Car insurance is essential to protect your and your vehicle when on the road. In Australia, there are two main types of optional car insurance available: third party and comprehensive. Each offers distinct coverage and benefits, and understanding their differences can help you make an informed decision that suits your needs and budget.
In this informative guide, Savvy takes you through the different types of car insurance, weighing up their pros and cons to help you find insurance cover to suit your needs.
What does third party car insurance cover?
Third party car insurance is the most basic form of car insurance. In Australia, there are two tiers of third party cover: third party property damage (TPPD) and third party fire and theft (TPFT). TPPD provides cover for damage you cause to another person’s vehicle or property with your car, while TPFT also covers damage to your own car through fire or theft.
What does comprehensive car insurance cover?
Comprehensive car insurance provides a more extensive level of coverage compared to third party insurance. It not only covers damage to other people’s property but also protects your vehicle against accidents, theft, fire and other insured events.
Which type of car insurance is best for me?
Whether to choose third party or comprehensive car insurance depends on various factors, including your budget, the value of your car and your risk tolerance.
Reasons to choose third party car insurance include:
- You are on a tight budget and your vehicle is older or has a lower market value.
- You are willing to bear the costs of repairing your own vehicle.
- You primarily want protection against damaging someone else’s property or vehicle in case of an accident.
Reasons to choose comprehensive car insurance include:
- You own a new or expensive car that requires protection against a variety of risks, including accidents, theft and natural disasters.
- You want to ensure that your vehicle is covered in a wide range of situations, minimising out-of-pocket expenses.
- You would like additional benefits like roadside assistance, new-for-old car replacement and coverage for personal belongings inside the vehicle.
Ultimately, you should take into account your unique circumstances to make an informed choice that best suits your priorities and needs and offers you peace of mind when behind the wheel.
The pros and cons of third party vs comprehensive car insurance
Third party insurance
- Third party car insurance is generally more affordable than comprehensive insurance, making it an attractive option for budget-conscious drivers.
- If you have an older, lower-value car, you might not need more extensive cover.
- Third party insurance provides essential liability coverage, protecting you from financial burdens in case you cause an accident that results in damage to someone else’s property or vehicle.
- Third party insurance offers minimal protection and does not cover your own vehicle against accidents or, in the case of TPPD, theft or fire damage.
- If your vehicle sustains damage due to an accident where you are at fault, you will be responsible for your car’s repair or replacement costs.
Comprehensive insurance
- Comprehensive car insurance safeguards your vehicle and financial interests by covering a wide range of risks, from collisions to hailstorms.
- Most comprehensive policies offer extra benefits like roadside assistance, new-for-old car replacement and coverage for personal belongings inside the vehicle.
- You can drive confidently knowing that your vehicle is protected in various scenarios, whether it's an accident, a natural disaster or theft.
- Comprehensive insurance typically has higher premiums than third party insurance due to its broader coverage and added benefits.
- Some policyholders may find that they don’t need or use all the coverage offered by comprehensive insurance, making it less cost-effective for their specific needs.
