What Are the Different Car Insurance Options?

What Are the Different Car Insurance Options?
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Date:
June 25, 2021

If you own a vehicle, then you’re going to need some level of car insurance coverage. Just as you keep health insurance in case something happens to you, such as illness or injury, you need auto insurance to protect your car and drivers on the road. This coverage helps pay for property damage, such as damage to a vehicle during an accident. It also helps cover the costs of medical expenses in the event that someone suffers bodily injury in a car accident. In the worst cases, auto insurance will even cover wrongful death. You may be able to find private coverage options for unusual damages.

You’ll have a variety of options when it comes to comparing car insurance policies. While it’s certainly important to look for car insurance companies with the best average rates, it’s important to remember that the cheapest insurance policy isn’t necessarily the best one for your needs. Here are the most common options you’ll have when shopping for auto insurance coverage to grant you peace of mind.

Compulsory Third Party Insurance

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Also known as Green Slip, compulsory third-party (CTP) insurance is the minimum coverage permitted by law in all Australian states. Depending on your state, CTP insurance may be included in your vehicle registration fees, or you may have to purchase it separately. Put simply, this form of insurance provides coverage for if people are injured or killed due to an accident involving the insured vehicle. This minimum coverage is required by law to ensure all parties can be compensated appropriately—something that would likely be impossible if they had to rely on the insured’s finances.

Losses covered under compulsory third-party insurance include hospital fees for bodily injury, rehabilitation costs, and loss of income due to an injury. CTP may also cover incidents that other policies won’t, such as blameless accidents.

However, it’s important to remember that CTP won’t cover damage to vehicles, or any property damage, for that matter. Premiums for compulsory third-party insurance are determined by factors such as vehicle type, location, and the perceived risk of the motorist. For example, young drivers or those with accidents on their driving record are typically seen as bigger risks.

Third-Party Property

This is the type of coverage you’ll need if you want to cover damage to someone else’s vehicle or other property, up to your coverage amount. You’ll want to consider how much coverage you need carefully. This type of policy could save you a great deal of money if you were to hit a new car, for example. Do take note that these plans won’t generally cover damages to your own vehicle.

An exception to this is a third-party fire and theft policy, which will cover damages to your car due to fires or break-ins. This coverage is worth considering if you live in an area with a high crime rate or in an area prone to wildfires. These policies may also cover damages caused by a natural disaster, such as an earthquake. They’ll also generally cover the contents of your car, up to a set amount.

Comprehensive Insurance

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This is the simplest policy to get if you’re looking to be covered for as much as possible, regardless of who is at fault. Of course, these plans also tend to have the highest premiums, so you’ll want to consider if you really need it. In addition to covering costs for other parties in an accident, comprehensive insurance also covers your car in case of collisions, other accidental damages, or any damages due to weather. It will also repair or replace your vehicle after incidents of theft or vandalism, making this coverage invaluable in high-crime areas.

There are also special car insurance plans for classic cars, so you may want to speak with a financial advisor before deciding what type of coverage makes the most sense for you. Once you’re ready, you can begin comparing car insurance quotes online.

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Written By
Business Editor

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