Car insurance in Australia may seem like a nightmare. Here are good tips for Car Insurance
Why Get Insurance?
Some people feel like they don’t need insurance: perhaps they are confident in their abilities on the road; perhaps they cannot believe that it will happen to them; or perhaps they are completely oblivious to the benefits of insurance. Regardless of their beliefs, it is always a good idea to have car insurance.
Roads are dangerous places. In July 2015 across Australia, there were 91 total road-related deaths. That doesn’t take into account the injuries or damage to property that seem to happen on a daily basis.
It’s not a good idea to go without insurance, no matter how good a driver you are.
Knowing the Basics:
However, knowing that you need insurance and knowing what sort of plan would be best for you are two very different things, as you are probably well aware. Having a conscious decision to get car insurance does not mean that you suddenly become well acquainted with the ins-and-outs of car insurance policies. That only comes with research and reading.
Fortunately, you don’t have to go into the depths of the insurance law section at the university library to uncover some of the basics (although that part of the library can be interesting – the dust there has evolved species yet to be discovered by modern science). Here is a quick overview of the basics of Australian car insurance policies.
Compulsory Third Party Insurance
In Australian car insurance, there is a base level of insurance that all car drivers and owners are mandated by law to have. This car insurance type is called “Compulsory Third Party” Insurance, or CTP for short. It is colloquially known as a “green slip” in some states such as NSW, due to the fact the papers come on a green slip (because Australians are very original when it comes to naming things).
CTP Insurance plans, being the bare minimum when it comes to insurance policies, only covers other people’s medical expenses if an accident occurs. Other costs, such as costs to repair the damage to property (yours or theirs), or your own medical bills are not covered. If you are injured, and you are blameless, you can claim the costs on the other person’s insurance – assuming they have the right type.
Confused? Here’s a scenario that may be helpful: imagine you have just been in an accident where a person pulled into your lane and caused both cars damage. Furthermore, you and the other driver, whilst mostly unharmed, had injured your legs. The other driver only has CTP insurance, which means that, since you are not at fault legally, their insurance pays for the cost of getting your leg seen to. However, the cost of the damage to the cars, or the other person’s injuries, are not covered.
With CTP, it is important that each of the different states and territories have different regulations, especially when it comes to getting it. Ensure you have researched your local state’s approach to avoid confusion.
Other Kinds of Insurance:
Beyond CTP policies, there are three other major types of insurance in Australia.
Third Party Property Cover: Often seen as the “next step” in the Australian car insurance family, policies that fall under this category cover not only the other person’s medical bills, but also the damage to the other person’s property. Using the above example, the other driver’s insurance would not only include the expenses for your broken leg, but also for the damage to your car.
Third Party with Fire and Theft Cover: Same as above, but with the addition of cover in the case of your car bursting into flames or being stolen.
Comprehensive Cover: The highest form of car insurance in Australia, Comprehensive Cover ensures that your car and property is covered as well as other people’s property and/or car.
Continuing the story so far, if the other person had Comprehensive Coverage, they would not only be able to get insurance on your car and health costs, but also their own car and their health costs.
Whilst there will always be some policies that truly defy categorisation, most Australian car insurance policies will fit neatly into these categories. The differences usually come down to prices, and other detail-orientated differences.
See, Australian car insurance isn’t so bad. True, it can be tricky at times, but overall, when you know the basics of Australian car insurance, everything else falls into place. In this way, understanding Australian car insurance is just like anything else in life – mastering the basics will give you an ability to properly understand the more complex problems later down the track.