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Car Insurance: The Lowdown

4 August 2020 AutoMarket, Petrol saving tips

Regardless of what you drive, car insurance is a mandatory requirement in Australia. It provides financial protection against property damage and personal injury. The road is a dangerous place, so driving uninsured is a risk you don’t want to take.

Finding the right insurance for you isn’t always straightforward, however. Nowadays, there are many different providers on the market, all offering different degrees of cover. If you’re struggling to narrow it down, we’ve compiled some key information on how best to insure your car. This should help you better understand the topic of car insurance, and guide you in making an informed decision.

Types of car insurance

There are four main types of insurance available for your car:

Comprehensive Car Insurance

This provides the best overall cover, including repair and replacement of your vehicle. Most comprehensive car insurance will cover basic events like theft, accident, fire, flood, and vandalism. Damages caused by other drivers, as well as emergency repair and transportation costs, is generally also included in this type of cover.

Compulsory Third Party Insurance

A requirement for every driver in Australia, CPT provides compensation for persons injured or killed during an accident involving your vehicle. In all states except NSW, CPT is included with your registration.

Third Party Fire & Theft Insurance

The terms of this insurance include loss or damage to your car in the event of theft or fire. It also covers any damage your car causes to other peoples’ property.

Third Party Property Insurance

This insurance covers any damage caused by you to another car or property. It does not cover the cost of damage to your own car, but may include limited cover for damage caused to your car by an uninsured driver.

Agreed Value vs Market Value

When looking for the right insurance for your car, most insurers will provide you with two options: market value and agreed value. This decision comes into play in the event that the car is written off. But what’s the difference?

  • Agreed value pertains to the value of insurance set for a specific amount or set within a range between you and the insurer.
  • Market value insures the car for its actual value at the time of the accident. 

What is an excess?

You often hear the word excess in relation to car insurance. Excess is simply the amount you’ll have to pay to make a claim. Generally, the higher the excess, the lower the insurance premium.

If you want to save some money, you can increase your excess, but just to a logical extent. A very high excess isn’t always worth the risk. In deciding where to set your excess, consider the important factors. For instance, if you’re driving an older, cheaper car, increasing your excess may not be helpful at all.

Tips for buying car insurance

  • Identify the type of cover you really need.
  • Compare different quotes for each cover.
  • Develop a thorough understanding of each type of insurance.
  • Be familiar with your car and driving history.
  • Consider how much you’re willing to spend.
  • Research the insurance company.
  • Understand the fine print of your policy.
  • Find ways to lower your premium.

When searching for the right car insurance for you, it’s also worth noting that Australian states have different regulations around issues such as fault, liability, injury and compensation. Familiarising yourself with these important facts is essential so that you understand exactly what is required.

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