Vehicle - Do I need car insurance?

You must take out compulsory third party (CTP) insurance before you are allowed to take your car on the road. If you borrow money and a lender takes security over the loan they will usually require you to pay for comprehensive insurance. This insurance covers damage to your own car and other people's property if your car is in an accident (including fire), as well as covering you if the car is stolen.

Insurance protection plans that are available

If you are arranging finance for your car you may also be offered other insurance products.

Loan protection insurance (or consumer credit insurance)

Loan protection insurance covers you if you can't work to repay your loan because of injury, sickness or involuntary unemployment. If you think you need life or disability cover you may be better off getting a policy that covers all your debts, or meets all your needs in providing for your dependents.

Gap cover (or shortfall insurance)

If your car is written off, your insurer will pay off your loan if there is a gap between what the car is worth and what you owe on the loan. Gap insurance can be expensive and you're less likely to need it if you have a small loan or pay a large deposit. You may be better off with a smaller loan, or spending your money on an agreed value comprehensive insurance policy (where you and your insurer agree on a fixed amount to insure your car if it is a total loss).

Extended warranty

Extended warranty covers the cost of unexpected mechanical repairs, parts and labour. See the voluntary and express warranties section of the Australian Competition & Consumer Commission website for more information.

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