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What is third party car insurance and what does it cover?

Third party car insurance is an economical option for those who want to save some money on their premiums. It doesn’t cover as much as comprehensive car insurance, but it can be a good option for people in certain circumstances.

What types of third party insurance are there?

There are a couple of types of third party car insurance. The lowest level of insurance is known as ‘compulsory third party’, or CTP insurance. It is a legal requirement that registered vehicles have CTP in all states and territories of Australia, as a bare minimum for safety. However, all drivers should take out additional cover to complement their compulsory third party insurance. This can a be a ‘third party property only’ insurance package, or the additional cover of ‘third party fire and theft’.

What’s covered by third party car insurance?

Compulsory third party insurance covers injuries to people such as pedestrians, cyclists and other drivers when your vehicle is involved in an accident. It is highly advisable to purchase insurance that will also provide cover for damage caused by your vehicle in the event of an accident.

Third party property only insurance provides cover for damage caused by your car to other vehicles or property, normally up to an agreed amount. Third party fire and theft offers this same cover, and adds fire and theft protection as well. It’s important to be aware of the limits when comparing policies – for example, your cover might only include $8000 worth of repairs, but if you’re at fault in a three-car pile-up then the bill could amount to much more than that.

What isn’t going covered by third party?

Compulsory third party is the lowest level of insurance, and drivers risk significant financial loss if they only have this cover. You could get stuck paying thousands of dollars in repair bills for other peoples’ cars or property. If you have property only or fire and theft third party cover, it still won’t cover any damage to your own car when you’re at fault in an accident, so you will end up with a repair bill.

How do I know if third party car insurance is right for me?

Third party insurance can be a good option for people who have a tight budget or who drive a car that isn’t worth much to them. If you don’t think your car is worth repairing in the case of an accident, due to its age or general condition, then you may want to consider third party insurance.

But remember, even if all you want is the ability to get back on the road without being too far out of pocket, comprehensive insurance is the better option for covering damage and ensuring you’re not left with big bills after an incident.

Sally Writes 24 Nov 2020