Third party car insurance—often called Third Party Property Damage—covers your legal liability if you damage someone else’s car or property while driving. It does not pay to fix your own car. Injuries to people are handled by Compulsory Third Party (CTP) insurance, which is tied to your registration in Australia (or bought separately in some states and territories). Third party cover is optional, but it can shield you from hefty repair bills if you’re at fault.
In this guide, we unpack what third party insurance actually covers (and what it doesn’t), how it differs from CTP and comprehensive policies, when to consider a fire and theft option, and how claims and fault typically work. You’ll also find key limits, excesses and exclusions to check, cost drivers and ways to save, real‑world use cases (including rideshare, delivery, taxi and business use), a quick CTP overview by state, and practical steps to choose and switch without gaps.
What is third party car insurance?
Third party car insurance (Third Party Property Damage) is an optional policy that covers your legal liability if you damage someone else’s car or property while driving. Put simply, it helps pay the other party’s repair bill when you’re at fault. It doesn’t pay to fix your own vehicle, and it isn’t the same as CTP (which covers injuries). In Australia, the meaning of third party insurance often includes limited extras with some insurers, like small not‑at‑fault benefits, but core cover is liability for property damage only.
What does third party property damage cover?
Third party property damage insurance steps in when your car causes damage to someone else’s property. It pays your legal liability for those losses and, with many insurers, also covers the cost of defending or settling a claim. Limits are typically high (for example, $20 million with some brands), and some policies add a small not‑at‑fault benefit if the other driver is uninsured, subject to conditions.
- Damage to other people’s property: Repairs or replacement for cars, fences, buildings, signs and other property you damage.
- Legal liability costs: Your liability to the third party, including reasonable legal defence and settlement costs.
- Uninsured motorist benefit (some policies): Limited cover for your car when you’re not at fault and the at‑fault driver is uninsured (e.g., up to $5,000; T&Cs apply).
What third party car insurance doesn’t cover
Third party car insurance is property‑only liability cover. It won’t pay to repair or replace your own vehicle, and it doesn’t insure it against events like theft, fire or weather. Injuries to people are handled by CTP. Some brands add small not‑at‑fault benefits, but the core exclusions below still apply.
- Your car when you’re at fault: No cover for repairs to your vehicle.
- Theft or fire of your car: Not covered unless you choose Fire, Theft & TPPD.
- Weather damage to your car: Storm, hail or flood aren’t covered under basic third party.
- Injuries to people: Medical and injury claims are a CTP matter, not third party property.
Third party vs CTP: how they work together
Think of these as two halves of the same risk. CTP (the mandatory cover tied to rego; in NSW, QLD, SA and the ACT you choose the insurer) covers personal injury claims arising from an accident you cause. It does not cover cars or property. Third party car insurance (Third Party Property Damage) is optional and covers the legal liability for damage you cause to someone else’s vehicle or property. There’s no overlap: CTP handles people; third party handles property. Together they manage the big liabilities, but they still won’t repair your own car.
- Rear‑end another car: Injuries = CTP; their car = third party; your car = not covered.
- Hit a fence, no injuries: Property damage = third party.
- Passenger injured in your car: Injury claim = CTP; your vehicle damage = not covered.
Third party vs comprehensive: which suits your car and budget?
Choosing between third party and comprehensive comes down to the value of your car, your appetite for risk, and what you can afford. By definition, the meaning of third party insurance is property liability only; comprehensive costs more but adds cover for your own car from incidents such as collision/impact and theft, and often severe weather, plus the same liability to others.
- Pick third party if your car’s low value, you can self-fund your own repairs, and your priority is avoiding a big bill for someone else’s car or property.
- Pick comprehensive if your vehicle is newer or higher value, you want your own damage covered regardless of fault (e.g., collisions, theft; many policies include storm/hail), and you prefer Market or Agreed Value options.
Fire and theft add-on: when to consider it
Basic third party won’t fix your car. If you want limited protection without going full comprehensive, consider a Fire, Theft & Third Party Property Damage option. It adds cover if your car’s stolen or damaged by fire (including bushfire) or attempted theft, while keeping third‑party property liability. Useful for modest‑value cars, on‑street parking, theft‑ or bushfire‑prone areas, or if you can’t self‑fund a total loss. It still won’t cover crash or storm/hail damage.
How claims and fault work with third party cover
With third party property cover, fault drives the outcome. If you’re at fault, you claim on your policy to cover the other party’s property damage (you’ll usually pay your excess) and there’s no cover for your car. If you’re not at fault, you pursue the other driver or their insurer; if they’re uninsured but identifiable, some policies offer a small uninsured‑motorist benefit for your car, subject to conditions and limits.
- At the scene: Exchange details and gather evidence (photos, witnesses).
- Notify: Tell your insurer promptly and lodge a statement; provide any police report.
- Assessment: Insurers determine liability from statements, photos and reports, then defend or settle your liability.
- Disputes: Insurers negotiate; liability may be split if evidence supports it.
Liability limits, excesses and common exclusions to check
Two numbers matter most on third party policies: the liability limit and your excess. Liability limits are typically high — for example, up to $20 million with some brands — protecting you if you cause major property losses. Your excess is what you pay on most at‑fault claims. Also check any uninsured‑motorist benefit: some policies pay a small amount for your car when you’re not at fault (e.g., up to $5,000, T&Cs apply).
- Liability limit: Often up to $20m; check what’s included.
- Excess: The amount you contribute on most at‑fault claims.
- Uninsured motorist benefit: Confirm the cap (e.g., $5k) and conditions.
- Exclusions to scan: Your car’s damage; theft/fire/weather without an add‑on; restricted commercial uses (e.g., rideshare, taxi, delivery) unless specifically covered.
Cost factors and ways to save on premiums
Third party premiums mainly reflect the level of cover and how the car is used. Third Party Property Damage is usually cheaper than comprehensive because it doesn’t cover your own car; adding Fire & Theft increases the cost. Commercial uses (rideshare, delivery, taxi) are insured on different terms and may be priced differently to private use.
- Use a price‑beat guarantee: Leverage competitive research to drive your premium down.
- Right‑size your cover: Choose TPPD vs Fire & Theft vs comprehensive based on needs.
- Ask about excess options: Confirm how changing your excess could affect your premium.
- Use preferred repairers: Some providers offer an excess discount when you do.
- Switch smart: You can change any time; get help calculating potential return premiums.
Use cases: when third party can be enough vs when it isn’t
Because the meaning of third party insurance is liability for damage to other people’s property, it suits drivers who can afford to self‑fund their own car repairs or replacement. If your car’s low value and you mainly want protection against big bills for someone else’s vehicle or fence, third party can be a smart, low‑cost fit.
- Third party can be enough: Older/low‑value car; secure garaging; short, low‑risk driving; strong emergency savings.
- Add Fire & Theft: Modest‑value car with on‑street parking or higher theft/bushfire exposure.
- Go comprehensive: Newer/higher‑value car; exposure to collision or weather risks you can’t self‑fund.
- Consider comprehensive: You’d struggle to pay for your own repairs after a crash or theft.
Rideshare, delivery, taxi and business use considerations
If you drive for rideshare, delivery, taxi or any business purpose, don’t assume a private-use third party policy will cover you. Many standard policies exclude commercial use unless you disclose it and take out a specific rideshare or commercial motor policy. Pricing, excesses and conditions can differ, and you may need extra covers for your operation.
- Declare your use: Misdeclared use can void claims.
- Choose the right policy: Look for rideshare/taxi/courier-specific third party or comprehensive.
- Check limits and drivers: Ensure liability limits and authorised drivers suit your operation.
- Consider add‑ons: Public Liability and cover for goods in transit may be relevant to business activity.
CTP by state and territory: quick overview
CTP covers injuries and is required everywhere, but the purchase process differs by state. In most places it’s bundled with registration; in a few you can pick the insurer. Use this quick snapshot to see how it works where you live.
- NSW: Buy a Green Slip before rego; you choose the insurer.
- QLD: Choose insurer during rego; premium sits within rego costs.
- SA: Choose insurer during rego.
- ACT: Motor Accident Injuries (MAI); choose insurer with rego.
- VIC: Included in rego; no choice of insurer.
- WA: Included in rego; no choice.
- TAS: Included in rego; no choice.
- NT: Included in rego; no choice.
How to choose and switch without gaps
Start by deciding if the meaning of third party insurance (property-only liability) suits your situation, or if Fire & Theft or comprehensive is better value. Check liability limits, excesses, exclusions and whether your vehicle’s use (e.g., rideshare or business) is properly disclosed. When switching, line up the new policy to start before you cancel the old one. Remember CTP is separate and tied to registration in most states or chosen with rego in some.
- Compare smart: Weigh TPPD vs Fire & Theft vs comprehensive; note liability limit and any uninsured‑motorist benefit.
- Align dates: Set your new policy to start before the current one ends; keep written confirmation.
- Ask about refunds: Query any return premium and cancellation fees on your old policy.
- Get proof: Carry your new certificate of insurance before you drive.
Final thoughts
Third party covers other people’s property, CTP covers injuries, comprehensive protects your car as well. Choose based on your car’s value, risk tolerance and budget; add Fire & Theft for a middle ground. For tailored advice, price‑beat quotes and seamless switching, talk to National Cover’s specialists or start now at National Cover.
