Two different products get called "car insurance" in Australia, and they do different jobs. CTP — the compulsory one, known as a green slip in some places — pays for injuries to people. Everything above it, from third party property damage up to comprehensive, deals with property: your car, someone else's car, a fence, a shopfront.
That split causes most of the confusion below, and it bites hardest at the two moments a car changes hands — when you sell one, and when you drive a new one home.
CTP pays for people, not property. If you cause a crash while carrying nothing but the compulsory injury cover attached to your registration, the bill for the other person's car is yours personally, and repairing or replacing a late-model car is not a small bill. Third party property damage cover exists for exactly that situation, and it generally costs less than comprehensive.
FAQs
What is the difference between CTP, third party property and comprehensive car insurance?
CTP is the compulsory layer, and it covers injury to people — passengers, pedestrians, cyclists, the people in the other car. It pays nothing towards damaged vehicles or property, which catches drivers out the first time they need it. Third party property damage picks up where CTP stops: it pays for damage you cause to other people's cars and property, but not to your own. Comprehensive adds your own car, along with theft, fire and storm damage under most policies. A middle tier, third party fire and theft, covers other people's property plus your own car if it is stolen or burnt, usually up to a stated limit.
Is CTP included with my car registration, or do I buy it separately?
It depends where the car is registered. In some states and territories CTP is bundled into the registration fee and there is no provider to choose; in others you select an insurer yourself and arrange cover before the vehicle can be registered. Because the arrangements genuinely differ, check your own state or territory road authority rather than relying on a general rule you read somewhere. Either way the cover attaches to the vehicle's registration rather than to you as a person.
What does agreed value mean, and how is it different from market value?
Agreed value is a fixed figure you and the insurer settle on when the policy starts, so you know in advance what a total loss pays out. Market value is what the car would have sold for immediately before it was written off or stolen, worked out by the insurer at claim time from industry valuation data — so the number is not known until the moment you need it. Agreed value usually costs more in premium and is often re-set downwards at each renewal, so check the figure when you renew rather than assuming it has held. It tends to suit a car worth more than the data would suggest, such as a low-kilometre example or a well-kept classic.
What is a car insurance excess?
The excess is the amount you contribute when you make a claim; the insurer pays the rest. A higher excess generally lowers your premium and a lower excess raises it, which is a genuine trade-off rather than a trick — you are deciding how much of a small claim you would rather absorb yourself. Policies frequently stack additional excesses on top of the basic one, commonly for young or inexperienced drivers and sometimes for particular claim types. Your product disclosure statement (PDS) sets out which excesses apply and when, and it is the document to read before assuming one figure applies throughout.
What affects how much I pay for car insurance?
Insurers price on the car and on the driver. The car side takes in make, model, age, value, any modifications, and where it is parked overnight. The driver side takes in age, claims and driving history, how far you travel, and who else is listed to drive it. Where you live carries real weight, because theft and collision rates differ from one area to the next, which is why two identical cars can be quoted very differently. The cover you choose shifts the number as well — comprehensive against third party property, agreed against market value, and the excess you have set — and Moneysmart has a plain-language guide to weighing those choices up.
Should I keep a car insured while it is listed for sale?
Yes. A car for sale still sits in a driveway, still gets moved, and still goes out on test drives, so dropping comprehensive cover the week you list is a small saving against a large downside. Test drives deserve a specific check: policies differ on whether a prospective buyer driving your car is covered, and some require the owner to be in the vehicle. Call the insurer or read the relevant section of your PDS before you hand over the keys, and see our guide to insurance and CTP when selling.
What happens to my car insurance and CTP when I sell the car?
The two behave differently, which is where people get tripped up. CTP attaches to the vehicle's registration rather than to you, so it generally travels with the car when ownership transfers, and there is usually nothing to refund in that situation. Your comprehensive or third party policy attaches to you and the car it names, so you either cancel it or move it across to a replacement, usually carrying over any no-claim bonus you have built up. Cancelling can attract a fee and normally returns the unused portion of your premium, so time it for after the transfer is complete rather than the day you shake hands.
Do I need insurance before I drive home a car I have just bought?
Arrange it before you drive away, not after. Once you take possession the risk is yours, and the drive home is a stretch plenty of buyers spend uninsured without realising it. Most insurers can start cover immediately by phone or online, and some will issue a cover note to bridge the gap while the paperwork catches up. If you already hold a policy on another car, ask about moving it across rather than starting fresh, since your claims history is worth carrying over. Check the car's registration is current too, because that is what carries the compulsory injury cover.
Can I insure a classic, imported or modified car?
Usually yes, though often through a policy written for the purpose rather than a standard one. Classic and enthusiast policies commonly use an agreed value and may attach conditions such as a distance limit, a garaging requirement or club membership, and laid-up cover exists for a car being restored and not driven. Imports can be harder to place, because parts availability and compliance history affect both the premium and whether an insurer will quote at all. Modifications are the part people get wrong: a change you did not declare can see a claim reduced or refused, and that includes work that looks purely cosmetic. Declare the lot, get the insurer's response in writing, and see our guides to insuring a classic and what modifications do to a car.
What does comprehensive car insurance usually not cover?
Wear and tear, mechanical failure and general deterioration sit outside it — insurance responds to sudden events, not to the cost of a car ageing. Claims are commonly reduced or declined where the driver was unlicensed or over the limit, where the car was being used for something the policy excludes such as ride-share or delivery work, or where a regular driver was left off the policy. Undeclared modifications belong on that same list. Exclusions differ between insurers and even between policies from the same insurer, so the product disclosure statement is what answers this for your particular cover. If a claim is declined, the insurer's internal complaints process comes first, with the Australian Financial Complaints Authority after that.
Where to next
- Insurance and CTP when selling your car — what to cancel, what transfers, and when to do it
- Insuring a classic: agreed value, laid-up cover and the questions to ask
- Modified cars: what's legal, what needs certifying, and what it does to resale
- What a car actually costs to run — insurance is one line of several