Car insurance Australia: find and compare policies

A car insurance policy covers the insured person’s liability in case they are responsible for a motor vehicle accident. The extent to which car insurance covers you will ultimately depend on the the type of insurance policy you choose and the level of coverage it offers. Across all Australian states and territories, motor vehicles are required by law to be registered and insured under a compulsory third party (CTP) insurance policy at a minimum.

All drivers face a certain level of risk each time they get behind the wheel, which is why car insurance is necessary even for those who consider themselves to be responsible. If you're involved in a car accident and are the at-fault driver, your car insurance policy can help pay for the expenses incurred by the other driver, be it hospital payments or car repairs. Your insurance may also cover the cost of damage to yours and other people's property, including accidental damage to your car from natural disasters such as windscreen damage from hail.

The incidents and damages covered by your car insurance policy depend on the type of car insurance product you choose, ranging from CTP insurance to comprehensive car insurance which, as its name suggests, covers most kinds of accidental damage. The amount you may be charged for your policy will depend on a number of factors including the type of insurance, the make, model, and age of your car, your driving experience, and where you live. 

Comparing car insurance quotes online before buying or renewing your insurance policy can help you better understand the kinds of coverage Australia’s top insurance companies offer. It may also be helpful to read through the insurer’s Product Disclosure Statement (PDS) to understand the exact limits, inclusions and exclusions.

Having a good understanding of the different levels of cover provided by different types of car insurance can help you ensure you're paying for what's right for you. Without this information, you could end up with a policy that doesn't offer you the best bang for your buck.

There are four main types of car insurance:

1. Compulsory third party (CTP)

CTP insurance is a base level of car insurance that's mandated by law for vehicle owners in all Australian states and territories. Also referred to as a green slip, it generally only covers injuries to other people involved in a road accident if you are the at-fault driver. Your own injuries typically won't be covered by a CTP insurance policy, although some insurers may offer optional extra coverage. Only specific insurers who are licensed to provide green slips offer CTP insurance policies.

2. Third party property damage

If you want a policy that also covers damage your vehicle may have caused to the other person's car or property, you can opt for a third party property damage insurance policy. Some third party property damage policies will also cover damage to your car if it's hit by an uninsured driver - but not if you're at fault.

3. Third party property, fire and theft

Some insurers may let you add fire damage and theft coverage to your third party car insurance, with a third party fire and theft car insurance policy. Such an extended policy may also offer limited coverage for any injuries or damage you suffer in accidents caused by other drivers. Additionally, it could cover other expenses such as a hire car in the event that your car is stolen, or towing a damaged vehicle.

4. Comprehensive car insurance

A comprehensive car insurance policy is the most exhaustive and in turn often the most expensive type of insurance. It covers injuries and damages to both you and the other person involved in an accident if you are at fault. Damage to your car from extreme weather events including floods, storms, and bushfires is also covered, similar to how home insurance can protect homes from similar disasters.

Comprehensive car insurance policies should include, within limits, coverage for any of your personal or work-related items that may have been damaged while in the car at the time of an accident. Window glass breakage and emergency repairs, or ride sharing costs may also be covered in some policies. 

If you take out comprehensive car insurance on a new car and it's written off within the first two years, you may be eligible for a new replacement car.

Optional extras

In addition to these preset types of insurance, many providers will also offer add-on coverage for a number of other incidents. For example, insurance with roadside assistance can be helpful in the event you need a jump start, tire change or towing.

By name, compulsory third party (or CTP) insurance is exactly that - compulsory. So, even if you're willing to risk not being covered for most costs involved with being in an accident, as a car owner in Australia, you will need at least to at least have CTP insurance.

If you're buying a used car, it's important to check when its registration and insurance is due to expire. Existing registration and CTP insurance should be transferred to you along with ownership. New cars, on the other hand will typically have the cost of registration and CTP insurance built into the drive-away cost, as the dealership will typically register and insure the new vehicle on your behalf.

Before you hand your keys over to a friend or a family member, you may want to check whether your car insurance policy’s coverage applies if someone else is driving your car. 

A car must be insured under the name of the primary driver of the vehicle, but you can have additional drivers listed on your policy if there are other people who drive your car on a somewhat regular basis. This can, however, be more costly depending on the age and driving history of the additional drivers.

Alternatively, if someone drives your car who isn't listed on the insurance policy and an accident occurs, you may be charged an additional excess on top of your basic excess to make a claim. How this works and how much excess you may be charged differs from one insurer to the next, so it's important to check your policy for information specific to your circumstances.

The cost of car insurance premiums (which is the recurring amount you pay an insurer to cover you) can vary greatly due to a number of factors, including the following:

• Type of car insurance: CTP insurance policies tend to have lower premiums, while comprehensive car insurance policies generally come at the highest cost.
• Driver's age: Young drivers are generally seen as a higher risk to insurers due to their lack of experience and therefore may be charged a higher premium than more mature and experienced drivers.
• Driving history: If you have a history of driving infringements and/or have made car insurance claims in the past, this may negatively affect how much you pay. In contrast, those with a clean driving record may be rewarded with lower premiums.
• Type of car: More expensive cars such as luxury vehicles often cost more to insure, as they will generally be more costly to repair or replace. Performance vehicles may also push up your premium.
• Where you park your car: The area you live in will have an impact on your premium, as will your parking situation. For example, if your car is parked in a lock-up garage most of the week, it's likely to score you a lower premium than if it was parked on the street - particularly in an area with high crime rates.

You might like to consider comparing personalised quotes from a number of different providers so you can choose a policy that works best for your personal financial situation.

Car insurance excess is a fixed amount of money that you are required to pay your insurer when you make a claim. The figure, which is an amount agreed to when you sign up to a new policy, is used to pay for part of your repairs. For example, if your excess is $1000 and the repair costs are $2500, you'll be out of pocket $1000 and your insurer will cover the remaining $1500. 

The amount of excess you pay directly relates to the cost of your insurance premium. Agreeing to a higher excess will bring your monthly premium down, while opting for a lower excess will mean paying a more costly premium. You will generally be able to decide what's right for you, but the insurance provider will typically have lower and upper limits to how much excess you pay.

Once you know what your excess is, it might be worth considering putting aside that amount in savings if possible, so that it's there if or when you need it.

A no-claims bonus, otherwise known as a no-claims discount, gives you a discount on how much you pay for your car insurance if you don't make a claim. It is put in place to reward and incentivise safe drivers. The discount can reduce your payments each year that you don't make a claim, typically up to a maximum number of years.

While a no-claims bonus may seem like a great opportunity to save money, ASIC's MoneySmart states that "a no-claim bonus doesn't always reduce the cost of your insurance". For more detailed information on how no-claims bonuses work, consider visiting the MoneySmart website.

There's no single best car insurance product on the market - it's more about figuring out what works best for your personal circumstances and requirements.

In order to find what's best for you, you'll need to consider your budget, age, the type of car you drive and the level of risk you are willing to take.

For example, sometimes comprehensive car insurance might be the right choice for you, such as if you've just bought a new car and the cost of the premium for comprehensive insurance works comfortably within your budget. But other times it might not be the right choice, even if you can afford it - such as if the resale value of your car isn't much more than the excess you'd pay if you needed to make a claim. 

Ultimately, you'll need to carefully weigh up what your insurance policy can offer you and whether it's good value for money.

You'll likely find it easier to compare car insurance quotes if you're comparing apples with apples. Here are some of the factors you may want to consider in order to narrow down your search:

Type of coverage 

By now you should have a general understanding of the differences between CTP insurance, comprehensive insurance, and everything in between - including add-ons such as roadside assist. A reasonable first step to take when comparing car insurance is to decide which of these types of coverage may work best for you.

Cost of premium

Your insurance premium is the recurring payment you'll be charged by your insurer. Comparing the cost of premium charged by one provider to the next may help you compare value, but be sure to factor in the correlating amount of excess applicable for each so that your comparison is fair.

Cost of excess

It's important to pay attention to how much your car insurance excess is, so that you're not taken by surprise when you go to make a claim. Keep in mind that if your excess is high, you'll likely be unable to make a claim for smaller accidents with less costly repairs.

Market value vs agreed value 

If you're taking out comprehensive car insurance, you can choose to cover the car (in the event that it is written off) for either the market value or an agreed sum.

A market value car insurance policy, which tends to be the default option, will require your insurer to pay the amount your car would sell for on the open market. The insurer will estimate this amount based on the market value at the time of the accident.

An agreed value policy, on the other hand, allows you to specify the amount covered. This option gives you the certainty of knowing the amount you’ll receive from the insurer in the event you have to file a claim.

There are pros and cons to both options, so it's important to do your research before choosing what might work best for you.

If you're involved in an accident or your car is damaged or stolen, it's important to work through each step of the car insurance claims process carefully. Consider the following example:

1. Ensure you and any other parties involved are safe.
2. If you cannot come to an agreement as to who was at fault, you may need to call the local police for advice.
3. Exchange details with the other driver, including insurance information and personal identification.
4. Take photos or video of any damage to yours and the other driver's car.
5. Write down details of the accident such as the exact location, date and time it occurred.
6. Gather your notes and photo evidence and submit your claim to your insurance provider. You will typically be able to do this online via your provider's website. Alternatively, you could contact them directly over the phone for help.
7. The insurance provider will then seek to confirm who caused the accident and, accordingly, work on settling the claim by negotiating with the other driver’s insurer.
8. If you are the at-fault driver, you will need to pay excess at this stage before the claim can be settled.

Keep in mind that the sooner you can report to your insurer, providing as much detail as possible, the faster your claim is likely to be processed.