A car insurance policy is must for Australian motorists. Depending on the level of coverage a motorist buys, auto insurance provides cover against financial loss or damages incurred through accidents, fire, theft, vandalism and, sometimes, adverse weather conditions. In general, the wider the
area of coverage, the more a motorist has to pay.
Introducing Compulsory Third Party Insurance
The most basic car insurance policy an Australian motorist can obtain is compulsory third party insurance, or CTP insurance. This is known as green slip insurance in other parts of the country, but there is very little variation in the terms of policies between different states.
CTP insurance is compulsory; you must obtain it when registering ownership of a new car. It serves to offset the millions of dollars it costs each year to rectify injuries, damage or fatalities caused by Australian motorists. It is termed “third party” because three parties are involved – the first being the
driver/owner of a vehicle considered “at fault” for an accident, the second is the insurance provider for the “at fault” vehicle, and the third is the individual who has gotten injured or killed.
Different Sources for CTP Insurance
Transport/Motoring/Insurance Commissions - application for CTP insurance in South Australia and the Northern Territory is bundled together with the fee for license registration for individuals aged 16 years and above. CTP insurance is obtained from the Motor Accident Commission and Territory Insurance Office in South Australia and the Northern Territory respectively; the process in Victoria is similar.
In Victoria, the Transport Accident Commission includes a levy for CTP insurance, also known as Third Party Personal insurance, through the fee for vehicle registration. Victoria CTP insurance alsocovers the “at fault” owner/driver for injuries suffered.
CTP insurance in Western Australia, obtained from the WA Insurance Commission, provides unlimited cover for a WA-licensed motorist in the event there are claims for injuries or fatalities for which the “at
fault” owner/driver is liable.
However, the policy does not provide cover for damage or injuries to the “at fault” owner/driver if he or she is at fault for injuries or damages incurred. Any claims the owner/driver wishes to make must first establish negligence against the other owner/driver and be made against the other motorist’s CTP
Private Insurance Providers - CTP insurance is also known as Green Slip insurance in New South Wales (NSW) by virtue of the colour of the paper on which the application form is printed. Unlike Victoria or South Australia, CTP insurance forms are obtained from the bigger insurance providers in NSW, and the insurance does not cover injuries to the owner/driver.
Motorists in Queensland also obtain CTP insurance from insurance companies in the region, but there is little variation in charges as the government exerts rigid control over premiums.
Why Compulsory Third Party Insurance (Only) Makes Sense
Compulsory third party insurance provides unlimited coverage to the insured party if motoring injuries/fatalities or damages occur. The benefits paid out to the injured (“third”) party are dependent on the severity of injury sustained. These benefits may include the following costs:
- legal fees (subject to limits based on circumstances)
- medical treatment
- ambulance transport
- hospital admission
- physical rehabilitation
- loss of income from injuries sustained (limited where applicable)
- long term care
You may not, of course, claim for benefits from your own CTP insurance policy if any accident injuries suffered are due to your negligence. However, some insurance providers actually provide additional “at fault” driver coverage for these circumstances without charging extra fees. Although the claimable benefits are subject to definition by the insurance provider, an “at fault” driver is sometimes eligible to make claims.
Why Compulsory Third Party Insurance (Only) is Inadvisable
Stranded by “no fault” accidents – unless your insurance provider provides “extra” benefits, relying solely on CTP insurance may be a bad idea if a person suffers injuries from a motoring accident where no vehicle is deemed to be “at fault”. In this case, CTP insurance does not cover costs of treatment for injuries sustained and loss of income as a result of those injuries.
This means the individual will have to fall back on Medicare and his or her own finances if he or she does not have private health or personal injury insurance.
Paying out of pocket – only having CTP insurance can also work against a motorist when it comes to property damage. As it only covers injuries sustained by the third party, the cost of paying for damage caused to your own vehicle will have to come out of your own pocket.
For some people, the desire to minimise expenses sees them cutting back on things like comprehensive car insurance. However, opting for the barest minimum where car insurance is concerned can be detrimental if a serious accident takes place. Most of the time, it is better to be safe rather than sorry
when it comes to potential vehicle damage, theft or injuries.
This article contains general advice about car insurance. The author has not taken into account your financial situation or needs and you should consider whether the advice provided is appropriate for your own circumstances before relying on it.
Filed Under: Understanding Insurance