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What kind of car insurance do I need?


People use their cars differently. Some just drive occasionally, heading down to the shops or running errands, while others travel long distances or to and from work each day. In the same way that car usage is individualised, so too should be our approach to car insurance.

That’s why, if you own a car, you should try and match your car insurance cover according to your specific needs. But how do you even start that process? Well, this handy guide should be able to help.

Know your car insurance options

There are a bunch of car insurance options out there, offering drivers flexibility in how much cover they get, and how much they pay.

Compulsory car insurance

In some Australian states, people are required by law to have Compulsory Third Party Insurance (CTP). This covers people who are injured or killed if your vehicle is involved in an accident.

A common myth is that CTP covers drivers if they cause damage to someone else’s property, but this isn’t true. CTP only covers the driver of a car for personal injury caused to someone else. It does not cover damage to your own vehicle or someone else’s vehicle or property, so you could still be out-of-pocket if you don’t have additional car insurance and you’re in an accident. This is why it’s important to carefully consider all your insurance options before you get behind the wheel.

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Third Party Car Insurance

Third Party Car Insurance covers you in the event of an accident for damage to another vehicle or property, if you’re found to be at fault. It’s an entry-level car insurance for many Australians and can be a handy insurance to have when you know that you can’t afford to repair damage out-of-pocket.  

If you’ve got an old car that has done plenty of kilometres and you don’t place a lot of sentimental value on it, or you don’t do a lot of driving, Third Party Car Insurance might be the level of cover you need. It can also cover your legal costs as a result of any damage to a car or property you cause.

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Third Party Fire and Theft

Third Party Fire and Theft is usually an optional extra that you can purchase on top of Third Party Car Insurance. It provides additional protection against damage sustained to your vehicle through – you guessed it – fire, theft, or attempted theft.

Vehicles are often the targets of crime. Research shows that 52,722 vehicles are stolen in Australia each year1. Stationary vehicles get targeted at public places such as petrol stations, and parked cars often get broken into, sometimes for valuable contents inside them.

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Comprehensive Car Insurance

This type of insurance has a much higher level of cover and therefore is a popular option for many motorists. In addition to covering another vehicle or property in an accident where you’re at fault, Comprehensive Car Insurance holders are covered for accidental loss or damage cover, enjoying the full protection of their vehicle regardless of who’s at fault. AAMI Comprehensive Car Insurance can cover you in case of an unexpected accident and get you back on the road.  

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Doing your research

Aside from understanding the different kinds of car insurance policies available, and reading informative blog posts like this one, it’s wise to do your due diligence and research your options. Policy Documents, although a bit of a dry read, are packed full of important information about what each type of cover offers. All of AAMI’s Policy Documents are available for you to peruse online, so you can conveniently scroll through them before you make a decision.

You can also contact us to chat more about your car insurance options by calling 13 22 44, 8am-10pm (AEST) 7 days a week! Or see what you could save with a quick, online quote.

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1Source: Car Safe, accessed January 21, 2019


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AAMI Car Insurance, NSW and ACT CTP Insurance, and Caravan Insurance are issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Consider the Product Disclosure Statement before making a decision about this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.