Comprehensive vs third-party car insurance: Which one do I need?

What's the difference between comprehensive and third party car insurance?

It really comes down to the level of protection you'll get and the price of your premium.

Comprehensive car insurance

This is the most extensive level of car insurance and the most expensive. It's the only type that covers damage to your own car as well as other people's. It will also cover the cost of damage to your car from storms, fires and hail or if it's stolen.

On top of this, comprehensive car insurance can cover you for:

• Roadside assistance
• Belongings inside the car
• Towing costs
• Hire car costs
• Emergency travel, accommodation and repairs

• Replacing an older car with a newer model after an accident
• Windscreen replacement
• Legal liability cover
• Lock and key replacement

Third party property car insurance

Like the name suggests, third party property insurance protects you from third-party damage. This means you'll only be covered for costs if you cause damage to another person's car or property. It won't cover you for repair costs to your own vehicle.

This is the most basic type of non-mandatory car insurance and is the cheapest.

Third party, fire and theft car insurance

This gives you all the same protection as third-party insurance but with added coverage if your car is damaged by fire or is stolen.

How much does comprehensive and third-party insurance cost?

The cost for each policy type will depend on the insurer you choose. But generally you'll find comprehensive insurance is the priciest, with third-party fire and theft falling in the middle, and third-party property car insurance as the most affordable.

This is the case across the 20 Aussie car insurance providers we researched. We found Comprehensive car insurance is more than double the cost of third-party property insurance per month at $112.33 to $51.20 on average. As expected Third-party fire & theft sits in the middle with an average $61.48 per month.

Is comprehensive or third party insurance better for me?

Picking a car insurance type is a choice between benefits and costs, so it's important to understand the pros and cons of each.

Comprehensive car insurance

Pros:

• Extensive coverage: Covers damage to your own car and others + incidents like theft, fire, and weather events.
• Extra benefits: Can include extras like roadside assistance, windscreen replacement, and hire car costs.
• Peace of mind: Financial protection in a wide range of scenarios, reduce your out-of-pocket expenses.

Cons:

• Higher premiums: More expensive than other car insurance types.
• More than what you need: You might be paying for features you don't need.

Third-party fire and theft

Pros

• Balanced cover: You get liability protection for damage you cause to other people's property and it covers you for fire damage or theft to your own car.
• Cost effective: Acts as a middle ground between comprehensive and third-party insurance in terms of pricing and features.

Cons:

• Not necessarily cheap: More affordable than comprehensive car insurance, but it may still be a significant expense without covering all scenarios.
• May fall short in disasters: Not designed for protection against natural events like floods or storms unless specified.
• Limited own-car coverage: Does not cover damage to your own car in collisions.

Third-party property car insurance

Pros:

• Cheaper: Generally the cheapest option, ideal for budget conscious customers.
• Liability protection: Covers damage against other people's car or property.
• Good for less valuable cars: If you're driving an older or cheaper car, it still covers your for most potentially expensive risks - damage to other people's property.

Cons:

• Limited protection: Does not cover damage to your own car in most scenarios, and offers no protection against natural disaster, fire, or theft.
• Out-of-pocket costs: You bear the financial responsibility for repairs and replacements of your own vehicle.
• Lender requirements: If you have a car loan, a third-party policy might not meet the insurance requirements of your provider.

At the end of the day your personal circumstances. You should consider your car's value, your own financial capacity, and how willing you are to take on risk before making a decision.

Frequently Asked Questions

• Do I need comprehensive car insurance?

  It depends on your personal circumstances. Comprehensive car insurance is a good option if you have a high value car or if you want peace of mind that you'll have financial protection in most scenarios. You should also factor how at risk you might be to accidents.

  CTP (Compulsory Third Party Insurance) is the only mandatory insurance you need, and covers you for injuries to other people in accidents. Outside of that, all other types of insurance are optional.

• Is comprehensive better than third party insurance?

  In terms of overall protection, yes. Comprehensive car insurance will offer more coverage, including the repair costs of your own car and others' cars, potentially giving you more financial compensation in an accident.

  Ultimately, what works best for you will come down to cost. If you're more budget conscious or are more willing to take on risk, a third-party policy may be the better option.

• What's the main difference between comprehensive and third party car insurance?

  It mostly depends on the level of protection you'll get and the price of your premium.

  Comprehensive cover will give you the highest level of protection against accidents and damage to your car, but with a more expensive premium. On the other hand, third-party car insurance will be cheaper, but generally won't protect you against damage to your vehicle or belongings.

Written by

Cameron Thach

Writer

With a background in writing across education, Web3, and finance, Cameron’s mission is to create content that speaks directly to readers in a way that’s easy to understand, helping them navigate complex topics with confidence. Cameron studied a Bachelor of Commerce, Economics and Marketing at Macquarie University, graduating in 2019. See full bio