Buying a car or van in Australia

Chapter 7 of 8

In Australia, you should know the differences between Compulsory Third Party (CTP) insurance and other types of insurance (fire, broken windows, theft, etc.)

CTP insurance

In all states, it is mandatory to have CTP insurance if you own a vehicle. This insures you for any physical injuries that you may cause while behind the wheel.

Depending on the state, the vehicle registration may already include CTP insurance. If it is not included, you can choose a state-recognised insurer. CTP insurance must be paid for at the moment of vehicle registration.

CTP insurance:

• Insures the driver, passengers, and third party (pedestrians, cyclists…) that may be injured.
• Financially compensates the victim for medical and related expenses.
• Is valid everywhere in the country.

It does not, however, cover:

• Damages to your vehicle.
• Damages to vehicles or property of other persons.
• Damages caused by theft or fire.

The cost for a year’s CTP insurance is between AU$220 and AU$1,000. Depending on the state, insurance can be bought for a period of six or 12 months.

Other insurance (optional)

In addition to CTP insurance, you have the option of buying:

• Third party property damage – covers damage caused to other persons.
• Comprehensive insurance – can insure your vehicle against fire damage and theft, broken windows, etc.

Third party property damage insurance (optional)

Although it is optional, we recommend that you get third party property damage insurance. It’s usually not too expensive in Australia, and can save you a lot of money if you have a collision or hit a stationary car in a parking lot.

This insurance usually has an excess (deductible), which is the amount that you have to pay out of pocket before the insurer starts reimbursing you for a given claim. For example, if your insurance has a policy excess of AU$500 but you have a collision and need to make a claim for AU$2,000, your insurer will only pay out AU$1,500.

Comprehensive insurance (optional)

As the name suggests, comprehensive insurance covers all other risks. This can include damages to your own vehicle (even if you are at fault), damages caused to other vehicles, repairs, fire damage, theft, etc.

Due to the broad nature of comprehensive insurance, it is essential to understand what exactly is (and isn’t) included in your policy. It’s really up to you to decide if it’s worth buying comprehensive insurance. For example, if you own a very old car, reimbursements might be quite limited.

Choosing your insurer

State-recognised CTP insurers also offer optional third party damage insurance and comprehensive insurance. The most well known among them are AAMI and Allianz.

You could also ask your Australian bank, which might have insurance offers for your vehicle. Among others, Westpac provides this.