What is Third Party Car Insurance?

female driver after crash finding out about her car insurance on phone

What is third party car insurance, and what does it cover? If you’re looking at insurance options, you might be feeling overwhelmed by all the jargon… like CTP, comprehensive, third party, liability, at-fault and so much more. What does it all mean?

It can be confusing, but we’re here to explain all about third party insurance and what it includes. So that you know what you’re covered for (or not) in the event of an accident.

What exactly is third party car insurance?

So, what does it mean when someone talks about having third party car insurance? Firstly, know that there are different types of third party car insurance commonly found in Australia:

  • compulsory third party insurance (also known as CTP or green slip)
  • third party property damage
  • third party fire and theft

Find out how the compulsory third party insurance scheme works according to your State or Territory:

Once you’ve got third party car insurance in place, what does it cover?

woman driving manual car not automatic

What does third party car insurance cover?

So we’ve answered your questions around what third party car insurance is. But what does it mean for you in reality? That is, if you only have third party car insurance, what are you covered for?

What does CTP insurance cover?

CTP covers personal injuries you might cause to other people while driving your car. So if you hurt a cyclist, pedestrian, or other driver when you’re driving, they’ll be financially compensated. 

Essentially, this type of insurance exists to make sure that when accidents happen, there’s guaranteed compensation to cover the medical costs of other people affected. These other people are the ‘third parties’.

It’s worth noting this type of third party insurance is mandatory for all drivers in Australia. You have to take it out when you register your car. Without it, you can’t register your car or take any other car insurance out.

If you do drive without it you’re breaking the law. Not only do you risk receiving a hefty fine, if you’re involved in an accident you could be held personally liable for costs involving injury caused to other people.

What does third party property damage insurance cover?

Every driver has to have CTP – it’s the only mandatory car insurance – but this isn’t the only third party insurance on the market. So what is third party car insurance when it’s not CTP? It’s additional insurance coverage.

One of the most common third party offerings is third party property damage car insurance.

Because CTP only covers you for injuries caused to others, you might find yourself wondering if you need more extensive cover. This is where third party property damage comes in. It’s a very basic and affordable insurance policy which covers you for damage your car causes to other people’s property or vehicles.

That means if you accidentally crash into someone’s bicycle while you’re driving, or dent their car while you’re reversing, your insurance will cover the repairs or replacements to the other person’s property. Not your own.

It’s important to know you don’t have any cover for your car with this policy. So if you damage it in an accident, you won’t be covered. But if you damage someone else’s car or other property, you’re covered.

third party car insurance for fire and theft covers cars which are on fire like this black one in a car park

What about third party fire and theft?

Third party fire and theft car insurance offers everything that a third party property damage policy does, but with added benefits for your car. With this policy, your car is also protected against fire and theft.

So, you’re financially protected if you damage someone else’s property or vehicle, plus if your car is stolen or damaged by fire.

This type of insurance won’t cover you for other damage to your car though, like if you have a collision. For that you’ll need comprehensive car insurance.

If you want to read more about the most extensive type of non-mandatory car insurance, here’s a guide to comprehensive car insurance in Australia.

Getting suitable car insurance

If you want cost-effective third party car insurance in addition to CTP then look at our offering for third party fire and theft as well as third party property damage. Both of them are easy to take out online, give you decent coverage and won’t break the bank.

How would you, like to proceed?

How would you, like to proceed?