Third party insurance, also known as Third Party Property Damage insurance, covers damage your car causes to other people’s vehicles or property. It doesn’t cover your own car. When you’re at fault in an accident, this policy pays for repairs to the other driver’s car, their fence, or whatever else you damaged. Think of it as protection for your bank account when you cause damage to someone else’s property. It’s the most basic level of car insurance you can buy in Australia beyond the mandatory CTP.
This guide walks you through how third party car insurance works in Australia, what it covers and what it leaves out, and how much you can expect to pay. You’ll learn how to choose the right policy for your needs, understand the key differences between third party, comprehensive, and CTP insurance, and get practical advice on finding genuine value without overpaying for features you don’t need. By the end, you’ll know exactly what you’re buying and whether this type of cover makes sense for your situation.
Why third party insurance matters
Your car can cause expensive damage even in a minor accident. A fender bender in a car park might crack someone’s bumper, and repair costs easily reach $2,000 to $5,000. Back into a luxury vehicle and you’re looking at $10,000 or more. Without a third party insurance policy, you pay these costs directly from your own pocket. That financial risk sits with you every time you drive.
Protection from major bills
Most Australians can’t afford to write a cheque for $20,000 worth of damage after an at-fault accident. Third party cover removes that risk by paying for the damage you cause to other people’s property. You’re also protected if you hit a shopfront, damage someone’s fence, or collide with council property. The policy handles these bills up to the liability limit, which typically reaches $20 million or more.
"Without third party insurance, a single accident can create debts that take years to repay."
You maintain your financial stability even when accidents happen, and you meet your legal responsibility to compensate others for damage you cause.
What third party car insurance covers
A third party insurance policy pays for damage you cause to other people’s vehicles and property when you’re at fault in an accident. The policy responds when you hit another car, damage a building, knock over street signs, or collide with fences and gates. Your insurer handles the claim and pays the repair costs directly to the affected party, up to your policy’s liability limit. This protection applies whether you cause minor parking damage or a major multi-vehicle collision.
What’s included
Your policy covers legal liability for property damage caused by your vehicle up to the stated limit, typically $20 million or more. This includes damage to other vehicles, buildings, fences, street furniture, and personal property inside other cars. Most policies also cover legal costs if someone sues you over the accident, and these costs sit outside the main liability limit.
"Third party cover protects you from the financial impact of damage you cause, but it won’t repair your own vehicle."
Some insurers include an uninsured motorist extension that covers damage to your car (usually capped at $3,000 to $5,000) when an uninsured driver hits you and is at fault. You need to identify the other driver to claim this benefit.
What’s not covered
The policy never covers your own vehicle. If you’re at fault and damage your car, you pay for those repairs yourself. It also excludes deliberate damage, driving under the influence, unlicensed drivers, and using your car for purposes not listed on your policy (like rideshare without commercial cover). Wear and tear, mechanical breakdowns, and theft of your vehicle aren’t covered either. Weather damage to your car, vandalism, and fire damage also fall outside this policy’s scope.
How to choose a third party policy
You need to compare several key features when shopping for a third party insurance policy. Start by checking the liability limit, which determines how much the insurer pays for damage you cause. Most policies offer $20 million coverage, but some provide lower limits like $10 million or higher limits up to $30 million. You also want to examine the uninsured motorist extension (if included), the excess amounts you’ll pay when making a claim, and any restrictions on who can drive your car.
Compare liability limits
The liability limit protects you when damage costs exceed typical accident repairs. While $20 million sounds excessive, a serious accident involving multiple vehicles or property can create bills reaching hundreds of thousands of dollars. Choose at least $20 million coverage to protect yourself from worst-case scenarios. Some insurers offer $30 million limits for similar premiums, which provides extra security without significant cost increases.
"A higher liability limit costs little extra but delivers substantial protection when you need it most."
Check the uninsured motorist extension
This feature covers damage to your vehicle when an uninsured driver hits you and is at fault. Most insurers cap this benefit at $3,000 to $5,000, which covers minor to moderate damage. You must provide the other driver’s details to claim this benefit. Compare the cap amounts between insurers, as $5,000 coverage costs roughly the same as $3,000 but delivers better protection.
Costs and what influences your premium
Third party insurance policy costs vary based on your circumstances, your vehicle, and where you live. Premiums typically range from $200 to $600 annually in Australia, making this the most affordable car insurance option beyond mandatory CTP. The price you pay depends on factors insurers use to assess risk, and understanding these factors helps you find better value when comparing policies.
Common premium factors
Your driving history directly impacts the premium. Insurers charge more when you’ve made recent claims or have traffic violations on your record. A clean driving history of three years or more typically qualifies you for lower rates. The driver’s age matters significantly, with drivers under 25 paying substantially more because statistics show higher accident rates in this age group.
"Your postcode, vehicle age, and driving record create the biggest premium variations between identical policies."
Where you park your car overnight affects the cost. Urban areas with higher theft and accident rates result in higher premiums compared to regional locations. Your vehicle’s age, make, and model also influence the price, though the impact is smaller than with comprehensive insurance since your car isn’t covered for damage.
Typical costs in Australia
Budget between $200 and $350 annually for basic third party coverage if you’re over 25 with a clean record. Younger drivers or those with recent claims often pay $400 to $600 for the same policy. Regional drivers generally pay 10% to 20% less than those in major cities. These prices assume standard excess levels of $400 to $600, and choosing a higher excess reduces your premium by $50 to $100 per year.
Third party vs comprehensive and CTP
Understanding how a third party insurance policy differs from comprehensive and CTP insurance helps you choose the right cover. These three insurance types serve different purposes, and most Australian drivers need at least two of them. Third party property damage sits between CTP (mandatory) and comprehensive (optional), offering middle-ground protection that covers damage you cause without the cost of comprehensive cover.
The key differences
CTP insurance is mandatory in every Australian state and covers injuries to other people in accidents you cause. It protects people, not property, and you cannot register your vehicle without it. Your third party property damage policy covers damage to other people’s vehicles and property, filling the gap CTP leaves. Comprehensive insurance covers everything: your car, other people’s property, and often includes theft, fire, and weather damage.
"CTP protects people, third party protects other people’s property, and comprehensive protects everything including your car."
You pay separately for CTP (as part of registration) and choose between third party or comprehensive for property damage. Comprehensive costs roughly double what third party costs but covers your vehicle regardless of fault.
Next steps
You now understand what a third party insurance policy covers, how much it costs, and whether it suits your needs. The next move is getting quotes from multiple insurers to compare liability limits, excess amounts, and uninsured motorist extensions. Request at least three quotes and examine the fine print for exclusions and driver restrictions that might affect your situation.
Most insurers provide instant online quotes within minutes, and you can switch policies at any time, even mid-term, receiving a refund on your unused premium. Don’t settle for your current insurer’s renewal price without shopping around first. Switching takes less effort than you think, and the savings often reach hundreds of dollars annually.
Need competitive cover that balances price and protection? Get a quote from National Cover to compare rates on comprehensive motor insurance with expert claims support and genuine value.
