What kind of car insurance do I need?

car accident with toy cars

What the different types of car insurance cover – and what they don’t.

Car insurance can be confusing. Knowing what you must have and what would be good to have can take some time and effort to work out.

So here’s a quick look at the options.

1. Must-have car insurance

Your ‘Green Slip’, otherwise known as Compulsory Third Party Insurance (CTP), is a type of insurance you are required by law to have in all Australian states in order to register your vehicle.

In most states it’s included in your registration, however in NSW, drivers are required to have a policy in place before registering their vehicle.

Because CTP Green Slip is a compulsory type of insurance, people are often unsure what exactly it is they're covered for under their policy.

So, what is covered by CTP?

CTP Green Slip exists to compensate people who are injured or killed if your vehicle is involved in an accident. Effectively, this means that if you (or someone driving your vehicle) have an accident where someone is hurt, your CTP Green Slip protects you from being financially liable in any lawsuits or compensation claims that might arise.

What isn’t covered by CTP?

Regardless of which state your CTP Green Slip policy is held in, it will never cover damage to your own vehicle or any other vehicle or property.

You’re still liable for financial damages if you don’t have additional car insurance, which is why it’s so important to carefully consider your insurance needs before getting behind the wheel.

2. Additional insurance options

There are several different types of insurance options available depending on your individual needs, however the three most popular types of vehicle insurance policies are:

Third Party, Fire and Theft Insurance is additional protection against damage sustained by your vehicle as the result of a fire or if your vehicle is stolen - it also covers other people's cars and property if you cause an accident.

Third Party Property Damage Insurance covers you for damage done to another person’s vehicle or property where you are at fault, but it doesn’t cover your own car.

Comprehensive Car Insurance is a much higher level of cover (and for this reason the most popular).

Not only are Comprehensive Insurance policy holders covered against damage to other people’s vehicles or property, they also enjoy protection of their own vehicles, regardless of who’s at fault in the event of an accident.

It offers policy holders the additional benefit of having an agreed market value paid out on their vehicle should it be deemed a ‘write-off’, and in many cases includes options for hire vehicles to be arranged while their vehicle is being repaired.

The importance of knowing what you’re covered for

While you’re required by law to hold a CTP Green Slip policy before registering your vehicle, it’s essential that you understand exactly what your car insurance does and doesn’t cover you for.

To ensure your vehicle and financial security are protected to the level you want, speak with your insurance provider about the best policy for your situation and read the details of your policy to make sure it matches your expectations.

Read more articles on protecting things you love at The Hub.

This article was contributed by NRMA Insurance, which is part of the Insurance Australia Group. The NRMA (National Roads and Motorists’ Association Limited) is a separate and independent company from NRMA Insurance.

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