Types of car insurance explained

  • Compare coverage for different types of car insurance
  • See an example cost comparison for the various car insurance types
Types of car insurance
Types of car insurance

In our car insurance guide:

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What are the different types of car insurance?

There are four main categories of car insurance:

1. Comprehensive car insurance

Comprehensive car insurance is the highest level of coverage available. It covers your car repairs after an accident (regardless of who's at fault) and damage to your car due to theft, fire, storm or hail damage, or vandalism. It also covers your liability for damage you cause other people's vehicles or property.

Comprehensive car insurance offers the broadest range of benefits and generally has higher insurance limits (the maximum your insurer will pay). Therefore, it comes at a higher premium than other car insurance policies.

Having comprehensive car insurance is often a prerequisite when taking out a car loan or a novated lease.

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Comprehensive is the only type of car insurance providing ‘new for old replacement’ cover as a standard benefit. Subject to the insurer’s conditions, this will replace your car with a brand-new equivalent if it’s stolen or written off in an accident covered by your policy.

2. Third party property only car insurance

Third party property only car insurance covers damage you cause to someone else’s car or property (including your legal liability if you must pay compensation) and damage to your vehicle or property caused by an insured driver.

This is the lowest level of optional car insurance. Third party property only cover is typically included in comprehensive car insurance policies, or available as a standalone policy.

3. Third party fire & theft car insurance

Third party property fire and theft car insurance is an optional extra that provides all the benefits of third party property only, plus additional cover for loss or damage to your car caused by fire, theft or attempted theft. It’s typically included as a standard benefit in comprehensive car insurance policies, or available as an add-on to third party property only (for an additional premium).

4. Compulsory Third Party (CTP) insurance

Compulsory third-party (CTP) insurance is paid for each time you renew your registration and is mandatory in all states and territories of Australia. It covers your liability if you or anyone driving your car kills or injures someone in a road traffic accident.

CTP is known as Green Slip Insurance in New South Wales and Transport Accident Charge (TAC) in Victoria.

What does each type of car insurance cover?

This table shows what’s generally included under each type of car insurance, but inclusions will vary depending on your individual policy and insurer. Check your insurer’s PDS for the full list of inclusions, limits, sub-limits and conditions of cover.

Inclusions

Loss or accidental damage to your car

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Injuries to you or other people

Comprehensive motorcycle insurance

No

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

Yes

Inclusions

New car replacement (if your car is stolen or written off)

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Car hire after an accident

Comprehensive motorcycle insurance

Yes (optional)

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Damage to other people's vehicle or property

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

Yes

CTP (compulsory)

No

Inclusions

Fire damage

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

No

CTP (compulsory)

No

Inclusions

Theft/attempted theft damage

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

No

CTP (compulsory)

No

Inclusions

Hire car following theft

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

No

CTP (compulsory)

No

Inclusions

Towing costs

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

No

CTP (compulsory)

No

Inclusions

Hail, storm or flood damage

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Emergency accommodation and transport costs

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Replacement of keys

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Legal liability for third party damage

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

Yes

CTP (compulsory)

No

Inclusions

Damage to your car caused by an uninsured driver

Comprehensive motorcycle insurance

Yes

Third party property, fire & theft

Yes

Third party property only

Yes

CTP (compulsory)

No

Inclusions

Reduced window glass excess

Comprehensive motorcycle insurance

Yes (optional)

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

Inclusions

Choice of repairer

Comprehensive motorcycle insurance

Yes (optional)

Third party property, fire & theft

No

Third party property only

No

CTP (compulsory)

No

InclusionsComprehensive motorcycle insuranceThird party property, fire & theftThird party property onlyCTP (compulsory)

Loss or accidental damage to your car

Yes

No

No

No

Injuries to you or other people

No

No

No

Yes

New car replacement (if your car is stolen or written off)

Yes

No

No

No

Car hire after an accident

Yes (optional)

No

No

No

Damage to other people's vehicle or property

Yes

Yes

Yes

No

Fire damage

Yes

Yes

No

No

Theft/attempted theft damage

Yes

Yes

No

No

Hire car following theft

Yes

Yes

No

No

Towing costs

Yes

Yes

No

No

Hail, storm or flood damage

Yes

No

No

No

Emergency accommodation and transport costs

Yes

No

No

No

Replacement of keys

Yes

No

No

No

Legal liability for third party damage

Yes

Yes

Yes

No

Damage to your car caused by an uninsured driver

Yes

Yes

Yes

No

Reduced window glass excess

Yes (optional)

No

No

No

Choice of repairer

Yes (optional)

No

No

No

Source: Suncorp and AAMI.

Other types of car insurance

This type of policy generally gives you much the same benefits as comprehensive car insurance, but calculates your premiums based on the kilometres you plan to drive.

Business car insurance provides coverage for accidental damage, fire and theft if you use your vehicle for both private and business use. Commercial car insurance can cover cars, trucks, utes, vans, forklifts and trailers, etc.

Provides cover for loss or damage to vintage or classic vehicles resulting from accidents, floods, fires, storms, theft, or malicious acts. It also includes liability coverage for damages to another person's vehicle or property. A car is considered vintage if it’s more than 25 years old, according to the Register of Approved Vehicles (RAV).

As the name suggests, motorcycle insurance is specially designed for people who ride a motorcycle on the road. It provides financial protection for loss or damage to your motorbike in case of an accident, theft, or other unforeseen event listed on your policy.

This is a type of car insurance designed specifically for rideshare drivers who use their vehicle on platforms like Uber or example. Rideshare car insurance is available in various levels of cover from comprehensive coverage to third party only, or as an extra on a standard car insurance policy.

While some car comprehensive insurance policies cover 4x4 vehicles, specialised 4WD insurance is also available as a standalone cover. Depending on the policy comprehensive 4X4 insurance will cover loss or damage to your 4WD, damage you may cause to other people's cars or property and may also include extras like off-road recovery cover if your 4X4 gets stuck.

Car insurance optional extras

All car insurances come with standard inclusions and benefits, but there are also optional extras you can add to your policy (for an added premium), including:

Roadside assistance

Also known as breakdown cover, roadside assistance is a service that helps you get back on the road if your vehicle breaks down or won’t start. It can come in handy if you have a mechanical issue, a flat tyre, or a jump start.

Choice of repairer

This optional benefit allows you to nominate your preferred repairer if your car is damaged in an accident or other insured event.

Hire car after an accident

This optional extra provides you with a rental car if your vehicle is out of action after an incident (regardless of who’s at fault). Most insurers have a dollar limit per day for car hire and a time limit (usually for up to 21 days). Some providers offer unlimited days of car hire while yours is being repaired (or until it’s determined as a write-off).

Windscreen and window glass damage

Pay no additional car insurance excess or reduce your excess for windscreen or window glass repairs if it’s only damage to your car following an incident.

Compare the cost of car insurance types from popular insurers in Australia

This is an example showing the cost difference of different types of car insurance from selected providers for a 2019 Mitsubishi ASX. Quotes are based on a 30-year old female driver in QLD driving a 2019 Mitsubishi ASX (private use), with no previous claims and no driver under 25 on the policy. Prices shown are for this scenario only and are not necessarily indicative of what you may pay.

Insurance provider

Suncorp

Comprehensive car insurance

$1,030.82 annually or $103.91 per month

Third party property only

$371.44 annually or $37.47 per month

Third party fire & theft

$462.13 annually or $46.54 per month

CTP for 12 months (QLD)

$369.60

Insurance provider

AAMI

Comprehensive car insurance

$1,131.45 annually or $113.97 per month

Third party property only

$313.73 annually or $31.70 per month

Third party fire & theft

$327.73 annually or $33.10 per month

CTP for 12 months (QLD)

N/A

Insurance provider

Allianz

Comprehensive car insurance

$1,284.38 annually or $107.04 per month

Third party property only

N/A

Third party fire & theft

N/A

CTP for 12 months (QLD)

$369.60

Insurance provider

QBE

Comprehensive car insurance

$1,612.87 annually or $155.68 per month

Third party property only

$409.62 annually or $34.12 per month

Third party fire & theft

$633.76 annually or $52.80 per month

CTP for 12 months (QLD)

$369.60

Insurance providerComprehensive car insuranceThird party property onlyThird party fire & theftCTP for 12 months (QLD)

Suncorp

$1,030.82 annually or $103.91 per month

$371.44 annually or $37.47 per month

$462.13 annually or $46.54 per month

$369.60

AAMI

$1,131.45 annually or $113.97 per month

$313.73 annually or $31.70 per month

$327.73 annually or $33.10 per month

N/A

Allianz

$1,284.38 annually or $107.04 per month

N/A

N/A

$369.60

QBE

$1,612.87 annually or $155.68 per month

$409.62 annually or $34.12 per month

$633.76 annually or $52.80 per month

$369.60

Quotes obtained on 9 January 2024.

What type of car insurance is best?

The best type of car insurance depends on your individual needs and your budget. With that said, comprehensive car insurance is the highest level of cover. It provides coverage for a wide range of events like collisions, theft, fire, weather-related events and for your legal liability in accidents where you’re at fault.

Comprehensive car insurance also has higher benefit limits which reduces your out-of-pocket costs if something unexpected happens. However, it does come at a higher premium than other car insurance policies.

FAQs about car insurance types

Third party property only is generally the cheapest type of car insurance available as it offers the lowest level of cover. It only provides coverage for the cost of damages you caused to others’ property and for damage to your car by uninsured motorists. It won’t cover accidental loss or damage to your car or damage from weather-related events. For that, you’ll need comprehensive car insurance, but you’ll generally pay a higher premium. That said, there may be ways to reduce the cost – by paying your premium annually instead of monthly, for example.

CTP insurance is the only mandatory car insurance in Australia. It covers your personal liability if you injure or kill someone in a car or road accident. While comprehensive car insurance is not mandatory, it is often a condition of car finance or if you use your car for ridesharing.

If you have a new car, you might want to consider comprehensive car insurance which offers new for old replacement if your car is written off in an accident or stolen, and a choice of replacement for market value or agreed value. Market value is what your car would currently sell for and agreed value is a predetermined amount the insurance provider agrees to pay if your car is a total loss.

If your car is under finance, you could consider insuring it for an agreed value that's at least equal to the remaining balance on your loan. This would ensure the insurance payout would cover what's left on your car loan in the event of a total loss you’re insured against.

If you have a used car in good condition, you could still benefit from comprehensive car insurance to ensure you’re covered for as many unforeseen events as possible. Additionally, some older cars may be cheaper to insure than new cars. According to sample quotes obtained by Money.com.au, an older Toyota Camry will cost less to insure than a brand-new hybrid model.

If your used car is not particularly valuable, you could consider a third-party property only policy, which would only cover you if you cause damage to someone else’s vehicle or property.

Written by

Megan Birot Money.com.au writer

Senior Finance Writer

Megan Birot

Reviewed by

Sean Callery Editor Money.com.au

Editor

Sean Callery

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