Demystifying insurance Pt. 2

Are you unclear about the difference between Comprehensive and Compulsory Third Party (CTP) insurance? Don't worry, you're not alone.
An easy way to remember the difference is:

Comprehensive insurance covers damage to property (e.g., your car) and you can choose if you need it (generally your financier will insist on it)
Compulsory Third Party Insurance (also referred to as CTP) covers damage to people and legally every driver in Australia must have it, i.e., It's compulsory.

Comprehensive Motor Vehicle Insurance (Australia-wide)

Comprehensive Insurance is designed to provide you with a high level (comprehensive) of cover for your car or commercial vehicle.
Every policy will be different, but in general comprehensive insurance should cover the cost of:

>> Crash repairs (even if you are at fault)
>> Replacing your car if it can't be repaired
>> Replacing your car if it's lost due to fire, theft, flood or vandalism
>> Replacing any personal property inside the car which is damaged or lost (limits will vary by provider)
>> Repairs to other people's cars or property damaged by your car.

Comprehensive insurance is typically mandatory for financed cars but otherwise you can decide whether or not you need it. In most circumstances it is a good idea to have comprehensive insurance, as being involved in a car accident can be difficult financially even if you were not at fault.

Some policies will offer just bare coverage, while others come with additional extras such as 14-day car hire if your vehicle is stolen, towing after an accident, or emergency repairs.

Comprehensive insurance gives you the best cover, but it's also the most expensive option so it pays to investigate and find the policy that is right for you. Be sure to look at options that offer agreed or market value cover and where you can choose from different levels of excess.

Comprehensive insurance does not provide financial cover for any injuries sustained by occupants of vehicles, pedestrians, cyclists or motorcyclists/pillion passengers.

Compulsory Third Party (CTP) Insurance

Compulsory Third Party Insurance was introduced in Australia in order to cover the medical expenses of people who were injured by a non-insured or unable-to-pay driver.

All Australian drivers are legally required to have CTP. It gives you financial cover for any compensation claims made for personal injury or death as a result of a car accident.

In some states, CTP premiums are included in your car registration fees. However, in Queensland, New South Wales and the Australian Capital Territory, you can choose your own CTP provider.

Additionally, each state administers CTP differently. Victoria, Northern Territory and Tasmania offer a no-fault scheme, while New South Wales, Queensland, South Australia, Western Australia and the Australian Capital Territory have at-fault schemes.

An at-fault scheme means the driver responsible for the accident is not covered by CTP. In states with an at-fault scheme, some CTP insurers may offer additional At-Fault Driver

Protection Insurance. This provides prescribed benefits to you or any other driver of your vehicle for certain injuries sustained in an accident that was your fault.

It is always worth checking if your CTP provides no-fault or at-fault cover so you can arrange additional insurance if you wish.

In summary, Compulsory Third Party (CTP) Insurance is required by all drivers in Australia and provides financial coverage for people injured by a motor vehicle, and its coverage and administration varies from state-to-state.

Comprehensive Car Insurance is a discretionary insurance that provides you with a high level of cover for damage to vehicles and property. Coverage and costs vary between policies so always check the policy cover includes options and items important to you.

Comparing insurance policies can be a difficult and time-consuming task. stratton can find you the best deal by calling the team direct on 1300 787 288.

General Advice Warning – The above is provided for information purposes only and does not consider your own personal situation. You should always read the Product Disclosure Statement to determine if these products are right for you.