Do you need to have car insurance in Australia?

New research from Finder [↗] highlights a concerning trend on Australian roads: a rise in the number of uninsured vehicles, driven by the decision of Australians cancelling or lowering their car insurance policies amid cost of living pressures.

The survey, which gathered responses from 961 drivers, found that 16% of drivers have either cancelled (5%) or downgraded (11%) their car insurance in the past year to cut costs.

With car insurance premiums having risen by an average of 10.6% over the past year and by a whopping 19.8% since the beginning of 2021 — outpacing overall inflation — many Australians find themselves in a financially difficult position.

But before you ignore your car insurance renewal email, we check if it's actually illegal to drive a car that is uninsured?

Is it illegal to drive a car without insurance?

Driving without compulsory third-party (CTP) insurance is, without exception, illegal in Australia.

This insurance covers liability for injuries caused to others in an accident you are involved in. It does not cover damage to property or other vehicles, nor does it cover your own injuries to the extent outside third-party claims.

Penalties for driving without CTP insurance can be severe, ranging from hefty fines to demerit points, and in extreme cases, imprisonment.

6

How can I get CTP insurance?

In most Australian states and territories, CTP insurance is included as part of the vehicle registration process. When you register your vehicle or renew your registration, you pay for CTP insurance.

In some states, the CTP insurance is bundled with the registration fee, while in others, you may choose your CTP insurer but must provide proof of the policy when registering your vehicle.

6

New South Wales

Known locally as a Green Slip in NSW, CTP can be purchased from multiple private insurers. Vehicle owners can compare and purchase Green Slips online, over the phone, or in some cases, in person. After purchasing, the insurer will electronically notify NSW Roads and Maritime Services, allowing the vehicle owner to proceed with registration or renewal.

Queensland

Queensland residents select their CTP insurer as part of the vehicle registration process, with several private insurers offering CTP insurance. The cost of the policy is included in the vehicle registration fee. Once selected, the insurer is automatically notified, and the insurance cover is linked to the vehicle's registration.

6

car insurance documents

South Australia

In South Australia, since July 2019, vehicle owners have the option to choose their CTP insurer when paying their vehicle registration through Service SA. The chosen CTP insurance is then integrated with the vehicle's registration.

Victoria

The process is simplified in Victoria by including CTP insurance, referred to as the Transport Accident Charge, with the vehicle registration fee. The insurance is provided by the Transport Accident Commission (TAC) and requires no separate action from the vehicle owner to obtain coverage (yay!).

Tasmania

Tasmania provides CTP insurance through the Motor Accidents Insurance Board (MAIB) as part of the vehicle registration process. Vehicle owners do not need to purchase a separate policy; it is automatically included with the registration or renewal fee.

Western Australia

Western Australia includes CTP insurance in the vehicle licence registration fee, provided by the Insurance Commission of Western Australia (ICWA). When registering or renewing a vehicle license through the Department of Transport, CTP coverage is automatically included.

6

Australian Capital Territory

In the ACT, vehicle owners have the choice of CTP insurer as part of the vehicle registration process with Access Canberra. This selection can be made online or in person, and the chosen insurer will notify Access Canberra electronically, linking the CTP insurance to the vehicle's registration.

Interestingly, vehicles owned by the Commonwealth of Australia or the Australian Capital Territory are exempt from the requirement to have insurance. However, the respective governments must handle and settle claims under their own systems, similarly to how an insurance company would.

Northern Territory

Finally, in the Northern Territory, CTP insurance is part of the vehicle registration fee and is provided by the Territory Insurance Office (TIO). This coverage is automatically included when registering or renewing a vehicle through the Motor Vehicle Registry (MVR), requiring no additional steps for the vehicle owner.

Other types of Insurance

Although CTP insurance is a legal requirement across Australia, drivers to have the choice when it comes to additional levels of cover for themselves or others in the case of an accident. When finances get tough, it's these covers being questioned by some.

Comprehensive Car Insurance

Comprehensive car insurance offers the broadest coverage. It commonly protects against theft, fire, vandalism, and weather-related damage to your car.

Additionally, it covers damage to other people's property and the costs associated with accidents, including your own vehicle's damage. This type of insurance is considered the highest level of cover available.

6

Third-Party Fire and Theft Insurance

This insurance provides a middle ground between comprehensive and third-party property damage cover. It includes coverage for damage your car causes to other people's property, and for your car if it’s damaged by fire or stolen.

However, it does not cover damage to your own car in the event of an accident.

Third-Party Property Insurance

This is the most basic level of voluntary car insurance, covering the costs if you damage someone else’s property, including their car, but not your own vehicle. This insurance can be crucial for covering potentially high costs of damage to other vehicles or property if you're at fault in an accident​.