Does Car Insurance Pay Even If An Accident Is Your Fault?


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Have you ever wondered what happens with car insurance if you’re at fault in an accident? Do you know for sure if your insurance provider will pay out?

It can be tricky to understand all the jargon and language involved with insurance. This article will explain the laws and types of car insurance available in Australia – and when you’re liable to pay out.

At-fault and no-fault car insurance

Different countries go about car insurance in their own ways. What you need to know is that there are two types of laws found in Australia: at-fault and no-fault. The law that applies depends on where you live in the country.

At-fault states, like Western Australia and Queensland, require you to legally prove that you were not at fault before you’ll receive compensation. Although both Queensland and Western Australia are moving towards no-fault in the near future.

In no-fault states, like Victoria and New South Wales, you don’t need to establish who’s at fault to receive compensation.

Types of insurance

Now we understand the difference between at-fault and no-fault. Let’s continue by breaking down exactly how car insurance works and what the different types are. Once you know that, it’s easier to figure out if you’ll receive compensation from your car insurance when you’re at fault.

There are four types of car insurance options:

  1. Comprehensive (not mandatory)
  2. Third Party, Fire and Theft (not mandatory)
  3. Third Party Property Damage (not mandatory)
  4. Compulsory Third Party (mandatory)

Comprehensive car insurance

This type of insurance is the most extensive. It’ll cover your car for theft, damage caused by an accident, fire, and even natural disasters.

Comprehensive insurance will also cover you for claims made against you by third parties where you’re responsible for damage to their car or property. Yes, car insurance that covers you even when you’re at fault.

As you can imagine, because this insurance will cover you for almost everything, it’ll cost you more than the other options.

People often get this type of car insurance mixed up with their CTP. For clarification, read our article: Comprehensive vs Compulsory Third Party Insurance Explained and consult our CTP section further down this article.

Third party fire and theft car insurance

Third party fire and theft is a cheaper option for insurance than comprehensive. However, as the name suggests it’ll only cover damage you cause to third parties (as well as fire and theft damage to your car).

This means that if you’re in an accident, your insurance will cover the damage done to other people’s cars and property. It’ll cover this whether you’re at fault or not, but it won’t cover your car.

So, in the wildly unfortunate event you crash into a beautiful new Ferrari, you’ll be very happy your car insurance is footing the bill. Though it won’t pay out for the damage to your vehicle, only the Ferrari.

Depending on the insurer you’re with you may sometimes get some extra benefits like being covered for the cost of hiring a car if yours gets stolen. It may even cover damage to your vehicle from an uninsured driver. We recommend reading the Product Disclosure Statement (here’s ours) to see exactly what’s included in your policy.

Third party property damage car insurance

Similarly, third party property damage insurance will cover any accidental damage you cause to other people’s cars or property. It doesn’t cover your car – and this time not for anything… not for fire, theft or any other accidental damage.

This is your cheapest option for insurance as the cover is so minimal.

Compulsory third party insurance

As the name suggests, this insurance is compulsory in Australia, and all cars must have it. It’s usually part of your car registration (except in New South Wales, where it’s purchased separately).

It covers financial compensation for any injuries or deaths that occur as a result of an accident you cause. Like with the other third party insurance types, this does not cover any injuries you may sustain. You can check out this article for more information: What Is Third Party Car Insurance?

Car insurance when you're at fault can save your life savings or prevent debt

Car insurance when you’re at fault: Who pays?

In Australia, almost every state and territory is a no-fault state. This means that car insurance will compensate you in the event of an accident, even when you’re at fault.

This is not yet true for Queensland and Western Australia. That said, they have started gearing up towards changing over from at-fault to no-fault states.

Car insurance that’ll keep you covered

Now that we understand car insurance when you’re at fault, you can see how important it is to be covered in the case of an accident.

Whether it’s a bumper bashing with that brand new Ferrari or something worse, car insurance will help you pick up the pieces without breaking the bank. Whichever you decide on: comprehensive car insurance, third party fire and theft or third party property damage. You can get it done online quick and easy with PD Insurance and rest insured.

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