Third party car insurance: property damage cover explained
Third party car insurance usually means third party property damage: optional cover for damage you cause to other people's cars and property, not to your own car. It is not CTP, the compulsory injury cover that comes with your registration (a separate Green Slip in NSW).
It is the most basic level of optional car insurance, and it covers the risk that can cost a driver the most: paying for someone else's car. This page explains what it covers and leaves out, how it compares with the other levels, the limited cover for your own car when an uninsured driver hits you, and how excesses and claims work.
By Better Rate Mate Editorial Team ยท Last reviewed
What third party car insurance covers
Moneysmart describes third party property damage as cover for damage your car causes to other people's cars or property. It does not cover damage to your own car. Some policies let you pay extra to cover your car if it is stolen or damaged by fire, which is third party, fire and theft.
The table shows where it sits among the four kinds of car insurance.
| What happens | CTP (compulsory) | Third party property damage | Third party, fire and theft | Comprehensive |
|---|---|---|---|---|
| You injure or kill someone | Covered | Not covered | Not covered | Not covered |
| You damage someone else's car or property | Not covered | Covered | Covered | Covered |
| Your car is stolen or damaged by fire | Not covered | Not covered, though some policies sell it as an extra | Covered | Covered |
| Your car is damaged in a crash you cause | Not covered | Not covered | Not covered | Covered |
| Storm, hail or flood damages your car | Not covered | Not covered | Not covered | Covered |
Third party car insurance vs CTP
CTP and third party property damage cover opposite risks. CTP covers injuries to people caused by your car, and you must have it to register the car. Third party property damage covers damage to other people's cars and property, and it is optional. Neither covers what the other does.
Queensland's regulator, MAIC, says CTP does not cover damage or repairs to property, including vehicles, and points to comprehensive or third party property damage insurance for those costs. In NSW, CTP is the Green Slip you buy before registering; in every other state it comes with your registration. See how CTP works in every state, or for both kinds of cover in one state, car insurance in NSW.
Is third party car insurance worth it?
For a driver who is not buying comprehensive, usually yes, because the damage you can cause to someone else's car has no natural ceiling. Moneysmart's own example is a driver with only CTP who hits a brand-new sports car that needs $20,000 of repairs, and has to take out a personal loan and work extra hours for five years to pay it off.
The flip side is your own car. Moneysmart's second example is a driver who drops from comprehensive to third party property damage to save money, then hits another car on the way to work. Her policy does not cover her own car, she cannot afford the repairs, and she loses her job because she cannot get to work. Third party property damage suits a car you could afford to repair or replace yourself.
The uninsured driver extension
Many third party property damage policies include a limited benefit for your own car when an uninsured driver hits it. In the three current policies below the limit is $5,000, the other driver has to be entirely at fault, and you need their name, address and registration number. None of the three charges an excess for these claims.
It is a real benefit, but it is not comprehensive cover by another name. It pays nothing if the crash was your fault or the other driver cannot be identified. If the other driver does have insurance, the extension does not apply: you seek the cost from them or their insurer instead.
| Insurer | Most it pays | Main conditions | Excess | Document |
|---|---|---|---|---|
| AAMI | Reasonable repair costs, up to $5,000 for any one incident | The other driver was entirely at fault; you give their name and address and the vehicle's registration | None | Third Party Property Damage PDS, prepared 18 September 2020 |
| Budget Direct | Up to the car's market value, to a maximum of $5,000 | A no-fault accident with an uninsured vehicle; the other driver's name, address and registration | None for a no-fault accident | Car Insurance PDS Part A, prepared 21 September 2023 |
| NRMA Insurance | Up to the car's market value, to a maximum of $5,000 | The other driver was solely at fault and uninsured for the damage; their name, address and registration | None | Car Insurance PDS, prepared 10 September 2023 |
What sets the price
There is no standard price for third party car insurance, because each insurer prices your own risk. Moneysmart says the premium takes into account the type and value of the car, who drives it, how often and how far, where you live and where the car is kept, plus the type of cover and the excess you choose. Moneysmart also reports that motor insurance premiums rose 8% in the twelve months to July 2025, so check each renewal against fresh quotes on the same terms.
Excesses and who can drive
Most claims carry an excess. Moneysmart says you generally pay it whether or not you are at fault, although some policies waive it in limited circumstances; RACQ, for example, says you may not have to pay it if another driver is entirely responsible and you give the insurer their details.
Extra excesses can apply on top for young, inexperienced or unlisted drivers, even on third party cover. AAMI's guide for third party policies from 30 June 2025, for example, adds a $400 age excess for a listed driver under 25, or $1,400 if that driver is not listed. Our guide explains how car insurance excesses stack.
Whether someone who is not named on the policy can drive your car depends on the insurer. NRMA covers anyone driving with your permission, with an undisclosed driver excess if they are not listed. Budget Direct does not cover a household member who is not listed on the insurance certificate. Check before you lend the car.
Claiming when you hit someone, or they hit you
Stop, check whether anyone is hurt (call 000 if they are) and swap details with the other driver: names, addresses and phone numbers, licence and registration numbers, insurers, and each car's make, model and colour. Moneysmart also suggests photos of the scene.
If you caused the crash, your policy pays for the other person's car or property, less your excess. Moneysmart's claiming guide is blunt about the limit: with third party property damage you can only claim for damage to other cars. If the other driver caused it, you can seek the cost of your repairs from them or their insurer, and if they have no insurance, the uninsured driver extension may help.
After you lodge a claim, Moneysmart says the insurer must contact you within 10 business days, and a rejection must be in writing. If you disagree with a decision, complain to the insurer first and then to the Australian Financial Complaints Authority (AFCA), which is free.
When this is the right level
It suits an older car you could afford to replace or do without, a second car that is rarely driven, or a period when cash flow matters more than certainty. The test is simple: if the car were written off tomorrow and you got nothing, could you cope? If yes, this level covers the risk that matters most. If not, look at comprehensive car insurance.
What to watch for
- Your own car is not covered for accident, fire, theft or weather damage.
- The uninsured driver extension needs the other driver identified and entirely at fault, and it is capped, at $5,000 in the policies above.
- This is separate from CTP. CTP covers injury to people and comes with registration; this covers damage to property and is optional.
- Check the excess, including any extra excess for young, inexperienced or unlisted drivers.
Common questions
Does third party car insurance cover my own car?
No. Third party property damage only pays for damage you cause to other people's cars and property. The exception is the uninsured driver extension many policies include: a capped amount, $5,000 in the AAMI, Budget Direct and NRMA policies, when an identified uninsured driver was entirely at fault.
What's the difference between CTP and third party car insurance?
CTP is compulsory and covers injuries to people caused by your car. Third party property damage is optional and covers damage your car causes to other people's cars and property. Holding one does not give you the other.
Is it worth getting third party car insurance?
For most drivers who are not buying comprehensive, yes. Moneysmart's example is a driver with only CTP who hits a brand-new sports car and faces a $20,000 repair bill, which he repays with a personal loan over five years. Third party property damage covers exactly that risk.
How much does third party car insurance cost in Australia?
There is no standard price. Insurers price on the car's type and value, who drives it and how far, where it is kept, and the excess you choose, so quotes for identical cover can differ a lot. Prices have been rising across the market: Moneysmart reports motor insurance premiums rose 8% in the twelve months to July 2025. Compare several quotes on the same terms.
When is the best time to shop for third party car insurance?
Before your renewal date, once the renewal notice arrives, so you can compare the new price with fresh quotes and switch without a gap in cover. Moneysmart cites ASIC-commissioned research that found 74% of people who received a renewal notice were quoted a higher premium than the year before. Compare again when you buy a car, move house or add a driver.
Can someone who is not on my policy drive my car?
It depends on the policy. Some, such as NRMA's, cover anyone driving with your permission but charge an extra excess if they are not listed. Others, such as Budget Direct's, do not cover household members who are not listed. Check your policy before you lend the car.
What is the uninsured motorist extension?
A limited benefit for damage to your own car when an identified uninsured driver was entirely at fault. AAMI, Budget Direct and NRMA all cap it at $5,000 in their current PDSs, with no excess, and you need the other driver's name, address and registration.
