In much the same way as the UK has three different categories of auto insurance classification, Australian car insurance operates on a very similar system and also uses a three-tiered method.
The three different levels of Australian car insurance are as follows:
- Compulsory third party insurance (also known as green slip insurance)
- Third party property insurance
- Comprehensive car insurance
As the name suggests, third party Australian car insurance is obligatory and is the absolute minimum level of coverage needed to drive on Australian roads. Third party property insurance represents cover for damage to the vehicle or property of any third party in the event of an ‘at fault’ accident.
Comprehensive Australian car insurance represents the top tier of auto coverage and as well as providing cover for third party claims, it also gives protection against fire, theft and accident damage on the vehicle of the policy holder. Although comprehensive Australian car insurance is more expensive than third party property and compulsory third party policies, it is considered to be the best option for owners of cars that are in good condition. It should be noted that many Australian car insurance companies will not provide comprehensive cover for older vehicles, especially if they are carrying existing rust damage.
However, comprehensive Australian car insurance does not cover vehicle damage related to general wear and tear, mechanical failure, electrical problems or accidents where the insured vehicle is deemed not to be roadworthy. By altering inclusions within a policy, comprehensive Australian car insurance can actually be lowered although policy holders must be aware that they may be liable to additional costs in the event of an accident.