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What Are The Different Types of Car Insurance?


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Understanding the different types of car insurance in Australia means getting the best value for money. Whether you choose third party fire and theft, comprehensive or another type of car insurance, it’s about getting that balance right of needs vs expenses.

Like any insurance, whether it’s home insurance, car insurance or pet insurance, you won’t always know your needs upfront. That’s why you need to understand what each different type of car insurance will and won’t cover. Then you can weigh up what your known and potential needs might be.

Here’s what your needs might entail and how to decide on which type of car insurance to choose.

women sits on car and googles different types of car insurance

What type of car insurance do I need?

If you’re looking for car insurance, there’s a good chance you’re looking for the cheapest deal. However, choosing car insurance based solely on price is not exactly a good idea for something you’ll need in critical times. Think about a car crash, theft or vandalism… what would you do then?

In Australia we face a myriad of weather extremities too. Therefore, when looking at the different types of car insurance, you’ll likely want coverage that helps pay for fire, storm and hail damage to your car.

Also, like grocery shopping, getting the cheapest deal to save a few bucks can often cost you more down the line. This is just one reason it’s worth understanding your car insurance excess payment. Also read about how to lower your car insurance premium (and how it’s calculated). And to round things out, find out whether your car insurance is valid if your drivers licence expires.

Happily with car insurance, the cost of your policy is tailored to you. It’s based on factors like your agreed car value, claims history, driving habits, garaging etc.

Now, let’s look at the different types of car insurance in Australia today.

person buying comprehensive car insurance online

What are the 4 main types of car insurance?

Working from top to bottom, in terms of price and protection, these are the four different types of car insurance in Australia:

1️⃣Comprehensive car insuranceWidest range of coverage
2️⃣Third party fire and theft insuranceMid range cover, though only a little cover for your own car
3️⃣Third party property damageOnly covers against damage to other’s property
4️⃣Compulsory Third Party (CTP)Required by AU law for all drivers

Let’s take a look at each of these different types of car insurance in more detail.

Australian women driving an open top car

#1 Comprehensive car insurance

Comprehensive car insurance is just that… It’s comprehensive, wide, broad, extensive. In other words you get the broadest range of cover of all the car insurance types and for the best price.

The Cambridge dictionary definition of comprehensive is ‘complete and including everything that is necessary’. More specifically as it relates to insurance, cites its meaning as ‘covering or providing broad protection against loss.’

Of the different types of car insurance cover, comprehensive car insurance offers the highest level of protection. It’s also the most commonly held policy in Australia. That’s because it covers your vehicle and other vehicles or properties that incur damage in an accident.

Plus, that cover applies to your policy whether you’re at fault or not.

While comprehensive car insurance policies vary, they generally cover repairs after an accident or weather event, vehicle loss from write-off and theft, and associated legal costs. Comprehensive car insurance is ideal if you’ve a new vehicle that would be too expensive for you to replace or it’s under finance. Read more about new for old car insurance to understand car replacement value after total loss.

That being said, comprehensive is the most costly type of car insurance. However, you might be surprised to discover that it’s often not that much more out of your pocket than a lower tier of cover. Put simply, for the benefits you’ll get, it’s highly economical and good value for money.

Want to know more? Find out what’s covered in a comprehensive car insurance policy and read our guide to comprehensive car insurance in Australia.

car on fire can will be replaced via third party fire theft car insurance

#2 Third party fire and theft car insurance

Third party fire and theft car insurance covers damages caused by your car to other people’s property. It also covers you financially if your vehicle gets stolen or damaged by fire. This is more affordable than comprehensive car insurance but still gives you great protection against some of the basics.

It’s a great option if you’re on a budget so you won’t end up paying out your life savings if you accidentally dent someone’s luxury car. It’s also a good way to get started with a car insurance company and build your way up to getting comprehensive car insurance once it fits your budget or you move on to a more valuable car.

Ultimately however, it’s only a little more each month with the comprehensive policy to get a broader level of cover. Remember that if you’re hoping to save on premiums you can also toggle between a high excess and low excess.

Find out more about getting this type of policy with PD.

two men trying to find consensus over a car accident they've just had

#3 Third party property damage insurance

Third party property damage insurance is the most inexpensive car insurance cover. It’s great for drivers who are looking for basic cover at an affordable price. This type of cover helps you pay for damage that you cause to others’ property but nothing else.

Like if you bump their car or happen to drive into their fence, for instance. You get the drift… if you damage someone else’s property there’s no telling what the damages will amount to, but happily this level of cover protects your pocket.

However, it’s important to understand that unlike third party fire and theft or comprehensive car insurance this level of cover doesn’t pay towards damage to your car. Find out more about getting third party property insurance with PD.

When you’re trying to decide between the different types of car insurance and your pocket, why not get a quote on each. The policy you’d prefer could be well within your monthly budget.

person injured on the road with medics attending to them

#4 Compulsory Third Party (CTP)

CTP, also known as a green slip, is one of the different types of car insurance in Australia BUT it’s mandatory for every registered driver. That’s one big difference it has when compared to the three described above. The other is that it covers personal injury to another party including other drivers, passengers, cyclists, and pedestrians.

You can’t register a vehicle without CTP coverage and drivers without this minimum coverage face steep fines. Read more about the differences between compulsory third party insurance and comprehensive car insurance to understand what it covers.

Different types of award winning car insurance

Regardless of which of the first three different types of car insurance you choose, PD offers you great value for money. Our award winning car insurance plans help protect you and your family against financial losses in the event of a car accident.

Click below to get your car insurance quote today.

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