What Does Car Insurance Cover?

Read about what your car insurance does and doesn’t cover right here with Savvy.

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, updated on February 15th, 2024       

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Car Insurance Banner - Young woman smiling while driving a car.

What your car insurance policy covers will ultimately come down to what type of insurance you choose to buy. Knowing what’s included in your policy can help you make informed decisions and provide greater peace of mind when you’re on the road.

You can find out about the different types of car insurance in Australia and what they cover, as well as what isn’t covered by car insurance, right here with Savvy.

What does third party car insurance cover?

What your third party car insurance covers will depend on the type of policy you decide to purchase. These are:

Third party property damage (TPPD) insurance

  1. Liability for damage caused to other people’s property by your car

Third party fire and theft (TPFT) insurance

  1. Damage to your vehicle due to fire
  2. Damage to your vehicle due to theft
  3. Liability for damage caused to other people’s property by your car

Having third party car insurance can help protect you from potential financial burden in the event of an accident which damages someone else’s vehicle or property. However, it’s important to note that all coverage is subject to your insurer’s terms and conditions and your policy documents.

What does comprehensive car insurance cover?

In contrast to third party car insurance, comprehensive policies can offer more covered events. These can include:

  1. Damage to your vehicle due to accident or collision
  2. Damage to your vehicle due to weather (such as hail or flood)
  3. Damage to your vehicle due to fire
  4. Damage to your vehicle due to theft
  5. Liability for damage caused to other people’s property by your car
  6. Optional extras may also be included (either for free or at an added cost), such as roadside assistance, hire car cover after an accident and excess-free windscreen replacement

Because comprehensive insurance offers the most in the way of coverage, it’s generally the most expensive form of car insurance you can buy in Australia. Like third party insurance, however, all coverage offered by your policy is required to meet your insurer’s qualification requirements.

What does compulsory third party car insurance cover?

Compulsory third party (CTP) insurance, also known as Green Slip insurance in New South Wales, provides coverage for personal injury or death compensation caused to others in an accident where you’re deemed to be at fault. CTP insurance doesn’t cover damage to any vehicles or property. This insurance is mandatory across all states and territories, unlike the other types of cover.

It's important to check the specific details of CTP insurance in your jurisdiction to understand the extent of coverage provided and how to acquire it. In some states, CTP insurance is included as part of your vehicle registration fees and it is regulated by the respective state or territory authorities, while it may be offered by approved insurers in other places.

What does car insurance not cover?

While car insurance provides valuable protection, certain situations and events typically aren’t covered by standard policies. These exclusions may vary depending on the insurance provider and policy terms, but common ones include:

  1. Wear and tear: car insurance doesn’t cover regular maintenance and repairs due to normal wear and tear.
  2. Mechanical or electrical breakdown: if your vehicle experiences a breakdown due to mechanical or electrical failure, it generally isn’t covered by car insurance.
  3. Intentional damage: deliberate acts or damage caused by illegal activities aren’t covered by your policy.
  4. Racing or reckless driving: car insurance doesn’t cover incidents that occur during racing or reckless driving.
  5. Driving under the influence: any damages or injuries that occur while driving under the influence of alcohol or drugs typically aren’t covered.

It’s important to carefully review the terms and conditions of your car insurance policy to understand the specific exclusions that apply.

Common questions about car insurance and what it covers

Is my car covered if someone else drives it and gets into an accident?

Depending on the type of cover you have, you may be covered if your car ends up in an accident with another driver at the wheel. However, it's important to check the terms and conditions of your specific insurance policy to ensure that it provides coverage for other drivers. Some policies may have restrictions or additional requirements for coverage in such situations, such as having to pay a further excess for drivers not listed on your policy.

Does car insurance cover damage caused by a hit-and-run driver?

Yes – if you aren’t at fault for an accident, the liable party is required to pay for coverage. If you have the necessary evidence, such as eyewitness accounts or footage, and report the incident to the police, you can make a claim for the damages caused by the hit-and-run driver. If you don’t have any information about the driver, you should still file a police report.

Will car insurance cover damage to my car caused by a fallen tree?

If you have comprehensive car insurance, you may be able to make a claim for storm damage if a tree falls on your vehicle. However, it's important to review your policy and check for any specific conditions or limitations regarding this type of claim.

Does car insurance cover me if I hit an animal?

In most cases, comprehensive car insurance can cover damage to your vehicle if you hit an animal. It's crucial to check your policy for any specific conditions or limitations related to animal-related accidents.

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Compare car insurance policies with Compare the Market

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Explore car insurance options by make

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Savvy (ABN 78 660 493 194, ACR 541 339) provides readers with a variety of car insurance policies to compare. Savvy earns a commission from our partnered insurers each time a customer buys a car insurance policy via our website. All purchases are conducted via our partners’ websites. The integrity of our comparison service is unaffected by our partnerships with those businesses and our effort remains to bring further brands that do not already use our comparison service onboard.

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.

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