Car insurance to protect you and your car
It's worth knowing the different types of car insurance when deciding what's right for you. Here are four of the most common types of car insurance on the Australian market.
Compulsory Third Party insuranceCompulsory Third Party (CTP) insurance is mandatory in all states and territories of Australia. It provides compensation for bodily injuries caused to a third party, but not for damage done to vehicles or other property. In some states, such as Victoria, it's included in your vehicle registration fee.
Third-party insuranceThird Party Property only insurance covers damage that your vehicle might cause to third party vehicles (that is, other drivers and property owners) – but it doesn't cover damage to your own vehicle. You might select this low-level insurance if your car is not worth the cost of your excess, but you still want to be protected from the potential high cost of repairing someone else's car.
Fire and Theft only insuranceFire and Theft only insurance covers your car from theft or damage caused by fire. It does not cover damage caused by collisions or any reasons other than fire and theft. It's commonly an add-on to third-party insurance for those who want more protection against a write-off, but don't want a third party property only or more expensive comprehensive policy.
Comprehensive insuranceComprehensive insurance is the most commonly-held insurance policy and is required if your car is being financed. It covers you for damage to your vehicle or third party vehicles from a 'comprehensive' range of causes. Check the exact details of the policy carefully as they will vary from one company to the next. For example, not all policies cover damage due to flooding or hail.
The cost of car insurance
The total cost of car insurance cover is determined by your premium (paid annually, or on a monthly payment plan) and your excess. The excess is the amount you pay when you make any claim. If repair costs are $1,000, and your excess is $400, you will receive a $600 insurance benefit. Sometimes when you sign up for coverage with a higher excess, the insurance company rewards you with a lower premium.
How premiums are calculated
How insurance companies determine premiums depends on the type of policy and is based on a number of factors. For comprehensive insurance, the type of car you have (and how expensive it is to repair) will have a significant impact on your premium. Also, your age, gender, driving record, postcode, and whether you keep your car in a secure garage will also influence your premium.