Cover types, costs and 2026 rules
Car insurance in Australia explained: CTP, third party, fire and theft and comprehensive
How Australian car insurance fits together in 2026: compulsory CTP by state, the three optional cover levels, what drives the price and how to compare at renewal.
Car insurance in Australia comes in two layers. Compulsory third party (CTP) is attached to your vehicle's registration and pays compensation to people injured in a crash; it never pays for damage to cars or property. On top of that you can buy one of three optional policies: third party property (damage you cause to other people's property), third party, fire and theft (the same plus fire and theft of your own car) or comprehensive (all of that plus accident, storm, hail and flood damage to your own car). Which one you need depends mostly on what your car is worth to you, whether it is under finance and how much loss you could absorb from savings.
This guide is the overview for the section on cover types, costs and rules. Each topic links to a detailed guide.
Layer one: CTP, the insurance that comes with your rego
Every state and territory requires CTP before a vehicle can be registered, but each runs its own scheme. The main split is between states where a government body is the insurer and states where licensed private insurers sell CTP under a state regulator:
| State or territory | Who provides CTP | How you pay |
|---|---|---|
| NSW | Licensed private insurers, regulated by SIRA | Buy a Green Slip before renewing rego |
| Victoria | Transport Accident Commission (TAC) | TAC charge included in rego |
| Queensland | Licensed private insurers, regulated by MAIC | Choose the insurer when paying rego |
| South Australia | Licensed private insurers, regulated by the CTP Insurance Regulator | Choose the insurer when paying rego |
| Western Australia | Insurance Commission of Western Australia (ICWA) | Included in rego |
| Tasmania | Motor Accidents Insurance Board (MAIB) | Included in rego |
| ACT | Licensed private insurers under the Motor Accident Injuries scheme | Choose the insurer when paying rego |
| Northern Territory | Territory scheme under the Motor Accidents (Compensation) Act | Included in rego |
The benefits are set by each scheme's law, not by the insurer. Some schemes pay benefits regardless of fault, others mainly compensate people who were not at fault, with separate lifetime support for catastrophic injuries. The details are in CTP insurance by state, and the reason CTP alone leaves you exposed is explained in CTP vs third party property.
Layer two: the three optional cover levels
| Event | Third party property | Third party, fire and theft | Comprehensive |
|---|---|---|---|
| You damage someone else's car or fence | Covered | Covered | Covered |
| Your car is stolen or burnt | Not covered | Covered, often to a capped amount | Covered |
| You crash and your own car is damaged | Not covered | Not covered | Covered, minus excess |
| Hail, storm or flood damages your car | Not covered | Not covered | Usually covered |
| An identified uninsured driver hits you | Limited extension in many policies | Limited extension in many policies | Covered, excess often waived |
Third party liability limits are usually expressed in millions of dollars, because a crash involving an expensive vehicle or a building can cost far more than most people could pay. That liability is the core reason to hold at least third party property cover even on an old car. How fire and theft compares with comprehensive is worked through in third party fire and theft vs comprehensive.
A quick way to choose a cover level
Answer these questions in order:
- Is the car under finance or a lease? Most lenders require comprehensive cover for the term of the loan. Check your finance contract.
- Could you replace the car from savings tomorrow without hardship? If not, comprehensive is usually the safer choice.
- Where is it parked? Street parking in areas with frequent hail, flood risk or vehicle theft favours comprehensive; a low-value car in a locked garage in a lower-risk area may suit fire and theft.
- What is the premium gap? If comprehensive costs $700 a year more than third party property on a car worth $4,000, you are paying a large share of the car's value each year to insure it.
Worked example (illustrative)
Mia owns a car worth $9,000 and parks on the street. Illustrative quotes: comprehensive $1,050 with a $750 excess, third party property $420. The premium gap is $630 a year. If she has an at-fault crash causing $6,000 of damage, comprehensive costs her $1,050 + $750 = $1,800 in that year, while third party property costs $420 + $6,000 = $6,420. If her car is written off, the gap widens to $1,800 against $9,420. Over five claim-free years she would pay $3,150 more for comprehensive. The decision depends on whether she could absorb a $6,000 to $9,000 loss, not only on probability. The cover level comparison lets you run this with your own numbers.
What sets the price
Insurers price each policy from rating factors such as the garaging postcode, the driver's age and history, the car's make, model and value, how it is used, the kilometres driven, the excess and the cover level, then add GST and state stamp duty. See what affects car insurance premiums for the factors and GST and stamp duty on car insurance for a line-by-line premium breakdown. If you choose comprehensive, the insured value matters too: compare agreed value and market value.
The rules that protect you
Car insurance is a financial product regulated nationally. ASIC oversees insurer conduct, APRA supervises insurers' financial soundness, and AFCA handles complaints free of charge. The Insurance Contracts Act 1984 sets your duty to take reasonable care not to make a misrepresentation and requires renewal notices before your policy expires. A summary of what applies in 2026 is in car insurance rules in 2026.
Renewal: where most of the savings are
The renewal notice is the natural point to recheck everything: the CTP arrangements for your rego, whether the cover level still suits the car, the listed drivers and the excess. Then compare quotes for identical cover. The renewal checklist gives the steps and the renewal vs new quotes example shows the arithmetic.
Frequently asked questions
Is it illegal to drive without comprehensive insurance?
No. Only CTP is compulsory, and it is part of or required for registration. Driving without third party property cover is legal but risky, because you can be personally liable for the damage you cause.
Does car insurance follow the car or the driver?
Private car insurance policies insure a specific vehicle, with drivers listed or allowed under the policy's conditions. Who may drive and what excess applies to them is set in the PDS and your certificate of insurance. CTP is attached to the vehicle's registration.
Can I insure a car that is not registered?
Some insurers offer cover for unregistered vehicles in storage, but on-road policies generally require the car to be registered. Driving an unregistered car also means it has no CTP, which can leave you personally liable for injuries.
Should I talk to a broker?
A licensed insurance broker can help when your situation is unusual, such as a heavily modified or classic car, a poor claims history or business use. Check the broker on ASIC's professional registers and ask how they are paid.
Sources
- ASIC — regulator of insurance conduct and disclosure
- Moneysmart — ASIC's consumer guidance on car insurance
- Australian Financial Complaints Authority — free external dispute resolution
- State Insurance Regulatory Authority (NSW) — NSW CTP Green Slips
- Transport Accident Commission — Victoria's CTP scheme
- Motor Accident Insurance Commission — Queensland CTP
