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Do I Need Car Insurance?
Do I Need Car Insurance?
Written by
Mel Basta
Edited by
Laura Crowden
Reviewed by
Toby HagonCompare car insurance policies the easy way
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Long story short
Compulsory third party (CTP) insurance is legally required across Australia
Note that CTP insurance only covers injuries to other people – not car or property damage.
Additional car insurance might protect you from big repair bills
Third party or comprehensive car insurance could help cover costs if you get into an accident.
There are several ways to save on car insurance
You could choose a lower level of cover, opt for a higher excess, or skip optional extras to reduce car insurance premiums.
Even though car insurance can be an extra cost and hassle, it could be worth forking out for. Here’s a look at why having additional car insurance on top of CTP insurance is not just a good idea but can also provide invaluable peace of mind.
Is car insurance compulsory in Australia?
In Australia, there’s no getting around CTP insurance, or ‘Green Slip’ insurance as it’s called in New South Wales. It is a legal requirement in every state and territory.
CTP insurance generally covers financial liability that might arise if you cause a motor vehicle accident (driving your insured car) that results in injury to a third party, including passengers, other drivers and their passengers, cyclists or pedestrians.
It doesn’t cover the cost of damage to the cars and any other property.
While CTP is mandatory in Australia, additional comprehensive or third party property cover is not.
However, not having additional insurance can leave you financially vulnerable were a car accident to occur.
Types of car insurance
| Car insurance type | Damage to your car | Damage to another person’s car or property | Damage or loss caused by theft | Injuries or death to others in an accident |
| CTP (mandatory) | No | No | No | Yes |
| Third party property | No | Yes | No | No (but covered by CTP) |
| Third party fire and theft | No | Yes | Yes | No (but covered by CTP) |
| Comprehensive | Yes | Yes | Yes | No (but covered by CTP) |
Do car insurance laws change in different states?
When it comes to CTP insurance, each Australian state and territory has its own rules and regulations.
Generally speaking, the amount paid for CTP depends on the type of vehicle being registered (for example, a car, bus or caravan), the age of the vehicle and its performance characteristics, as well as the age, driving history and claims history of the driver.
In most states, CTP insurance is included in the cost of your vehicle’s registration, although drivers in Queensland and the ACT can choose their own provider when registering a vehicle. In New South Wales, drivers need to purchase a ‘Green Slip’ separately.
Although comprehensive or third party insurance is not compulsory anywhere in Australia, it can be well worth the additional expense.
Where can I get CTP insurance?
Where you get CTP Insurance if it’s not already included in your registration depends on your state or territory:
- Australian Capital Territory: Choose from four licenced Motor Accident Injuries (MAI) insurance providers when registering your vehicle
- New South Wales: Research and select your own Green Slip insurance provider
- Northern Territory: Motor Accident Compensation Scheme
- Queensland: Choose from three licenced CTP providers when registering your vehicle
- South Australia: CTP Regulator
- Tasmania: Motor Accidents Insurance Board
- Victoria: Transport Accident Commission (TAC)
- Western Australia: Motor Injury Insurance Scheme (MIIS)
Keep in mind that in the ACT, New South Wales, and Queensland, you’ll need to have a CTP insurance policy in place when you renew your registration.
Is it worth getting additional car insurance?
Just because it’s not required by law to carry additional insurance, doesn’t mean you should opt out.
Below are some common excuses for not taking out additional insurance, along with the reasons why you should consider extra cover.
Being a safe driver is enough insurance against an accident
Even if someone is considered a safe driver and has never made a claim, it doesn’t guarantee the same thing for other motorists.
The fact is, it’s impossible to predict what other drivers will do, and without appropriate insurance, even the best driver could get stuck with a massive repair bill from an accident they didn’t cause.
Their car’s value isn’t worth insuring
Even if a car isn’t worth its value in scrap metal, what if it accidentally rear-ended a shiny new Mercedes in the parking lot?
Third party insurance can be a cost-effective way to help cover against damage to other people’s property and help avoid being stuck with the bill for expensive repairs, minus the excess.
It’s too expensive
Even a minor fender bender could potentially cost thousands of dollars in repairs and leave you stranded without a car for days or weeks.
If a claim ever needs to be made, the trade-off in the premiums paid may be well worth it.
So, while not having car insurance might save a few bucks in the short term, it could end up being a financial nightmare down the track.
Indeed, the benefits of having car insurance may only become obvious when needed most.
Helpful tip
You shouldn’t just consider the cost of insurance when buying a new car. You may also want to consider what it could cost you if you decide not to get comprehensive insurance. With an expensive car you could find yourself in a world of financial pain if the worst were to happen.
Toby Hagon
Motoring Journalist
How can I save on car insurance?
There are several ways you could save money on car insurance.
One way to cut costs is to avoid paying for unnecessary policy features.
For example, while comprehensive car insurance offers the highest level of protection, if you are looking to keep costs down then you might be happy with a basic third party property policy that only covers damage to someone else’s vehicles and property.
Alternatively, a third party fire and theft policy, which includes some protection for a vehicle, might offer some additional peace of mind in the event your car is stolen or in a fire.
Whichever policy is chosen, the price of the premium will vary depending on:
- The market or agreed value of the vehicle.
- The level of excess preferred ($250, $500, etc.).
- Optional extras, such as windscreen protection or roadside assistance.
The level of cover that’s suitable will depend on your personal situation and budget.
As always, be sure to carefully read through the policy’s product disclosure statement (PDS) before making any purchasing decisions.
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