There's little doubt car insurance is a necessity as a driver, but determining the kind of cover you need is where things become a little murkier.
And depending on where you live, you may or may not have a choice when it comes to how and where you access your level of cover.
"Compulsory Third Party (CTP), also known as ‘Green Slip’ insurance in New South Wales, is compulsory in every Australian state to allow you to register your vehicle," explains Hugo Schreuder, CEO of Australian insurer Youi.
"In some states it’s included in your vehicle registration, but in New South Wales it’s essential to have a policy in place to allow you to register your vehicle."
How CTP is managed varies greatly from state to state, with some states offering drivers a choice of insurer, while others have more limited options.
"In Queensland, New South Wales and the ACT, drivers may choose their CTP insurance and there can be hundreds of dollars of difference in the price of insurers," Taylor Blackburn, Insurance Specialist at Finder.com.au, says.
Additionally, some states place more emphasis on who is at fault in an accident than others.
"At-fault cover means that your injuries will be paid for by your CTP, even if you're the one that caused the accident. This is the case in SA, QLD and ACT, but all other states CTP generally just covers you if you weren't deemed to have caused the accident," Mr Blackburn explains.
To help you understand the differences between the various car insurance types, here's our basic guide.
What is compulsory third party (CTP) insurance?
"CTP is liability cover that exists to compensate people if you injure or kill another person in an accident involving your vehicle," Mr Schreuder explains.
"Essentially it covers you from being financially liable if a lawsuit arises seeking compensation."
For example, as Mr Blackburn explains, "if you crash into a Tesla driver parking in their driveway, you are covered for their hospital bills but not their car or home repairs".
However, depending on where you live, drivers also may or may not have to prove they weren't at fault in an accident in order to claim these medical benefits.
In 'no-fault' states, people who are injured in a road accident can still claim medical benefits even if the accident was their fault.
In 'at-fault' states, if the person who was injured in the accident was at fault, insurers will not provide medical compensation or cover any rehabilitation or ongoing medical care.
In this instance, some insurers will offer 'at-fault' driver cover at an additional cost, in case you would like to ensure you can claim medical compensation regardless of who is to blame.
It's also important to note that CTP only goes so far and you shouldn't consider it the sole level of cover you need.
"Across all states CTP does not cover damage to your own vehicle or anyone else’s vehicle or property, which is why it’s vital to consider what insurance you need before jumping in the driver’s seat," Mr Schreuder advises.
|STATE||INCLUDED IN REGISTRATION?||CHOICE OF INSURER?||AT-FAULT OR NO-FAULT?|
|Victoria||Yes||No – the government runs the CTP scheme in Victoria via the Transport Accident Commission (TAC)||No-fault|
|South Australia||Yes||No – there are four different providers, but one is automatically assigned to you by the Motor Accident Injury Assessment Scheme (MAIS)||At-fault|
|Tasmania||Yes||No – it's handled by the Motor Accidents Insurance Board (MAIB)||No-fault|
|New South Wales||No – it's handled separately and you'll need your registration number or Vehicle Identification Number (VIN)||Yes||No-fault|
|Western Australia||Yes||No – there is only one provider, the Insurance Commission of Western Australia (ICWA)||No-fault|
|Northern Territory||Yes||No – it's run by the government-operated Motor Accidents Compensation Commission||No-fault|
What is comprehensive insurance?
As its name suggests, comprehensive car insurance offers comprehensive cover that extends from damage to your own car during accidents, theft, vandalism or natural disasters, to any damage you may cause to other people's cars or property.
Often, it comes with extras depending on the level of cover you choose. For example, Youi’s comprehensive car insurance policy includes 24/7 Roadside Assist (subject to limitations and exclusions) and car hire after theft (for up to 14 days) as standard.
What is third party insurance?
Not to be confused with compulsory third party insurance, this is a basic level of insurance that covers damage to other people's vehicles when you're liable, but not coverage for your own car.
What is third party, fire and theft insurance?
This covers your own car if it's damaged by a fire or stolen, and it also includes the third party insurance cover explained above.
In Youi's case, its third party fire and theft insurance offering also provides emergency accommodation, transport and repairs, and up to $750 of cover for the contents in your car if your claim is accepted.
Disclaimer: Levels of cover vary from insurer to insurer, so read the product disclosure statement carefully. Your ability to claim will also be affected by the individual circumstances of the incident in question.