Car Insurance in Australia: The Complete Guide
This is an independent, plain-English guide to car insurance in Australia (also called auto insurance or motor vehicle insurance). It explains the four types of cover, what actually drives your premium, how the claims process works, and how to compare policies — with links to the government regulators and consumer bodies that oversee the industry. We don't sell insurance and we don't give financial advice.
What are the four types of car insurance in Australia?
Australian car insurance comes in four levels: CTP (compulsory, injuries to others only), third party property damage (damage you cause to others' property), third party fire & theft (adds fire and theft cover for your own car), and comprehensive (adds accident, storm, flood and hail damage to your own car). Only CTP is required by law.
| Cover type | Injuries to others | Others' property | Your car — fire & theft | Your car — accident, storm, hail, flood | Required? |
|---|---|---|---|---|---|
| CTP (green slip) | Yes | No | No | No | Compulsory |
| Third party property damage | — | Yes | No | No | Optional |
| Third party fire & theft | — | Yes | Yes | No | Optional |
| Comprehensive | — | Yes | Yes | Yes | Optional |
Each optional level sits on top of CTP — it never replaces it. For a full breakdown of what each policy type includes and excludes, see our guide to comprehensive vs third party car insurance.
Is car insurance compulsory in Australia?
Yes — but only CTP. Every registered vehicle in every state and territory must carry Compulsory Third Party insurance, which covers injuries to other people when you're at fault. In most states it's built into your rego; in NSW you buy it separately as a "green slip". All other car insurance is optional.
Because CTP covers people, not property, driving with CTP alone means you personally wear the full cost of any damage you cause — and reversing into a luxury car or a shopfront can run to tens or hundreds of thousands of dollars. That's why consumer bodies such as ASIC's Moneysmart suggest most drivers carry at least third party property damage on top of CTP. How CTP works differs in every state — see the full state-by-state CTP guide.
How much does car insurance cost in Australia?
There's no single national price — your premium is calculated from your age and driving history, the car you drive, your postcode, how you use the car, and the excess you choose. Young drivers (under 25), high-theft postcodes and high-performance or expensive cars all push premiums up; a long no-claims record, a higher excess and a secured garage pull them down.
For CTP specifically, the state regulators publish comparison tools — NSW's Green Slip Price Check and South Australia's CTP premium calculator let you compare real prices. For comprehensive cover, quoting the exact car and address is the only way to get a real number. The full list of pricing factors, and every lever you can pull to bring your premium down, is in our guide to what car insurance costs and how to pay less.
What does comprehensive car insurance cover?
Comprehensive covers damage to your own car from collision, fire, theft, vandalism, hail, storm and flood, plus your liability for damage to other people's property. Typical extras include towing, a hire car after theft, limited personal-effects cover, and new-for-old replacement for cars usually under two to three years old.
It's the only level of cover that protects your own car against accident and weather damage, which is why it's the standard choice for newer or financed vehicles. It still has firm exclusions — wear and tear, mechanical breakdown, drink or drug driving, racing, unlicensed drivers and undeclared modifications are not covered. Full details, including the third party options, are in the types-of-cover guide.
Agreed value vs market value — which is better?
Agreed value locks in a fixed payout when the policy starts and usually costs a little more. Market value pays what the car would have sold for just before the incident, so the payout falls as the car depreciates, but premiums are lower. Newer cars generally suit agreed value; older cars often suit market value.
The choice only matters when the car is written off or stolen and not recovered, but that's exactly when it matters most. Moneysmart's guide to choosing car insurance and Mozo's jargon buster, which defines both terms side by side, cover the trade-off in more depth.
How do I make a car insurance claim?
At the scene: make sure everyone is safe (call 000 if anyone is injured), exchange names, licence and rego details, photograph everything, get witness contacts — and don't admit fault. Then contact your insurer as soon as practical, lodge the claim online or by phone with your policy number, and keep the claim reference. The insurer assesses the damage, then repairs the car or pays out its value, minus your excess.
Insurers who subscribe to the General Insurance Code of Practice commit to handling claims promptly and fairly, and if a dispute can't be resolved internally you can escalate it free of charge to the Australian Financial Complaints Authority (AFCA). The step-by-step process — including assessment, write-offs, excesses and disputes — is in the claims guide.
Does car insurance cover floods, bushfires and hail?
Only comprehensive car insurance covers natural-disaster damage to your own car — flood, bushfire, storm and hail. Third party policies don't (though third party fire & theft responds to fire). One key exclusion: damage from deliberately driving through floodwater is typically not covered.
Natural disasters are a serious and growing cost in Australia — in its Insurance Catastrophe Resilience Report 2025–26, the Insurance Council of Australia reported 29 declared extreme weather events since 2019, totalling $20.7 billion in insured losses from more than 760,720 home and building claims. Policies use the standard flood definition from the Insurance Contracts Act 1984, and insurers expect you to take reasonable steps to protect the car — moving it to higher ground during a flood warning, or under cover ahead of a forecast hailstorm. The Financial Rights Legal Centre's bushfire factsheet is a good resource if you're affected.
What are the most common car insurance myths?
- "Red cars cost more to insure." False — colour has no bearing on premiums. Make, model, performance, repair cost and theft statistics do.
- "CTP covers damage to my car." Dangerously false — CTP covers injuries to other people only. Property damage needs third party or comprehensive cover.
- "A write-off pays back what I paid for the car." No — a market value policy pays the depreciated value at the time of loss. Only agreed value (or new-for-old on near-new cars) fixes the amount.
- "If a mate crashes my car, their insurance pays." Usually it's your policy that responds, and an unlisted-driver excess may apply — list your regular drivers.
- "My policy covers Uber and deliveries automatically." No — business use, including ride-share, must be declared or claims can be denied outright.
Finder's myth-busting guide covers more. The one habit that beats every myth: read the Product Disclosure Statement — our glossary translates the jargon.
How is car insurance changing in Australia?
Two shifts matter most for drivers right now. Usage-based insurance prices your premium on how — or how much — you actually drive, and it comes in two distinct flavours in Australia. Kilometre-based cover asks you to nominate your annual distance and prices off it, as Real Insurance's Pay As You Drive does. Behaviour-based cover scores your driving through a phone app and discounts the next period's premium, as ROLLiN's Safe 'n Save does. Mozo has a plain-English explainer on how telematics tracking works. Electric vehicles are changing pricing too: higher purchase prices, expensive battery packs and specialist repairs generally mean higher comprehensive premiums for EVs, and insurers are building EV-specific policies in response. Longer term, AI-driven claims processing and eventually autonomous vehicles will keep reshaping how policies are priced and settled.
Frequently asked questions
Is car insurance compulsory in Australia?
Only Compulsory Third Party (CTP) insurance is legally required, and every registered vehicle in Australia must have it. CTP covers injuries to other people if you cause an accident — it does not cover damage to any vehicle or property. Third party and comprehensive car insurance are optional extras that cover property damage.
What is the difference between car insurance and auto insurance?
Nothing — they are the same product. 'Car insurance' and 'motor vehicle insurance' are the usual Australian terms; 'auto insurance' is the common American term. This site uses both, but every policy discussed is an Australian one.
Does CTP insurance cover damage to my own car?
No. CTP only covers personal injuries to other people when you are at fault. Damage to your own car is only covered by comprehensive insurance (or by third party fire and theft in fire or theft events). Damage you cause to other people's cars or property needs at least third party property damage cover.
What does comprehensive car insurance cover?
Comprehensive car insurance covers accidental damage to your own vehicle — collision, fire, theft, vandalism, hail, storm and flood — plus your legal liability for damage to other people's property. Most policies add benefits such as a hire car after theft, towing, and new-for-old replacement on newer cars.
Should I choose agreed value or market value?
Agreed value fixes the payout amount in advance and usually costs slightly more; market value pays what your car was worth just before the incident and usually costs less. Agreed value suits newer cars still depreciating quickly; market value can be more cost-effective for older cars.