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If you’ve recently bought a car, or received a renewal notice, you’re probably considering your options for car insurance. If that’s the case, you’ve probably noticed that one of the cheaper options available is called third party property insurance. But before you’re tempted by the cheaper price, it’s important to know exactly what third party property insurance is, what it covers and, even more importantly, what it doesn’t.
Third party property insurance covers damage that you cause to someone else’s property while driving your car (up to policy limits). In terms of cover, it’s different from the legal minimum insurance required in Australia, which is a compulsory third party (CTP) also known as a ‘green slip’ in NSW. CTP, as the name suggests, is compulsory, and you wouldn’t be able to register your car without it.
In most states, your registration fee usually includes the cost of your CTP. But if you live in Queensland, NSW and the ACT, you typically need to choose your CTP insurance provider yourself and have to buy it separately before registration renewal.
CTP only covers drivers who are liable for personal injury to another person in a car accident. This can include other drivers, passengers, cyclists and pedestrians.
Third party property insurance typically covers other people’s property damaged by the insured driver in a car accident. While there are limits to how much can be claimed, that could be someone else’s car, house, shop, caravan, boat, bicycle or property in general. (And remember: the other car could be a brand-new Ferrari, so having third party property insurance could save you a fortune!)
It’s also important to know that third party property insurance will generally not cover damage to your own car if an accident occurs. So make sure you consider your car’s value when choosing a policy. Some insurers may provide additional cover under third party property that will cover you if you have an accident that’s not your fault and the other driver is not insured. If you wish to have this extra cover you will have to check that your insurance policy has this included.
As with all insurance policies, there are other exclusions you should be aware of when taking out third party property insurance. These are spelt out in detail in the product disclosure statement with each policy—this can be quite a list, so be sure to read them carefully.
Some examples of exclusions on a third party policy may include;
Finally, if you don’t pay your premium or renewal, then try to claim outside of any period of grace, you’re generally not insured. As mentioned earlier, the PDS that comes with your policy will spell out the whole list of exclusions. But keeping your car and driving legal, and having appropriate insurance for your usage, are good places to start to comply with most policies.
Third-party property insurance could be a suitable choice for you if you’re more concerned about covering repairs on someone else’s car rather than your own. (If you have a cheaper car, for example.) But even if you do have a less-than-luxurious car, there are times that comprehensive insurance or third party fire and theft, could still be a more appropriate choice.
To get a better idea of whether third party property is suitable for you, here are some questions to consider:
If you live in an area with a lot of car theft, you may consider third party fire and theft insurance. Unlike third party property insurance, third party fire and theft covers theft of your vehicle and from your vehicle. Likewise, if your car is your livelihood, and you can’t afford to replace it, comprehensive insurance may be an option.
Third-party property can be a good fit if you can afford to repair or replace your car if necessary or can manage to get around without it for a while. The table below shows a broad outline of what each type of insurance covers to help you decide which policy to take out.
|
TYPE OF INSURANCE > |
CTP | THIRD-PARTY PROPERTY | THIRD-PARTY FIRE AND THEFT | COMPREHENSIVE |
| INJURIES OR DEATH TO OTHER PEOPLE |
YES |
NO |
NO |
NO |
| DAMAGE TO OTHER PEOPLE’S PROPERTY |
NO |
YES | YES | YES |
| LOSS OR DAMAGE TO YOUR CAR DUE TO FIRE OR THEFT |
NO |
NO |
YES |
YES |
| DAMAGE TO YOUR CAR DUE TO A TRAFFIC ACCIDENT. |
NO |
NO |
NO |
YES |
As with all insurance policies, insurers consider a range of factors to determine your third-party property premium. Knowing and understanding these factors could help you save money by making choices that can positively influence your premiums. Some of these factors include:
You no doubt know that your age affects your insurance premiums. And there’s nothing you can do about your own age of course, but restricting the age of other drivers on your policy could help reduce your premium. (This is one of the few advantages of getting older, so enjoy it.)
You can also opt for different levels of excess. By choosing a higher excess, you’ll pay more in the case of a claim, but your premium is usually lower.
It can be tempting to opt for the highest level of excess to reduce your premium as much as possible, but make sure you’ll be able to afford the excess payment if you ever needed it. Otherwise, you may find yourself with a nasty bill if you have an accident that’s your fault.
A safe driving record may give you a discount on your premium, as insurers often see less risk in insuring you. Insurers sometimes offer a no claim bonus, which rewards you for maintaining a claim-free driving history. But this doesn’t always equal a discount on your premium, so it’s worth shopping around.
Keeping your car standard by avoiding modifications may help you save money on your insurance – particularly if you’re opting for an uninsured motorist extension on your third party property policy.
Once you’ve taken all that information into account, it’s time to find an insurer that offers a policy you like. With iSelect, you can compare Third Party Property policies online from our range of policies and providers. Click here to get started today!
Sources:
1. https://moneysmart.gov.au/car-insurance/choosing-car-insurance
2. https://moneysmart.gov.au/glossary/third-party-property-insurance
Last Updated: 1/04/2021
