduced rate so long as they don’t drive over a certain limit (such as 10,000 kms) each year.⁴ ‘Pay as You Drive’ policies are similar, calculating premiums based on how many kilometres you drive each year.⁵

What kind of optional extras are available?

Many insurers offer a range of optional extras for their Third Party and Comprehensive Insurance policies. These add-ons all offer a bit of additional cover. The downside? They usually increase the cost of your premiums: 

• Reduced Excess: You’ll usually have to pay an out-of-pocket excess when you make an at-fault claim on your Car Insurance. This little goodie offers a way around this—it can reduce or cover your excess completely when you make certain claims.⁶
• Roadside Assistance: If your car ever breaks down, this extra will ensure that someone can come out and get you back on the road.⁷ They’ll typically help out with stuff like flat tyres, emergency fuel and battery replacements.⁸
• Hire Car Cover: This can help you out with the cost of a hire car when you make a claim for a lost or damaged vehicle.⁹ However, it usually won’t be offered for CTP or Third Party Property Insurance since those policies don’t cover damage to your car. 

There are also extras that are only usually available for Comprehensive Car Insurance. Depending on the insurer, these can include: 

• Vehicle Contents Cover: This can help cover the personal belongings inside your car for any loss or damage.¹⁰ However, there’s usually a limit to how much the insurer will pay. You won’t usually get cover for any jewellery, mobile phones or laptops, either.¹¹
• Choice of Repairer: Typically, when an insurer covers the repairs for your car, they’ll get it done with one of their preferred repairers. This extra lets you choose your own repairer, provided the costs involved are reasonable.¹²
• No Claim Discount Protection: Most insurers will offer a discount on your premiums that goes up each year you don’t make an at-fault claim. This handy extra will also let you make a certain number of at-fault claims each year without affecting the discount.¹³

Now, here’s the kicker: some insurers will also offer these extras as standard inclusions on their policies.¹⁴ Because every insurer does things a little bit differently, it’s a good idea to read the Product Disclosure Statement (PDS) on their website. This will give you a good rundown of what kind of protection the policy provides and what the insurer offers as an extra. 

Can I 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 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 cover for repair costs isn’t really worth what they’re paying in premiums. 

In these cases, 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 insurer. Some insurers will simply change your cover type but keep the dates and term of your Insurance the same.¹⁵ 

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 policy is cancelled. 

What kind of Car Insurance policy is better for me?

No type of policy is really better than another. They all have different trade-offs in terms of price, 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 Consideration

• For brand-new cars: Your typical car can lose more than half its value within three years.¹⁶ Until that point, it’s going to be a lot more expensive to replace the car for what it’s worth if it’s wrecked in an accident. That’s where Comprehensive Car Insurance can be particularly useful; it can cover you for collisions and weather damage while your car is still shiny and new.
• 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 Consideration 

• 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 are willing to take out Third Party Cover and take on the risk paying the repair costs themselves if the car gets into a collision.
• For low-risk areas: Some suburbs see far more car crashes than others.¹⁷ While accidents can still happen, and Comprehensive Car Insurance can still offer protection, there’s less risk involved of getting into a collision if you live in an area that’s prone to less accidents.
• For tight budgets: Some budget-conscious drivers might find Third Party Cover to be a good compromise. It will give them some level 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 watched Third Party and Comprehensive Car Insurance duke it out, you’re probably ready to find a heavyweight policy of your own. So if you’re ready to find your champion, let’s see if we can help. 

With iSelect, you can compare different Car Insurance policies from a range of providers online*. 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. 

^{Sources:
1 Moneysmart - Choosing car insurance 
2 As above 
3 Budget Direct - What car insurance covers 
4 Budget Direct - How to Save on Car Insurance 
5 Huddle - Car Insurance 
6 pd.com.au - Car Insurance For Fans PDS (Page 11) 
7 pd.com.au - Third Party Property Insurance 
8 Budget Direct - What does Roadside Assistance cover? 
9 Everyday Insurance from Woolworths - Car Insurance Product Disclosure Statement (Page 11)
10 pd.com.au - Comprehensive Car Insurance 
11 pd.com.au - Car Insurance For Fans PDS (Page 12) 
12 Budget Direct - Car Insurance PDS Part A (Page 22) 
13 Budget Direct - No-claim discounts 
14 Budget Direct - What Does Car Insurance Cover? 
15 Budget Direct - Live Chat Advice (23/06/23) 
16 Budget Direct - Ultimate Car Depreciation Guide 
17 Victoria Government | Department of Transport Open Data Hub - Road Crashes for Five Years Victoria (Filter: Maribyrnong; Dandenong)}