Why do I need CTP Insurance?

As of 31 January 2024, there were 21.74 million motorised road vehicles in Australia, according to a statistical report by the Australian Government. With more of us on the roads than ever before, it’s never been more important to make sure we have the right protection in place to help ourselves and others as we travel from A to B. 

Compulsory Third Party (CTP) insurance, also known as a Green Slip Insurance in some Australian States and Territories, is a mandatory insurance that helps protect drivers from being held financially responsible if they cause injury or death in a road incident.

While CTP insurance is compulsory Australia-wide, it does work differently depending on which state you call home. In some states (such as WA) there is only one set CTP provider, while in other states (including NSW, QLD, ACT and SA) you have a choice.

Australian states and territories have different rules around CTP regarding fault, liability, injury and compensation. The cost of your policy can vary depending on where you live, with some states basing policy pricing on your age, risk factors, driving experience and history. Requirements also differ for vehicle safety, with some states requiring a vehicle identity check before registration. So it’s wise to check with your state government roads authority to fully understand the requirements you will need to satisfy.

In NSW, you must purchase your CTP separately before you can renew your registration. 

• If you’re buying a car new from a dealership, they’ll usually organise CTP insurance at the same time as registration.
• If you buy a used car, any existing CTP policy will transfer over with the car. If there isn’t one, you’ll need to arrange a new policy yourself.

Here’s a scenario that can help explain why CTP is a mandatory requirement. Picture this: 

It’s a rainy day and you’re driving to work. You turn a corner, lose traction and accidentally collide with another car. The driver of that car — or a passenger — is injured and they need medical attention. They will probably also need a week off work while they recover.

How will the other person’s medical expenses be covered? Who pays for their potential loss of income? 

Hopefully, this situation never happens to you, but if it does, this is where CTP comes into action. 

CTP insurance is needed to ensure that anyone injured in a road accident can be compensated for their injuries, regardless of the means or income of the person who was at fault. It covers the:

• treatment and rehabilitation expenses, as reasonable and necessary
• commercial care for help in the home while the person recovers from the accident
• a percentage of their weekly pay (prior to the injury) if they need to take time off work to recover.