Do I need car insurance?

Andrew Munro 23 October 2017

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How to work out whether or not you need car insurance.

Try asking yourself a couple of questions.

  • Do you have a car?
  • Does it drive on the road?

If you answered yes to both those questions, then you need car insurance.

Some car insurance is mandatory

The mandatory car insurance in Australia is compulsory third party car insurance (CTP).

This covers pedestrians, cyclists, your passengers and anyone else unlucky enough to get in your way, against disability, injury, death and that fun stuff.

And it can also cover you against being sued into the ground after running someone over, injuring one of your passengers in an accident or similar.

In most states it’s automatically included in your car registration. The exceptions are NSW, the ACT and QLD where someone thought it was a good idea to make you buy it separately - thanks, guys.

The rest isn't mandatory - but it's a pretty good idea

Other than CTP, you technically don’t need car insurance. It’s perfectly legal to hit the road without any other cover.

But that doesn't mean it's a good idea to go without.

It’s safe to say you’ll want extra liability cover. In car insurance, this is known as third party property damage cover (hereafter referred to as TPPD for brevity).

This is basically like CTP insurance, except for damage to cars and other property, rather than damage to people.

If you’re driving along and a house suddenly gets in your way, it’s safe to assume that the owner of that house will be going after your wallet with a vengeance. With third party property damage cover, your insurance company may take the hit in your place.

It works the same for houses as it does for other road hazards like BMWs. Scratch the paint on one of those and it’s on you.

You don’t want to know how much that stuff costs, and with liability insurance you might not have to find out.

I’m a 100% perfect driver all the time. Do I still need TPPD?

No you’re not.

And if you have an epileptic fit, get bitten by a spider or otherwise have something unpredictable happen while driving, you might still be found liable for resulting vehicle damage.

And then there’s good old fashioned insurance fraud. Better hope no one decides to have “an accident” with your car.

And then there are those he-said-she-said situations. Let’s say you get into an accident and it’s entirely the other driver’s fault, but for some strange reason they don’t just admit to everything and offer to pay for all the damage.

That’s the kind of situation that can end up with you in court. Your liability insurance can also pay for legal costs on the way.

Woah. My liability insurance comes with lawyers?

Pretty much. The insurer doesn’t want to pay for it either, and proving that the other driver is at fault means they probably don’t have to. You and the insurer are on the same side here.

Want to start comparing car insurance?

When you may or may not need car insurance

CTP is mandatory and TPPD is a really good idea, but neither of those will really cover damage to your own car.

That’s what comprehensive car insurance does. Hail, flood, fire, vandalism, theft, accident, accidental vandalism by hailstone-wielding thieves, etc.

Conveniently, it also includes TPPD cover, so you don’t need to shop for that separately.

Instead, all you have to do is decide whether it’s worth paying extra for comprehensive car insurance, or if you just want the cheaper TPPD only.

How do I decide what policy is best for me?

As a general rule, the worse your car is the worse your insurance can be. If you’re driving a motorised wheely bin, you might as well stick with TPPD only cover. And nice job getting that thing roadworthy and registered.

If you really can’t go without your car, like if you need it to drive to work and will get fired without it, then comprehensive car insurance might be worth it, just to help make sure you can get it repaired fast if needed.

Or if it’s a brand new car, or just a nice car, then your comprehensive cover might also be well worth it.

How to get cheaper car insurance

The two top tips for cheaper car insurance are:

  • Buy online: You were most likely going to do this anyway. But if you weren’t, you probably should. Insurers don’t like dealing with too much paperwork or too many phone calls, and so will offer straight-up discounts just for you if you buy online.
  • Shop around: If there are ten different insurers, and you get five different quotes, there’s only a 50/50 chance that you’ve seen the cheapest. There are way more than ten insurers in Australia.

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