What Insurance Do I Need For My Car?

Learn about the different types of car insurance with Savvy to help you work out what coverage you need.

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, updated on February 15th, 2024       

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Car Insurance Banner - A couple driving their car at sunset.

Looking for the right insurance coverage for your car in Australia? Whether you're a new car owner or simply looking to review your current coverage, the car insurance you may need for your vehicle will depend on a range of variables.

You can find out more about car insurance and what you might need right here with Savvy. Our handy guide outlines the types of insurance you can choose from in Australia and what they cover, as well as what the legal requirements are for coverage where you live, so find out the information you need to know with us today.

What types of insurance are available for cars in Australia?

In Australia, there are several types of car insurance coverage options to suit different needs. The most common types include:

  • Third party property damage (TPPD) insurance: this type of insurance can cover damage caused by your vehicle to someone else's property. However, it doesn’t cover damage to your own vehicle.
  • Third party fire and theft (TPFT) insurance: this type of insurance can cover damage to your vehicle caused by fire, theft, or attempted theft, as well as damage caused to someone else's vehicle or property. Like TPPD insurance, it doesn’t cover damage to your vehicle in an at-fault accident.
  • Comprehensive insurance: this is the highest level of car insurance coverage available in Australia and can provide protection for damage to your vehicle due to accidents, collisions, theft, fire and certain weather events. This is in addition to covering damage to third-party property.

Which of these types of insurance is best for you will ultimately depend on a range of factors relating to your profile, such as the type of car you have and what you’re looking to get out of your insurance.

Do I need car insurance by law in Australia?

While the above types of car insurance aren’t legally required in Australia, compulsory third party (CTP) insurance is mandatory in all states and territories. Also known as a Green Slip in New South Wales and Motor Accident Injuries (MAI) insurance in the ACT, CTP insurance can cover liability for injury or death caused by your vehicle to others in an accident.

However, CTP insurance doesn’t cover property damage or damage to your own vehicle. Because of this, you may elect to take out one of these non-compulsory insurance types to expand your overall coverage. 

How do I decide which car insurance policy is best for me?

Choosing the right car insurance policy depends on various factors, including your individual needs, budget, and the level of coverage you require. Here are some tips to help you decide:

  • Assess your needs: consider factors such as the value of your vehicle, your driving habits and your financial situation. Determine the level of coverage you need based on these factors.
  • Compare policies: take the time to research and compare different insurance policies. Look for coverage options, policy inclusions and exclusions and additional benefits offered by different insurers.
  • Consider affordability: evaluate the cost of premiums and any applicable excesses. Find a balance between the coverage provided and what you can afford.
  • Look for optional extras: many policies will come with optional extras you may be able to add to your insurance, such as roadside assistance and excess-free windscreen replacement. Consider which of these are important to you and look for insurers and policies which may offer cover for these.

Remember, every individual's insurance needs are unique, so it's essential to carefully consider your circumstances before making a decision.

What insurance do I need to use my car for work?

If you use your car for work purposes in Australia, you may need additional insurance coverage beyond personal car insurance. The type of insurance you need will depend on the nature of your work:

  1. Business car insurance: this type of insurance is designed for those who use their vehicles for both work and personal purposes. It can provide coverage for both personal and business use and is usually taken out on standard passenger vehicles.
  2. Commercial vehicle insurance: if you use your vehicle solely for commercial purposes, such as transporting goods or providing delivery services, you may need commercial vehicle insurance. This coverage is tailored to the unique risks associated with commercial use, providing protection for your vehicle, goods and liabilities. This is often taken out on specialist commercial vehicles, such as vans, trucks and other non-passenger vehicles, though passenger cars can be insured under this type of policy.

It's important to review your insurance policy and consult with your insurance provider to ensure you have the appropriate coverage for using your car for work-related activities.

What factors affect the cost of car insurance in Australia?

The cost of car insurance in Australia can vary depending on several variables. Some common factors that can affect the cost of car insurance include:

  • Vehicle type: the make, model, age, and value of your car can influence insurance costs. Expensive or high-performance vehicles generally have higher premiums due to increased repair or replacement costs.
  • Driver's age and experience: younger, inexperienced drivers are often charged higher premiums due to the higher risk of accidents. Older drivers with a clean driving record are typically eligible for lower premiums.
  • Driving history: your past driving history, including any previous accidents, road offences or claims, can result in higher premiums.
  • Location: the area where you live and park your car can affect insurance rates. Areas with higher rates of theft or accidents may have higher premiums.
  • Coverage type and limits: the type and level of coverage you choose will impact your premium. For instance, comprehensive coverage typically has higher premiums than basic coverage options.
  • Special offers: insurance providers may offer certain discounts on your policy, such as for signing up online or for meeting other criteria related to safe driving. Evaluate whether any discounts are worth it in the long run, as a short-term saving doesn’t always equal a long-term one.

To find the best insurance premium available for your circumstances, it's crucial to compare quotes from multiple insurance providers and consider the coverage and benefits offered.

Frequently asked questions about what car insurance you may need

What car insurance do I need if I have multiple vehicles?

If you own multiple vehicles in Australia, you have a few options for car insurance. You can choose to insure each vehicle separately with individual policies or you may consider a multi-car insurance policy. Multi-car insurance allows you to cover multiple vehicles under a single policy, which can be more convenient and potentially save you money.

Do I need additional coverage for car accessories and modifications?

If you have added accessories or modifications to your car, it's important to review your insurance policy to ensure they are adequately covered. In some cases, you may need to purchase additional coverage specifically for these additions. Not disclosing modifications to your insurer can lead to potential issues when making a claim, so it's important to communicate any modifications or accessories with your insurance provider.

Can I insure a second-hand or used car?

Yes – you can insure a second-hand or used car in Australia, provided it meets your insurer’s eligibility criteria. If your vehicle is in good condition and doesn’t have a history of accidents, you may qualify for cheaper premiums compared to brand-new vehicles, as the cost of repairs may not be as great for used cars.

Can I still get car insurance with a criminal record?

Having a criminal record may impact your ability to obtain car insurance, but it’ll depend on the severity and nature of the convictions. While some convictions may result in higher premiums or a denial of coverage, such as drink driving or insurance fraud, it's important to disclose any relevant information to your insurer to ensure accurate and appropriate coverage.

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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.

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