Your Explanation for the Different Levels of Car Insurance
The automobile is the preferred method of travel for most Australians. We use our cars for everything from enjoying a beautiful scenic trip to making the daily drive to work through crowded city streets. When driving down the road, there is no doubt that all drivers take precautions to protect themselves, passengers, and cars. As careful as we are behind the wheel, however, some car accidents will inevitably occur. When a bump-up does happen, you will want to be prepared.
Whether you are buying a new car or taking care of your old one, you will want to have enough car insurance to make sure that you are protected. But how do you know the type of insurance that you need? In Australia, there are a few types of coverage options available. The two basic types of auto insurance include compulsory third-party insurance (CTP) and comprehensive car insurance coverage. You can also opt for limited third-party fire and theft coverage or property damage coverage. Let’s take a look at the different levels of car insurance that you can purchase for your vehicle.
Compulsory Third-party Insurance
For all 19.8 million registered vehicles in Australia, compulsory third-party insurance is mandatory in all states and territories and is the minimum amount of insurance that you must carry. CTP insurance protects bodily injuries or death caused by your automobile. It is usually included in your registration, however, if you are in New South Wales it’s purchased as a separate policy. In some states, you will have the option of choosing a CTP insurer at the time of registration. In other places, you will only have one option. CTP insurance typically works in varying ways and comes with conditions in each area. You will need to check the details of how it works where you live.
As far as coverages are concerned, compulsory third-party insurance only pays liability costs if you cause an injury or death. This insurance doesn’t cover the cost of any repairs to vehicles or property. With CTP it doesn’t matter if your accident causes minor or major damage, the plan won’t pay to cover damages.
Optional Third-party Insurance
Third-party property insurance is optional coverage. It can be added to your basic CTP plan and provide payment to help cover damages you cause to someone else’s property. A plan like this also includes liability coverage. This means that you will receive help with any legal proceedings resulting from the damage you caused. It’s important to note that third-party property insurance will only pay for property damage you cause to someone else’s property. It doesn’t pay for repairs to your car and won’t replace it.
Fire and theft insurance is another optional plan that will offer some protection for your car. Third-party fire and theft insurance is one step above third-party property insurance. A plan like this will cover the damage that you cause and also provides payment for damages to your car from fire or theft. Similar to CTP and third-party property insurance, however, fire and theft insurance doesn’t cover physical damage to your vehicle due to accidents.
Comprehensive car insurance coverage is the most inclusive and expensive car insurance offered in Australia. A comprehensive insurance policy provides all the coverage that third-party insurance plans offer and provides coverage for damage to your own car. Depending on the insurance provider and the amount of coverage you choose, comprehensive coverage might also pay for things like rental vehicles and windshield replacement. Because these plans cover more than liability insurance, your premium payments will be higher and you may have a higher deductible.
While comprehensive insurance covers more than other policies, it doesn’t cover everything. In general, your insurance policy usually won’t pay if the damage is caused by someone else driving your car. It also won’t provide payment if the driver was over the legal alcohol limit or under the influence of drugs when the accident occurs.
With accidents in Australia averaging $27 billion yearly, car insurance provides financial protection in the event of a car accident. We hope that you will never have to use your insurance, but it is best to have the appropriate coverages just in case you find yourself in a bump-up. With various types of insurance offered, you will do some research to help you find the coverage limits that you need at a price that you can afford.