Compulsory Third Party Insurance
Australia has a compulsory insurance system called Compulsory Third Party (CTP) to cover third party injuries in a motor vehicle accident. It's a legal requirement for drivers in all states and covers all road users.
State variations
The scheme varies from state to state, making CTP premiums cheaper in some areas.
The ACT and NSW both run fault-based schemes and this means an injured party can claim for negligence, pushing costs up for drivers in these states.
However, in NSW, insurers are allowed to risk-rate premiums, so younger drivers will have to pay more, while ACT motorists all pay the same premium.
Victorian motorists have a no-fault system, so injured parties have very limited rights to sue for negligence compared to NSW and the ACT, keeping costs for drivers down.
On the other hand, both NSW and Victoria are divided into zones, so motorists living in Melbourne and Sydney will pay more than in country areas.
Buying CTP
Although buying CTP is a legal requirement throughout Australia, there are different ways of paying for it depending on where you live.
In NSW, CTP is also known as a greenslip and you buy one when renewing your registration, either every six months or every 12 months.
You have the choice of buying your greenslip through seven licensed insurers. Prices will vary between insurers and some insurers offer the extra feature of at-fault driver cover.
However, under new rules introduced recently by the NSW government, at-fault drivers have been included in the scheme, putting the necessity of this feature in doubt. If you have any concerns, contact your insurer.
In South Australia, Western Australia and Victoria, you pay for your CTP as part of your vehicle registration, giving you no choice of insurers.
In Queensland, there is a choice of insurer but price is controlled by the government.
In the ACT, only one insurer is available, but this is expected to change in the near future.