One of the most common misunderstandings in Australian motor insurance is assuming that compulsory insurance means the car itself is fully insured. It does not. CTP is primarily about personal injury liability. Damage to vehicles and property is a separate decision.
ASIC’s Moneysmart service identifies four main levels of motor cover: CTP, third party property damage, third party property damage plus fire and theft, and comprehensive insurance.
1. Compulsory Third Party (CTP)
CTP covers injuries to people caused by the insured vehicle, according to the rules of the relevant state or territory scheme. It does not cover damage to cars, buildings or other property. CTP arrangements differ across Australia: in some jurisdictions it is built into vehicle registration, while in others motorists select an approved provider.
2. Third party property damage
This is designed to cover damage your vehicle causes to someone else’s car or property. It generally does not pay to repair your own car after an at-fault accident. That distinction matters because damage to another person’s expensive vehicle can create a large financial liability even when your own car has low market value.
3. Third party property, fire and theft
This typically adds limited protection for your own vehicle if it is stolen or damaged by fire, while retaining third party property cover. It is a middle ground between basic third party property insurance and comprehensive cover.
4. Comprehensive car insurance
Comprehensive insurance usually provides the broadest vehicle protection. It can cover accidental damage to your car and damage you cause to other cars or property, as well as theft, fire and certain weather events. Exclusions still apply, and the policy may require an excess when a claim is made.
| Cover type | Injury to people | Other people’s property | Your car |
|---|---|---|---|
| CTP | Yes, under scheme rules | No | No |
| Third party property | Handled by CTP | Yes | Usually no |
| Third party + fire & theft | Handled by CTP | Yes | Fire/theft only, subject to terms |
| Comprehensive | Handled by CTP | Yes | Broad accidental damage, theft, fire and other insured events |
Agreed value vs. market value
Comprehensive policies may settle total-loss claims using agreed value or market value. An agreed value is a specified amount accepted by insurer and policyholder for the policy period. Market value depends on the vehicle’s value at the time of loss under the policy definition. Renewals should be checked because values, premiums and excesses can change over time.
Why the cheapest premium can be misleading
A lower premium can come with a higher excess, narrower cover, lower limits, restrictions on drivers or reduced optional benefits such as hire-car cover. Moneysmart recommends comparing what is and is not covered rather than choosing on premium alone.
A practical renewal checklist
- Confirm the type of cover.
- Check agreed or market value.
- Review the basic and age/inexperienced-driver excesses.
- Check whether listed-driver restrictions apply.
- Review storm, flood, hail and theft coverage.
- Compare annual payment and instalment costs.
- Read exclusions and cancellation terms.
Frequently asked questions
Does CTP cover damage to another car?
No. CTP is for personal injury liability, not property damage.
Is comprehensive car insurance compulsory?
No. CTP is compulsory for registration; comprehensive cover is optional.
Does comprehensive insurance cover everything?
No. Every policy has exclusions, conditions, excesses and limits.
Sources & further reading
Reviewed against ASIC Moneysmart guidance in September 2026. CTP schemes and registration arrangements differ by state and territory.
