To enjoy those beautiful tourist spots, most people prefer to travel around Australia by car. But, needless to say, you never know what can happen when, no matter how cautious you are behind the wheel, the possibility of an accident always exists.

So, instead of relying entirely on the wheels, prepare some paperwork in case an unfortunate event occurs that damages your car. These documents are known as car insurance policies.

A car insurance policy is required in Australia for these cases, and it can benefit you a lot of money by paying for car repairs as well as any people or assets you may have harmed or damaged with your car.

Types of Car Insurance in Australia

In Australia, there are four main types of car insurance policies, each different and implied based on specific instances and forms of incidents. Here, we'll go over the differences between them so you can decide which one is preferred for you. 

CTP: Compulsory Third Party

The first one on this list is the most complex; it's called CTP, or Compulsory Third-Party Insurance, and it protects other people from harm caused by accidents that you may be at fault for rather than your property or vehicle.

What Does It Cover?

It will only cover your expenses related to other people's fatalities or injuries. So, it refers to anybody who is not you or who does not have insurance coverage, including any potential drivers of other vehicles, someone driving the car you own, passengers, or bystanders. 

Also, it doesn’t insure the other car; only the person directly associated with it is covered, not any car damage. What exactly does it cover? Medical attention, rehabilitative services, financial difficulties, etc. 

State-Wise Rule

This car insurance is in effect throughout much of Australia, is frequently referred to as a "green slip" in NSW, and is mostly handled by the state in which you live. Among the states, Queensland, SA, and WA have an at-fault rule. 

This means that if the driver is at fault, they cannot make a CTP compensation claim. For instance, if the driver's bad behaviour, such as a drinking issue, caused the accident, he won't receive any insurance benefits at all. However, the CTP can be granted based on the severity of the injury and the degree to which the accident was fatal.

What if the Accident Happened on the Interstate?

Accidents can happen while travelling through other states, and in these cases, the CTP will be implemented based on where the accident occurred. Furthermore, if your vehicle is registered in another state, the claim will be made against the CTP insurer or the other driver.

Comprehensive Car Insurance

The next up is considered the most expensive car insurance; the comprehensive car insurance policy. It provides the highest level of protection and helps to keep your costs as low as possible. Simply put, if the accident was caused by you, this insurance will cover the people or properties you harmed as well as any damage you caused to yourself.

The only difference between this and CTP is that you and your vehicle will be equally covered for any damage you may unintentionally cause to other people's stuff.

What does It Have to Offer?

Everyone who owns a four-wheel vehicle is covered by comprehensive insurance. Also, insurance options can differ, so it's important to check ahead of time. For example, if the driver has never been insured, he will not be covered. 

Furthermore, if you were involved in an accident as a result of excessive drinking or drug use, you have no recourse!

The insurance policy will offer you numerous options, including market value and agreed value. These two are generally the amounts fixed for car insurance and determine how you'll get them if something happens to your car, such as it being robbed.

Agreed Value  

For the agreed value, the insurance is provided in a specific manner in which the amount is determined by the insurer and you agree to it. If you lose your car, your insurer will pay you the full value. 

If you have a loan on your car, you should think about getting insurance for an agreed value that is at least the sum of the finance you took. This way even if you lost your car, the debt will be compensated before you get a new ride.

Market Value

The value of your car at the moment of the accident determines the market value. It can greatly reduce your premium, but the value may vary depending on the event. As nothing is predetermined, you will be less clear about what the payout might be.

It may be less expensive than the agreed price value, but it is less reliable.

TPP: Third Party Property

Third-party property insurance, or TPP, is regarded as the absolute efficient of the four types of insurance. It covers you after you've damaged another car, but there can also be some limited insurance for you from the other driver who just so happens to be uninsured, but only in certain circumstances.

It primarily covers the other person you injured, his property, and his car. As we saw with CTP, it only covered serious harm to the other individual, and neither of your vehicles or private properties was insured. 

The sole exception is that with TPP, as opposed to CTP, both the injured party and the car or other property that was damaged are covered.

Third Party: Fire & Theft

The final one, which we call the TPF&T, is similar to TPP in that it covers unintentional damage to other people's property or vehicles that is caused by your conduct. Here are some more, though; it offers coverage if your car is hijacked, destroyed intentionally, or suffers fire damage.

Plus, in this case, you can either choose the market value alternative or an agreed value, where the insurance will be fixed in advance under theft and fire damage, depending on the type of policy you had insured.

What Will Be Your Choice?

Finally, we must consider which option will work for you. We don't want to be caught without insurance, so get something that isn't too heavy on you. Following a thorough investigation, the Comprehensive policy appears to be adequate because it will cover both you, your car, and the cracked ones too, even if the blame is yours to take. There’s

more to consider here as well, but the final call will be yours depending on the circumstances.

Car Insurance: A Smart Decision

Given how these four types of auto insurance operate, it is clear how important it is for you to have car insurance. Whatever meets your requirements and situation is always available for you to reach here. 

The ability to assess premiums, eliminate excess payments, and receive substantial financial benefits in times of emergency is facilitated by car insurance.

So set aside some time for yourself and look for the right deal!