- Posted 20 Oct
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Many drivers choose car insurance based solely on price, looking for the cheapest deal. But that’s not necessarily a good approach for an item that can become critical if you are in an accident or your car is stolen. Let’s look at the insurance market in Australia and the various options available for drivers:
Compulsory third party (CTP) insurance
CTP is the minimum mandatory insurance required by law. In South Australia CTP insurance is included in your car registration fee so you will be covered automatically. In other territories and states, you’ll need to show proof of CTP coverage in order to register your vehicle. It is illegal to drive without this minimum coverage, and the fines can be significant.
If you are in an accident, CTP insurance will pay the medical expenses of anyone that you injure. Depending on where you pay for insurance, the minimum mandatory policy may also pay your medical expenses if you are not at fault in an accident, but read to contract carefully because you may not have any personal protection.
CTP insurance won’t pay for repairs to your car or the other driver’s vehicle. This means you could still be responsible for substantial damages if you are in an accident.
For more information about legal requirements and minimum CTP coverage, contact your local government agency:
- ACT: http://www.treasury.act.gov.au/compulsorytpi/index.shtml
- NSW: maa.nsw.gov.au
- NT: http://www.tiofi.com.au/wps/wcm/connect/tio/website/mac/
- QLD: maic.qld.gov.au
- SA: mac.sa.gov.au
- TAS: maib.tas.gov.au
- VIC: tac.vic.gov.au
- WA: icwa.wa.gov.au
Third party property insurance
If you are in an accident, third party property insurance will cover any damage to other people’s property. Depending on the policy, it may also cover legal fees related to the accident.
However, a third party property policy won’t pay for repairs to your own vehicle. This type of policy makes sense if you have an older car that doesn’t have a high replacement cost. Check the fine print though; some policies will cover a limited amount of damage to your vehicle if you are in an accident with an uninsured driver.
Third party fire and theft insurance
This insurance is similar to a third party property policy but has added coverage for damage from fire or theft. Check the policy for the financial limits on what is covered.
This insurance covers your vehicle and other people’s property that you may damage in an accident. It also pays if your vehicle is stolen and will pay your legal costs in a court case.
Comprehensive insurance makes sense if you drive a relatively new vehicle that would be costly to replace. It is the most expensive form of insurance but provides the highest benefit rate.
If you choose comprehensive coverage, you’ll need to keep your car in good repair. Your vehicle may not be covered if the insurer can prove that it had unrepaired damage or rust problems before the accident.
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