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What is car insurance?
Car insurance protects you against the cost of damages caused by things like car accidents, theft, weather events and other unforeseen events. A car insurance policy helps pay for the cost of these damages to your car, as well as any property you might damage with your vehicle.
Car insurance can provide you with peace of mind knowing that a financial safety net is in place should something go wrong on the road.
What does car insurance cover?
Car insurance can cover the financial fallout if you damage someone else’s property or vehicle. If you opt for a higher level of coverage, you may also be covered for the repair or replacement costs of your vehicle after a collision, fire, theft or weather event.
Insurance policies can vary in coverage and price, which is why it’s important to review your options carefully and weigh up the benefits alongside the price.
Frequently asked questions
The cost of insurance (known as your premium) depends largely on the type of cover you hold (i.e., Comprehensive, Third Party Property Damage or Third Party Fire and Theft) and how risky you are to insure. That risk is based on a variety of variables which determine your car insurance premiums, including:
- Your age
- The address you park the car overnight
- Your car model and the age of your car
- The average number of kilometres you drive each year
- Any car modifications or dealership add-ons
- Who else uses the car
- Your driving and claims history
You might also be able to get a discount when purchasing a new policy online or when you bundle your car insurance with an insurer that you already have a policy with, like home and contents insurance.
With different types of car insurance to choose from, it can be hard to keep track of what each one covers. The inclusions, benefits and optional extras available may vary between the insurers in the market, so you should always read the Product Disclosure Statement (PDS) of any insurance policy before purchasing it.
To help you understand the types of car insurance, we’ve compiled the following table as a simple way to compare them. The information in this table should be used as a guide only, as different policies and insurers might offer varying coverage.
You can also compare policies and insurers for your own car and driving history just by using our free, easy-to-use comparison service.
Car insurance: compare different levels of cover
| What is and isn’t covered? | Third Party Property Damage | Third Party Fire and Theft | Comprehensive | CTP/Green Slip |
| Damage caused by collision to your own vehicle | ✗ | ✗ | ✓ | ✗ |
| Loss or damage caused by you to a third party’s vehicle/property (legal liability) | ✓ | ✓ | ✓ | ✗ |
| Loss or damage to your own vehicle caused by weather (storm, flood, hail) | ✗ | ✗ | ✓ | ✗ |
| Loss or damage to your vehicle caused by theft | ✗ | ✓ | ✓ | ✗ |
| Hire car after theft | ✗ | ✓ | ✓ | ✗ |
| New car replacement | ✗ | ✗ | ✓ | ✗ |
| Loss or damage to your vehicle caused by fire | ✗ | ✓ | ✓ | ✗ |
| Loss or damage of personal possessions/effects | ✗ | ✗ | ✓ | ✗ |
| Damage to your vehicle caused by an uninsured driver | ✓ | ✓ | ✓ | ✗ |
| Emergency transport and/or accommodation | ✗ | ✗ | ✓ | ✗ |
| Towing | ✗ | ✓ | ✓ | ✗ |
| Key replacement | ✗ | ✗ | ✓ | ✗ |
| Death benefit | ✓ | ✓ | ✓ | ✗ |
| Legal liability for injuries or death to other people | ✗ | ✗ | ✗ | ✓ |
| Variable excess | ✗ | ✗ | ✓ | ✗ |
| Restricted driver discount | ✓ | ✓ | ✓ | ✗ |
There are a few exclusions common to all the different car insurance options. including:
- Illegal activity at the time of the incident
- Driving intoxicated
- Driving without a licence
- Driving an unregistered vehicle
- Lying or withholding information from your insurer
- The car isn’t roadworthy
- Overloading the car with too many passengers
- General wear and tear
- Driving in a race or competitive motorsport event
- Reckless or dangerous driving
You can get car insurance for your four-wheel drive (4WD or 4×4) like any other car. This insurance usually has limited coverage for off-road driving, with some conditions on when you will be covered for off-roading. We answer a host of questions about car insurance for 4WDs here.
Car insurance for 4x4s may not cover you in 4WD adventure parks and when driving on an unlisted (non-gazetted) road. There are also terms and conditions regarding vehicle recovery and roadside assistance that can have a big impact on 4WD owners, so it’s vitally important to read through the PDS for details before purchasing.
Some car insurance providers do cover ridesharing and you might find that it’s only covered on certain policies (such as comprehensive car insurance). You’ll typically be required to have Third Party Property Damage as a minimum by the rideshare platform you work for.
When comparing car insurance quotes with Compare the Market, make sure you select a ‘business use’ option when asked how you use your vehicle. You’ll then be asked follow-up questions about whether you transport passengers, food or goods for payment.
Learn more about insurance rideshare driving here.
Car insurance can cover your vehicle for business use and for the same insured events as personal-use car insurance. If something happens on the roads while you’re travelling for business, car insurance with business use cover can cover you.
When comparing car insurance with Compare the Market, make sure you select the appropriate usage when you’re asked how you use your car.
Keep in mind that not all policies or insurers cover business use, and not all types of business uses may be covered. For example, you can be covered for driving to meet clients, driving to various work sites, running errands or transporting employees between locations, but not for transporting members of the public for a rideshare app.
The key difference between market value and agreed value car insurance is that with an agreed value policy, you know the total amount you’ll be covered for in the event of a claim as this amount was set when you bought the policy or renewed it.
It works like this:
Market value
Your car is likely insured for its market value, which refers to the value of the car in the present day and not the price you paid when you first bought it. Market value is typically calculated using an average price by comparing other cars of the same make and model that are in a similar condition to yours.
If repairs to your vehicle cost more than its market value (e.g. the car is a total loss and gets written-off after an accident), your car insurer will instead pay you the market value of your car or provide a replacement that has a similar market value.
This payout is subject to the terms of your policy. For example, you may be paid the market value of your vehicle if it was damaged in a bushfire through a Third Party Fire and Theft or comprehensive policy, or during a car accident with a comprehensive car insurance product.
Agreed value
If your car insurance policy offers an agreed value option, this means you can set the value of your car with your insurer. This can be handy because a car insured for its market value may lose such value over time. On the other hand, having an agreed value means you’ll receive the same payout on the day your car is written as you would have on the day you took out your policy. However, keep in mind that choosing an agreed value over market value may increase your premiums.
Furthermore, some agreed value policies do lose value over time, but at a set rate rather than the value in the car market.
‘Extras’ are inclusions or perks bundled into car insurance policies to extend your coverage. Some extras, like roadside assistance, will add to your premium if you choose to include them in your car insurance policy, while others may be complimentary.
Some common extras you may find can be added to your policy include:
- Hire car cover. Your insurer may provide you with a hire car when your vehicle is being repaired or replaced.
- Roadside assistance. Should your car break down or experience any other issues while out on the road, an assistance team will come to help you.
- Windscreen cover. Adding windscreen cover to your policy can mean low or no excess should you need to repair it.
Depending on your insurer, there may be a range of optional extras available to you when taking out car cover. Like all insurance products, it’s important to understand the fine print when choosing extras so that you fully understand what you’re covered for and how adding extras may affect the cost of your premium.
You can potentially save on premiums by:
- Paying annually. Paying in one, annual lump sum (as opposed to monthly or quarterly) is cheaper as insurers can add additional charges for paying monthly or quarterly.
- Increasing your basic excess. If you increase your excess, you can typically reduce the cost of your premiums. However, be aware that if you need to claim, you will be paying a greater amount in excess.
- Restricting drivers’ ages. By restricting drivers of your vehicle to a certain age limit (e.g. drivers older than 25 or 30), you may be able to save on your premium. In theory, older drivers are generally more experienced and less risky to insure.
- Driving less. Some insurers will reduce your premium if you’re a low-kilometre driver (e.g. typically under 15,000km each year).
- Comparing often. You might have been on a great value deal a few years ago, but have you reviewed your options lately? Perhaps something cheaper has come along that offers the same benefits, but you won’t know unless you shop around.
Always disclose as much information to your insurer about your motor vehicle and yourself as they require. If you decide to hide your claims history, for example, your cover could be cancelled, or future claims could be denied.
An excess is the amount you’ll pay your insurer when you make an insurance claim, which is agreed upon when you first take out your policy. When you pay the excess, your insurer will pay the rest of your repair or replacement costs.
For example, if your excess is $500 and your car’s repair costs $3,000, your insurer will foot the $2,500 bill after you’ve paid your excess.
Depending on the situation, there may be different types of car excess that apply to your claim:
- Standard excess. Paid out of pocket when you make a claim.
- Voluntary excess. Paid in addition to your other excess charges, sometimes for a cheaper premium.
- Age/inexperienced driver excess. A separate excess for less experienced or younger drivers.
- Unlisted driver excess. If you make a claim but the driver wasn’t listed on the policy, you may have to pay an excess for this (if you are even covered at all).
- Additional excesses. Other additional excesses may also apply depending on the product you’ve chosen.
If a third party was at fault for an accident, you may not be required to pay an excess for any claims you make as a result of this accident, provided you can give your insurance company some details about the person responsible (i.e. their name, phone number, driver licence number and or their car registration). The exception to this rule is when the at-fault party can’t be personally identified. For example, say you’re involved in a hit-and-run and the guilty party does not give you their name, licence details or phone number, you may still be required to pay the excess if they can’t be tracked down.
You may be able to choose a higher excess payment and reduce your insurance premiums in turn. Likewise, you can choose a lower excess payment and pay an increased premium for the policy. Just bear in mind that whichever option you choose, you will have to pay for regardless.
To confirm all excesses that may apply to you, be sure to check your Product Disclosure Statement (PDS) and Insurance Certificate.
Windscreens and window glass can be covered by car insurance, as specified under your policy. For example, a Third Party Fire and Theft policy can cover damaged glass from vandalism or a fire. A comprehensive car insurance policy can also cover the cost of repairing accidental damage to your windscreen.
You might also see a windscreen excess reduction or waiver as an optional extra on the policy. Some insurers have a specific additional excess payment for windscreens that you would need to pay in a claim on top of any other excess payments that apply. Paying this waiver can reduce or remove the excess payment for windscreens.
Learner drivers are covered by car insurance, but some insurers require you to add them as a listed driver (not all do). You can contact your insurer to find out whether you need to list any learner drivers for them to be covered.
Should you need to make a claim while a learner driver was behind the vehicle, they may incur a young driver excess if they’re under a certain age limit at the time of the incident.
Liability refers to the person who is legally responsible or at-fault in an accident. For example, you may be liable for third-party damage if you didn’t give way and collided with a vehicle that was already on a roundabout.
Compulsory Third Party (CTP or Green Slip) cover is the only form of car insurance that covers your legal liability if you’re at-fault in an accident where another person is injured or dies. If you damage someone’s property or possessions, you could be liable for the cost of repairing or replacing those items.
Classic car insurance is a broad term referring to a product that covers classic, vintage or prestige vehicles. It’s typically broken down into a variety of specific types:
- For car enthusiasts who own automobiles made between 1905 and 1919.
- Covers cars made between 1919 and 1930.
- Prestige. For high-end European or UK-produced sports cars or ‘supercars’ associated with ‘status’ owners.
- American Classics. Covers the owners of US-made ‘muscle cars’, typically manufactured between the late 1970s – early 1980s.
You may need to seek out a specialised policy or insurer to cover cars like these.
There are a wide range of car insurance providers operating in Australia, offering a variety of policies from the humble Third Party only car insurance to comprehensive coverage with all the bells and whistles
We currently compare car insurance products from the following brands:
- 1st for Women
- Budget Direct
- Huddle
- Ozicare Insurance
- Retirease
- Virgin Money
- Woolworths
- Carpeesh
- Stella
- KOBA
- Oceania
We do not compare all car insurance providers in the market. At certain times, certain insurance policies might be unavailable.
Car insurance companies in Australia
The full list of car insurance companies operating in Australia (including the car insurance providers we work with) are listed below:
- 1st for Women
- 1300 Insurance
- AAMI
- AANT (Automobile Association of the Northern Territory)
- AI Insurance
- Allianz
- ANZ
- Apia
- Australia Post
- Australian Seniors
- Australian Unity
- Bank of Melbourne
- BankSA
- Bendigo Bank
- Best Buy Insurance
- Beyond Bank
- Bingle
- Blue Badge Insurance Australia
- Budget Direct
- BOQ (Bank of Queensland)
- Bupa
- Carpeesh
- CCI Personal Insurance
- CGU
- Coles
- CommInsure
- COTA Insurance
- Elder’s Insurance
- eric Insurance
- Essentials by AAI
- Famous Insurance Agency Pty Ltd
- GIO
- Guild Insurance
- HSBC
- Huddle
- IAL
- Hume Bank
- KOBA
- Kogan Insurance
- Lumley Special Vehicles
- MB Insurance
- NAB
- National Seniors Australian Insurance Holdings
- NRMA
- Over Fifty Insurance
- Oceania Insurance
- Ozicare
- People’s Choice Credit Union
- PD insurance
- Progressive
- QBE
- RAA
- RAC (WA)
- RACQ (QLD)
- RACT (TAS)
- RACV (VIC)
- Real Insurance
- Retirease
- ROLLiN’
- Ryno Insurance
- SGIC
- SGiO
- Shannons
- St. George Bank
- Stella
- Suncorp
- Territory Insurance Office (NT)
- UbiCar
- Vero
- Virgin Money
- Westpac
- Woolworths Insurance
- WFI
- Youi
Accurate as of 28/04/2022
Meet our car insurance expert, Stephen Zeller
As General Manager of General Insurance at Compare the Market, Stephen Zeller is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. There are different types of car cover: comprehensive, third party fire and theft (TPFT) and third-party property damage (TPPD).
Stephen has more than 30 years of experience in the financial services industry, and is an Allied Member of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and helps review general insurance content on Compare the Market to ensure it accurately breaks down complex insurance topics.
Stephen’s car insurance tips:
- Your renewal policy should show both last year’s premium and your new premium, meaning you can instantly see how much more you’re being asked to pay. Make note of the difference to see how big the new change is before comparing car insurance.
- When comparing car insurance policies, be sure to compare new policies with the same features so you have a fairer comparison. For example, make sure the excess payment and, type of cover is the same, that you’ve set either market or agreed value (depending on your current policy) and the payment schedule is on par with your current one.
- Paying your car insurance annually can often be cheaper than paying it monthly or fortnightly. If you can, consider paying a lump sum once a year for a discounted price.
- Consider who is driving your car. Generally, drivers under the age of 25 will likely increase the premium you pay. If you can restrict the age of drivers on your policy, this can help you save money.
- You don’t have to wait for your renewal to save money, either. You can cancel your existing policies at any time and switch insurers. Just be aware of any cancellation fees that may apply.