Just What Does Your Car Insurance Really Cover?

Just What Does Your Car Insurance Really Cover?

It's a fact of life. Before you can go out for a spin, you need to buy car insurance so that you're covered in the event of an accident. Not only does this just make plain sense, it's also a legal requirement in each Australian state and territory.

But with so many types of policies to choose from, and the fact that each insurance provider has their own unique perks – such as roadside assistance, choice of repairer, and agreed vs. market value compensation – deciding which policy is right for you can be surprisingly tricky.

To help you choose an insurance policy that offers the coverage you need, let's take a closer look at the four basic types of general motor insurance, and the different scenarios they cover you for.

Types of Car Insurance

Compulsory Third Party (CTP) – Is the minimum mandatory level of insurance required by every driver in Australia. This policy protects you from claims in the event you injure or kill another person while driving.

Third Party Property (TPP) – Is an optional type of insurance that covers any damage done to another person's car or property while driving. It only covers the property of the other driver, not any property owned by you (the policy holder).

Third Party, Fire and Theft (TPFT) – Another type of optional insurance that covers damage to a third party, as well as damage to your own vehicle as a result of fire or theft.

Comprehensive Car Insurance (CCI) – A premium level of insurance coverage that offers all the protection of the previous policies, as well as the fact it covers damage to your own vehicle.

Common Incidents and the Type of Insurance You Need

Whether your car is on the road or not, life as a motorist comes with its own unique risks and challenges. Not only do you have to be aware of yourself as a driver, but also other drivers around you and the risks that come with parking in certain places, particularly on the street. Let's take a closer look at some of the most common incidents you may across as a driver, and the type of insurance you need to be covered under those circumstances.

Injury and Death
When one or more people are killed or injured in a motor accident, the purpose of CTP insurance is to basically serve as a form of personal injury cover, and protect the driver responsible for the accident from any legal liability.

Any person injured due to a motor accident – whether they're a driver, passenger, pedestrian, motorcyclist or cyclist – can apply for compensation from the at-fault driver's CTP insurance provider. For instance, they may get compensation to cover medical and rehabilitation bills and income support.

In the event of fatality, the next of kin of the deceased person can apply for compensation to cover funeral costs and other expenses.

Fire and Theft
As the name implies, TPFT insurance covers you for any damage to your vehicle caused by theft (plus attempted theft) and fire.

All insurance companies offer cover for up to a certain monetary value whether the vehicle is damaged or a total loss. For instance, your car could be covered for up to a market value of $10,000.

If you live in an area that has a notably high crime rate or is prone to bushfire, TPFT insurance will provide the cover you need to sleep easy at night.

Rear Endings and Collisions
Accidents happen. And when they do, you want to be sure your insurance provider will at least cover the cost of damage done to the other driver's car or other property. In this case, you need TPP insurance.

With this level of coverage, your insurance provider will work closely with all affected drivers and arrange the necessary repairs to be done by a certified repairer. Depending on the policy, the repairer is either chosen by the insurance company, or the driver who submitted the claim.

Weather, Vandalism, and Damage to Your Car
In all of the above instances, only CCI will protect you from having to pay for any damages to your car or compensate you for the total loss of your car. In the case of extreme weather most policies will cover you for:

• Hail damage (excludes pre-existing hail damage).
• Heavy rain and flooding, causing cars to wash away.
• Lightning strikes, resulting in tire blowouts, burn marks, and damage to the car's internal electrical system.
• Excessive wind, causing trees and tree limbs to collapse onto nearby cars.

Always be sure to carefully read your insurance policy so that you know exactly what you are covered for.

What Your Car Insurance Doesn't Cover

With all that said, there are certain limits and restrictions on when an insurance policy does and does not apply. Some of these limits depend on the policy you choose, while other limitations are universally accepted by nearly all insurance companies.
In many cases, an insurance provider won't cover damages if the driver at fault was:
• Proven to be distracted or negligent.
• Under the influence of drugs or alcohol.
• Driving with a suspended or expired license.
• Charged by police with an offence related to the incident.

Furthermore, an insurance provider typically won't cover damages for pre-existing damage, or if the car was not roadworthy.