Mozo guides

Types of car insurance

People looking through car window with insurance

What’s that? Car insurance is your favourite ever thing to pay for? Yeah, we know it hurts the hip pocket and no one wants to really deal with it. But it’s a necessary purchase we all need to think about, whether we like it or not.

For those who are buying car insurance for the first time, you need to understand two types of insurances:

1. CTP - a compulsory insurance that must be purchased before considering the next step and definitely before getting behind the wheel.

2. A choice between:

  • Third party property insurance: If you’re at fault in an accident, people injured or property damaged may be covered, not including you or your own vehicle or property.
  • Comprehensive insurance: A broader coverage that aims to cover all people and things affected by the accident you caused.

Please note: Under no circumstance will CTP, third party property or comprehensive insurance cover you if you’re found to be intoxicated in any way. That may include medication that causes drowsiness, illicit drugs and alcohol, possibly even if you’re under the legal limit.

Wouldn’t it be great if car insurance was one, no-fuss price? Uniformity in Australia is kinda rare when it comes to financial products and car insurance isn’t any different. So when it comes to CTP, comprehensive and third party property insurance, the price you pay to protect your vehicle will likely depend on:

  • which state or territory you live in
  • which insurance company you choose
  • the value of your car
  • demographics like age, gender identity and driving experience

If you want to know more state-specific rules and necessary inclusions, read Mozo's state-by-state guide to car insurance.

Is greenslip and CTP the same thing?

Yes, it is. Depending which state you live in, when you register your car your CTP cost may be included in the overall price of registration. As CTP (Compulsory Third Party) is compulsory insurance – as you might have guessed – you absolutely cannot drive without it. There’s no way around it, but you do have a choice on which insurance provider you go with. And the prices vary like you wouldn’t believe. 

After I pay my greenslip, what happens next?

You have the choice between purchasing comprehensive and third party property insurance. Imagine if you’re at fault in an accident and didn't have any insurance other than CTP. You’d have to pay for any damage done to cars, people or property. That could amount to tens of thousands of dollars! Insurance covers you so it doesn’t come out of your pocket, besides an agreed-upon excess.

Excess is essentially an ‘access payment’ to the insurance amount that covers you in case you’re at fault. That is only if you’ve followed all the rules that bind you to your policy so you qualify to receive help from your insurance provider. 

Third Party vs Comprehensive

Third party property insurance covers personal injuries, car and property damage which you may cause to others. However, even if your claim is accepted within the parameters of your policy, it's often only up to a certain monetary amount, normally starting at around $5,000. If potentially having to pay the difference in repairs is a worry, you can talk to your provider about increasing the limit (this will likely come with an increase to your premium).

Best for: Drivers on a tighter budget with a less valuable vehicle. If you park your car in the street in an area with a high crime rate, you might consider adding 'fire and theft' insurance to your policy at an increased cost.

Comprehensive insurance is the highest level of cover you can purchase. It aims to cover you and others in the case of personal injury, as well as car and property damage. Most policies will have optional extras which cover more events or car-related items for a premium bump.

Best for: Drivers who want to ensure their vehicle is covered in as many circumstances as possible, and have peace of mind about their finances when it comes to possible mishaps on the road.

The hidden extras of car insurance

If you don’t opt-in for some policy features which you assumed were automatically covered, you could face a very nasty surprise come claim time. Here are some of the important extras you want to look for in a policy:

  • fire damage
  • storm, flood and hail damage
  • theft
  • windscreen and window repairs
  • car modifications
  • roadside assistance
  • car hire during repair
  • restricted drivers on your policy
  • adjusting your excess

Whether you're looking into a comprehensive policy or third party coverage, read the policy's Product Disclosure Statement (PDS) before signing up. This form is publicly available and has all the information you need to form a clear idea of what you’re paying for and when you'll be covered. Then decide whether you want or need to add any of the above features to your policy.

How are young drivers included?

It’s all about being honest with your insurance provider from the get-go so everyone knows where they stand. Don’t forget, they've got a business to run and won’t take your personal financial situation into account. It’s a completely unbiased business transaction when purchasing car insurance not matter who it’s for.

If you need to add an inexperienced driver or a driver under the age 25 to your policy, you may need to pay more for your premium.

How can I save money on my car insurance?

1. Get in the garage: You’ll save hundreds on your premium in the long run by keep your car locked up, especially if you live in a high crime area.

2. Stay loyal: You'll be rewarded with a reduced premium the longer you stay with one provider. You could save up to 20% of your bill if you play your cards right.

3. Keep a good record: It’s nice to know good drivers get snaps. It you’ve had no accidents in the last few years, then expect to pay less for your premium. 

4. Increase your excess: If your monthly budget is really stretched, opt to pay a higher excess as this will reduce the amount you pay every month.

5. Bundle up: If you purchase other types of insurance with the same provider in addition to your car cover, you can earn a multi-policy discount. So if you have home or life insurance also, go for it.

6. Manage a multi-car policy: More than one vehicle registered in your household? Talk to your car-owning partner, kids or roomies about co-insuring under one policy name to save on your premiums.

7. Buy online: By purchasing your policy online, you could save up to 20% on the first year of your annual premium. 

Keen to get cracking with a fresh new policy? Head to Mozo's car insurance comparison page.

Olivia Gee
Olivia Gee
Money writer

As a personal finance writer at Mozo, Olivia investigates insurance, banking and property. After completing a double degree in journalism and media and communications, Olivia became a lifestyle editor at Time Out Sydney and freelanced for notable publications such as Guardian Australia and SBS News. Now she is Mozo’s resident car insurance enthusiast, and is certified (ASIC RG146 Tier 2) to provide general advice in general insurance. She also creates audible finance adventures as co-host of Mozo’s podcast, The Finance Burrito.

* Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.

^See information about the Mozo Experts Choice Car Insurance Awards