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What is third party car insurance?
Third party car insurance often refers to third party property damage (TPPD) car insurance. It covers damage you cause to someone else's vehicle or property. So, if you crash into someone's new car, you don't need to pay the repair costs – your insurance will. This kind of policy won't cover your car but could stop you from facing big bills from other people.
Compare third party car insurance
What does third party car insurance cover?
Third party property car insurance
Third party property car insurance covers you for damage to other people's property – for example someone else's car, home or shop. It covers only this and nothing else, up to a certain limit (commonly $20 million). This type of policy adds an additional layer of protection over the bare minimum compulsory third party insurance, and prevents you from having to be out of pocket for potentially enormous bills if you hit something expensive.
Third party, fire and theft car
This is a step up from third party property insurance. In addition to covering you for costs if you damage someone else's property, it can pay to repair or replace your car if it's damaged by fire or stolen. However, it still doesn't cover you for damage done to your own car – only comprehensive car insurance covers you for this.
What our experts have to say about third party car insurance
When I see a really fancy car, I instantly get the fear that I’m going to crash into it and lose a small fortune. It’s irrational and it’s unfounded, because even if the damage to my car isn't covered, third party car insurance protects me against having to outlay the cash for the damage caused to the other person's vehicle. I like knowing I'm covered for the costs of their repairs – even if I collide with a Maserati! However, to be covered for the costs relating to damage on your own car, you'll need to get comprehensive car insurance.
If your budget is really tight, third party, theft and fire car insurance can be an affordable way to ensure you’ve got important coverage. You could be up for a bill worth thousands (or tens of thousands) if you damage someone else’s property, so this is essential cover in my view. To find the best deal, be really clear on the cover you want and compare 4–5 different options.
If you're worried about being able to pay for damage to your own car, then you're probably best to get comprehensive car insurance. If you're not fussed, maybe because your car isn't worth much anyway, then third party car insurance is good – it's relatively cheap and could save you thousands if you damage someone else's car.
With cost of living pressures continuing to bite, it can be tempting to cut out non-compulsory insurance and just go with CTP insurance. But that's risky: you'd face a large bill if you cause damage to another driver's car after an at-fault accident – not to mention the cost of getting your own vehicle back on the road. Third party property insurance can at least cover you for the damages to another person's vehicle or property.
Want more than the bare minimum (CTP) which only covers injuries to people
Might not be good if you:
Own an expensive car
Live in a high crime area, with risk of theft or fire (in which case, consider TPFT instead)
Cheap third party car insurance
The easiest way to find cheap third party car insurance is to compare policies. Out of 9 brands, we found a difference of $356.05 between the cheapest and most expensive third party car insurance policies.
Keep in mind that these costs are based on a limited profile (that we've outlined below). As with all car insurance, the cost of a third party policy will vary based on your age, location, gender, and other variables such as where you park your car.
To determine this estimated cost, we sourced quotes using this profile:
Male, aged 35
Lives in Sydney
Drives a 2019 Toyota Corolla
Car travels 10,000 - 20,000kms per year
Excess between $695-$800 (differs depending on provider)
Driver has held his license for 5+ years
Car used for private use
Driver has made no claims in the last 3 years
No additional drivers
Excludes drivers under 25
No finance on the car
Car is kept in a garage
Market value
How to find cheap third party car insurance
Compare quotes
Most third party car insurance policies are very similar so price is an important factor. If you think you're paying too much, shop around to find a better deal.
Choose a higher excess
Your insurer will offer you a lower premium in return.
Nominate drivers
If you can nominate certain people to drive your car, especially if they are all over the age of 25, this will reduce the cost of your cover.
Secure your vehicle
Vehicles with security systems and those that are kept garaged overnight are less expensive to insure than ones parked on the street or without security systems.
Bundle your cover
If you have a separate policy (for example, home insurance) with a provider, it may offer you a discount on your car insurance policy.
Compare car insurance by state
Use the map below to compare car insurance based on your location.
According to our research of nine providers, AAMI offers one of the cheapest policies. Other cost-effective insurers include Bingle & GIO. Keep in mind prices vary for everyone.
The best third party car insurance policy depends on your needs. AAMI, Bingle & GIO offer some of the cheapest policies according to our research. However, you should also look at what's covered. For example, some policies may cover you for ridesharing as well as damage to other people's property.
Usually not. Most third party car insurance policies do not cover windscreen damage. This is usually clearly mentioned as an exclusion.
When calculating your third party property damage insurance premiums, insurers consider questions like:
How old are the people driving your car?Younger drivers are more inexperienced and also feature heavily in Australian road crash statistics, which means they cost more to insure.
Are you a good driver? Drivers with a long, blemish-free driving record will obviously cost less to insure than those who have made claims in the past or who have multiple traffic infringements.
Where do you keep your car at night? Areas with high theft and accident risks will generally result in higher insurance premiums for car owners.
What type of car do you drive? Inexpensive, low powered cars are typically cheaper to cover than high powered, expensive vehicles. Any modifications and accessories fitted to your vehicle will also be taken into account.
How much do you use your car? If your vehicle is used for business purposes, or more frequently than most, you may have to pay a higher premium. Alternatively, if you don't drive too often you can opt for a Pay As You Drive policy.
No. Third party insurance is for your vehicle. Your car is insured to be driven by certain people as described in the insurance policy. You are not automatically covered by your usual third party insurance when driving other vehicles.
If you hold third party property damage car insurance, then any car or property you damage in an accident is covered, your own vehicle is not.
No but it's easy to get them confused. Compulsory third party is mandatory in Australia. It protects you from legal and medical costs if you injure or kill someone in a car accident.
Third party property damage, on the other hand, covers other people's property if you damage it with your car and are at fault.
The excess is the amount you're required to contribute towards the cost of your claim. As an example, if your excess is $250 and your claim is for $2,000, you will pay the first $250 of your claim and your insurer will cover the remaining $1,750. Insurers will charge a basic excess, which is the minimum you'll need to contribute when you make a claim, as well as a voluntary excess (in return for a lower premium) and an age excess (if your policy features a young or inexperienced driver). Depending on your insurance provider and your individual circumstances, other excesses may also apply to your cover.
An uninsured motorist extension (UME) is an optional extra available with some third party car insurance policies. It covers damage to your vehicle up to set limits (typically around $3,000–$5,000) in the event that it's damaged by an uninsured driver, that you were not at fault and that you can provide the uninsured driver's name and address.
Gary Hunter is an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 5 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, news.com.au, The Telegraph, Explore Travel and Escape. Gary holds a Kaplan Tier 1 General Insurance (General Advice) certification and a Kaplan Tier 1 Generic Knowledge certification which meets the requirements of ASIC Regulatory Guide 146 (RG146).
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I’m interested in looking at car insurance which allows for some rideshare work. Can you provide a list?
Hi Dan,
Thanks for the message. You can head to our guide to rideshare insurance here. More than a dozen providers offer some coverage for rideshare drivers.
Best,
James