What’s the difference between Compulsory Third Party and Third Party Property Damage Insurance?

If you’re wondering what the difference is between Compulsory Third Party Insurance and Third Party Property Insurance, you’re not alone. It’s a really common question, and the reason why is simple; they both sound a lot alike! But the good news is that once you break it down, the differences are easy to understand. Let’s get into it. 

Always good to start at the beginning with a simple definition, so here they are:

CTP (also known as a Green Slip in NSW and MAI in the ACT,) helps cover your liability (and the liability of anyone else driving your vehicle) for injuries caused to others in a motor accident. In NSW, it covers the driver, too. CTP insurance is regulated at a state/territory level, meaning the requirements are slightly different across each state/territory in Australia.

TPPD is insurance that covers damage you cause to other people’s cars or property in an accident.

In Australia, everyone needs to have CTP insurance in order to register their vehicle. That’s where the word ‘compulsory’ comes in — you absolutely must have it. 

While it operates differently across the country’s states and territories, each CTP scheme is concerned with the indemnity, liability and compensation of how motor accidents resulting in injury and death are handled. 

Conversely, TPPD and any other motor insurance policies are optional for drivers. This means you’re not obligated to purchase a policy. Of course, accidents can happen, so you might like to consider it in case you ever damage another person’s car or property, or someone else damages your vehicle.

As you can imagine, the financial impact of causing injury to another person in a road accident can be huge. In some circumstances, an injury can result in many years of treatment, care and lost income – and this is a big burden to bear. This is why CTP is necessary for everyone driving a vehicle on a public road.

TPPD and other types of car insurance (like Comprehensive) are not required by law because they are concerned with property, rather than people. While TPPD isn’t compulsory, it’s worth thinking about, because needing to arrange and pay for another driver’s vehicle repairs (in addition to your own vehicle’s repairs) entirely out of your own pocket could be very costly. 

Working out whether you want to purchase additional motor insurance is an individual choice. Here are some things you may like to consider as you weigh up your options:

• Your budget and individual needs and circumstances, including how much you can afford, how often you drive, and where you drive.  

• If you’re uninsured and end up in an accident, would you be able to pay the reasonable cost of any damage to your vehicle, and any other person’s vehicle? 

• The age and current condition of your car. For example, if you have a very old vehicle that you only drive once a week to the supermarket, you may decide Third Party Property Damage cover might be sufficient. Or, if you have a vintage coupe that you only drive on special occasions (lucky you!), you might consider specialised Classic Car Insurance.