Insuring your vehicle can be the difference between having to pay tens of thousands of dollars in a bad situation and keeping that money in your account. Vehicle insurance is a must for those who want security in knowing such an important asset will be protected if something goes horribly wrong. Third Party Fire and Theft insurance is one of the optional insurance policies you’ll have to choose from, so it’s worth finding out more about it in this extensive guide. Read about ways you can look to compare between insurers and policies to guarantee you buy the coverage that suits your needs.
How does Third Party Fire and Theft insurance work?
Third Party Fire and Theft insurance (also known as 3rd party fire and theft insurance or TPFT insurance) is one of three types of optional insurance available to Australian car owners. While it’s non-compulsory, taking out a vehicle insurance policy on top of your Compulsory Third Party (CTP) insurance can save you a significant amount of money if you find yourself in a sticky situation with your vehicle. TPFT insurance will cover the following types of damage:
- Damage sustained by another vehicle or property in an accident for which you’re liable
- Damage sustained by your car due to a fire
- Damage sustained by your car due to theft
- Loss of your car due to theft
It’s important to note that damage sustained by your vehicle in an accident isn’t covered under a TPFT insurance policy, nor will it cover you for any injuries or deaths caused by an at-fault accident. The latter of those is covered by Compulsory Third Party (CTP) insurance, which is mandatory for all vehicle owners to take out.
Why should I choose Third Party Fire and Theft insurance over comprehensive car insurance for my vehicle?
The primary benefit TPFT insurance holds in this comparison is its price. Premiums for TPFT insurance policies, while not as cheap as Third Party Property Damage (TPPD) policies, are less costly than those of comprehensive car insurance policies. Comprehensive car insurance is the most expensive when it comes to non-compulsory insurance options, which is thanks to its wide coverage across different types of damage. If you don’t have the financial capability to afford comprehensive car insurance, or if you simply don’t want to pay that much for your premiums while still retaining protection for your car, you might end up selecting a good TPFT insurance policy.
Another reason you might look to take out a TPFT policy is if your vehicle isn’t new anymore or has declined in value. Weighing up the options, it may not end up being worth the extra cost every year to insure your vehicle for accident damage. TPFT might strike the perfect balance of premium cost and coverage, as you’re not exactly getting short-changed when it comes to what you can be reimbursed for. Also, if the area you’re living in is more vulnerable to theft or bushfires, or don’t have a secure place to park your vehicle, you may reason that they’d be more likely reasons for your vehicle to end up being stolen or affected by fire. Let’s take the example below to see how you can save with a TPFT insurance policy:
You’re tossing up whether to take out a TPFT or comprehensive car insurance policy for your car. You’ve had it for a few years now, during which time you haven’t made any claims or been in any accidents, but it’s worth much less now than when you bought it new. You decide that the most important area of coverage for you is fire or theft damage, as you’re a safe driver with a spotless accident record but live on a property with no in-built parking facilities. Because your car isn’t worth a huge amount, you believe that if an accident did happen, you’d be more focused on the damage done to another car rather than your own.
You speak with an insurer who offers you a comprehensive car insurance policy valued at $90 per month. You then go to a different insurer for their TPFT insurance policy and find that they’re willing to offer $70 per month, which only omits coverage for damage to your car if you’re found liable for an accident when compared to the comprehensive car insurance policy. Laying out how much that might cost you, you find the following:
|Monthly cost||12-month spend||Overall saving|
*Calculations are based on estimates. Rates may not reflect current market offers for TPFT or comprehensive car insurance.
Under these conditions, you’d save $240 in just one year by choosing not to cover damage to your car in the event of an accident because you’re a safe driver. In scenarios like this, it might seem like a no-brainer to choose the TPFT policy, but it’s still worth considering the coverage and how much value you place on it.
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Types of car insurance you can choose from
The most basic type of optional cover available, TPPD insurance can offer protection for damage caused by your vehicle to other people's property. However, no damage to your vehicle will be covered.
A step up from TPPD, TPFT insurance can also cover damage to your vehicle sustained due to a fire or theft (or attempted theft) in addition to third-party property damage if you're in an at-fault accident.
The most extensive (and expensive) form of cover, comprehensive car insurance can also offer cover for damage to your vehicle in an accident, collision and certain weather events on top of the areas TPFT covers.
Top tips on how to compare Third Party Fire and Theft insurance policies
This is a good place to start. If you’re able to work out a certain price per month or annual lump sum that you don’t really want to go beyond, you can begin to narrow down your list of potential insurance providers.
The coverage you’ll receive under your policy is another significant factor that you should consider. While every insurer will cover the same general ground (third party damage to property, fire and theft damage/loss to your vehicle), some will throw other bonuses into the mix. For example, you’ll be able to find insurers that’ll cover you for a rental car for as long as three weeks if it’s been stolen.
Some insurers may pay out more than others, so you should compare all your options and align yourself with an insurer that historically has a strong record of high payouts.
The pros and cons of Third Party Fire and Theft insurance
Cheaper alternative to comprehensive
TPFT insurance covers almost all of the areas that comprehensive car insurance does while charging you less for your premiums.
Provides legal liability for at-fault accidents
Not only will you be covered for the cost of any damage done to another vehicle or property, but also for legal proceedings that may stem from the accident.
Not covered for damage to your car in an accident
The only damage you can claim for is that by an uninsured driver, otherwise there aren’t any avenues to claim for damage in a crash that you’re liable for.
May not be covered for other extreme weather damage
The “Fire” in “Third Party Fire and Theft” is taken very literally, as many insurers won’t provide coverage for any other extreme weather events like earthquakes, hailstorms and floods.
Frequently asked Third Party Fire and Theft insurance questions
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Savvy’s comparison service includes selected products from a panel of trusted insurers and does not compare all products in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy. We always recommend readers to consult the Product Disclosure Statement (PDS) of different policies before purchasing your car insurance.