Depending on the level of cover you take out and the details of your policy, car insurance can cover the cost of repairing damages to your own vehicle, other cars and property, as well as injuries you and other road users sustain during an accident.
There are three basic levels of car insurance in Australia, but only one—compulsory third party insurance (CTP)—is mandatory. How and when you purchase CTP, its price and coverage will differ depending on where you live, as it is administered or overseen by state and territory bodies. Speaking generally, CTP exists to cover the medical and care costs of people who are injured while using roads, whether they’re drivers, cyclists or pedestrians.
You can elect to take out the next level of car insurance, third party property damage, to cover costs for damages you may cause to other people’s vehicles or property while driving. This coverage type doesn’t protect your own vehicle, but ensures you won’t have to foot a massive bill to repair a pristine Mercedes should you damage it during an insurable incident.
It’s a suitable option if your wheels are a little worse for wear and may not warrant a higher annual premium. If you drive or park in an area with a high crime rate, you may consider adding fire and theft insurance on top of this policy. For an additional fee, this adds a layer of protection for your car if damages or total loss are caused by the two headline events: fire and theft.
Comprehensive car insurance is the broadest level of cover you can purchase (and therefore the most costly), insuring both your own ride and others should they incur damages. These policies are generally more tailored to your car, offer optional extras and increased dollar limits when requested, so premiums can differ significantly depending on what you want covered.
Like any insurance policy, not every event or circumstance will be covered by these car insurance variants. But for most road users, having the peace of mind that there’s financial support during certain emergencies is worth the premium.