There are so many different types of insurance available on the market these days, it’s easy to become overwhelmed and unsure of what types of insurance are best for your situation. We have compiled this article to help you navigate through the world of vehicle insurance and the pros and cons of each.

Compulsory Third Party Insurance

We thought we’d start with Compulsory Third Party (CTP) Insurance as many people aren’t aware of the differences between Compulsory Third Party Insurance and Third Party Property Damage Insurance and what each of them cover.

Compulsory Third Party (CTP) Insurance covers injuries to people such as pedestrians, cyclists and other road users caused by your vehicle in the event of an at fault accident. CTP Insurance is included in your vehicle registration, so if your vehicle is registered – you have current CTP Insurance. It is important to distinguish that CTP insurance does not cover damage to vehicles, either yours or any other party involved in an accident. When you register your vehicle, you will be given a choice of insurer for CTP Insurance.

Car Insurance

In general, there are three different options for vehicle insurance cover, Third Party Property Damage Insurance, Third Party Fire and Theft Insurance and Comprehensive Insurance which we’ll go through below.

Third Party Property Damage Insurance
Third Party Property Damage Insurance provides cover for loss or damage to someone else’s property caused by an at fault accident which is deemed your fault. It does not cover damage to your own car. So if you run into a $100,000 Mercedes, your insurance will cover the cost of fixing or replacing the Mercedes, however you will have to cover the cost of fixing your own car. It is very important to have at least Third Party Property Damage Insurance so that you don’t have to wear the cost of fixing other party’s vehicles in the event you have an accident.

Third Party Fire and Theft Insurance
Third Party Fire and Theft Insurance gives you all the cover of Third Party Property Damage Insurance above, but not as much cover as Comprehensive Car Insurance below. It covers you for loss or damage to someone else’s property caused by you as well as loss or damage to your vehicle caused in the event of fire or theft.

Comprehensive Car Insurance
Comprehensive Car Insurance covers you for all things included in the Insurance policies above, but also covers damage to your vehicle caused by an accident that is deemed your fault. A typical Comprehensive Car Insurance policy also covers your vehicle for damage caused by fire, storm, hail and vandalism as well as many other things.

Many policies also offer various optional extras such as windscreen breakage cover, flexible payment and excess options and No Claim Discount protection.

Loan Protection Insurance

Loan Protection Insurance is an optional insurance product that can help lift the financial burden of your loan repayments in the event of a serious illness, involuntary unemployment, terminal illness or death. Depending on the coverage option selected, Loan Protection Insurance can help cover your loan payments and also provide a cash assist benefit subject to any maximum payouts stipulated in the contract.

Loan Protection Insurance could prove beneficial to anyone with finance. It can help protect you and your family’s way of life in the event that you are unable to meet your loan commitments due to involuntary unemployment, serious illness, injury or death.

Gap Insurance

Shortfall Insurance, also known as Guaranteed Asset Protection (GAP) Insurance protects you from having to pay the ‘shortfall’ between what you owe on your car loan and the amount that your insurance company pays out in the event that your car was written off or stolen.

Shortfall Insurance is most valuable when you are either looking to purchase a new or near new vehicle and or not looking to put down a sizable deposit. This means that your loan to value ratio will be higher and there is a higher risk of having a gap if your vehicle was to be written off.

Unsure which type of insurance is right for your needs?

Be sure to check out our insurance section for further information, alternatively contact our expert Finance Consultants on 1800 538 287 to discuss your finance and insurance options.