Third party property damage car insurance is the cheapest type of optional car insurance in Australia, and for the right driver it is all the cover they need. It pays for the damage you cause to other people's cars and property, but it does not pay to fix your own car.
This guide explains exactly what third party property car insurance covers, what it leaves out, how it compares with third party fire and theft, CTP and comprehensive cover, and who it actually suits. We use plain examples of real-world claims to show where the gaps are, and we do not recommend or name any insurer.
Quick note on terms: you will see this cover called third party property damage, third party property, 3rd party property car insurance or TPPD. They all mean the same basic product. Always read the Product Disclosure Statement (PDS) for the policy you are quoting, because the fine print differs between insurers.
The short answer
Third party property damage (TPPD) pays for damage your car causes to other people's cars, fences, buildings and property. It does not pay to repair or replace your car.
CTP (compulsory third party) is the cover you need to register a car. It covers injuries to people, not damage to cars or property.
Third party fire and theft is TPPD plus cover for your car if it is stolen or damaged by fire.
Comprehensive covers your car and other people's property, even if you caused the crash, plus theft, fire and weather events such as hail and flood.
If your car would be cheap to replace and you could afford to lose it, TPPD protects you from the expensive part of a crash: someone else's repair bill. If you could not afford to replace your own car, look at comprehensive.
What third party property damage insurance covers
At its core, a third party property policy covers your legal liability for damage that your car causes to someone else's property. In practice that usually means:
Other vehicles you damage in an at-fault crash, from a scraped bumper to a written off late-model SUV.
Fixed property such as fences, walls, garage doors, power poles, shopfronts and street furniture.
Legal costs connected with a covered claim against you, depending on the policy.
The federal government's Moneysmart service describes it simply: third party property damage "does not cover damage to your car but covers damage to other people's cars or property caused by your car".
Many policies also include a limited uninsured motorist benefit. If someone else causes a crash and they are not insured, this can pay to repair your car up to a set cap, provided you can identify the at-fault driver and their car. The cap and conditions vary widely, so check the PDS before you rely on it.
What it does not cover
This is where third party property cover catches people out. A standard TPPD policy generally does not pay for:
Damage to your own car in a crash you cause.
Your car being stolen or damaged by fire (unless you add fire and theft cover).
Hail, storm, flood or falling trees damaging your car.
Injuries to people. That is what CTP is for.
Vandalism to your car, or personal items stolen from inside it.
Claims where policy conditions are broken, such as an unlicensed, drink or drug affected driver, an unregistered car, or a driver the policy excludes.
You will usually still pay an excess when you make a claim. Many policies add extra age or inexperienced driver excesses for drivers under 25, which matters for P-platers.
TPPD vs third party fire and theft vs CTP vs comprehensive
What is covered | CTP | Third party property damage | Third party fire and theft | Comprehensive |
|---|---|---|---|---|
Injury to other people | Yes | No | No | No |
Damage you cause to other cars and property | No | Yes | Yes | Yes |
Your car if you cause a crash | No | No | No | Yes |
Your car if stolen | No | No | Yes | Yes |
Your car if damaged by fire | No | No | Yes | Yes |
Your car in hail, storm or flood | No | No | No | Yes |
Your car if an uninsured driver hits you | No | Limited, if included | Limited, if included | Yes |
Compulsory to register a car | Yes | No | No | No |
Relative cost | Included with or bought for rego | Lowest optional cover | Low to mid | Highest |
Coverage shown is typical. Inclusions, limits and exclusions vary by policy, so read the PDS before you buy.
For a state by state breakdown of how CTP works, see our guide to CTP vs third party vs comprehensive. If you are deciding between the two main optional covers, our third party versus comprehensive guide goes deeper on agreed value, market value and renewals.
How CTP fits in
CTP is not optional, and it is not the same as third party property cover. It pays for injuries caused by your car, and you need it to register a vehicle. How you get it depends on where you live.
State or territory | How CTP is arranged |
|---|---|
New South Wales | Bought separately as a green slip from a licensed CTP insurer before you register |
Victoria | Included in your registration through the state scheme |
Queensland | Paid with your registration, where you choose a licensed CTP insurer |
South Australia | Paid with your registration, where you choose a CTP insurer |
Western Australia | Included in your registration through the state scheme |
Tasmania | Included in your registration through the state scheme |
Australian Capital Territory | Paid with your registration, where you choose a licensed CTP insurer |
Northern Territory | Included in your registration through the territory scheme |
Check your state or territory transport authority for current rules and fees. South Australian drivers can read our SA car insurance guide for local registration and CTP figures.
Real-life claim examples
The scenarios below are illustrative examples of how third party property cover works in common situations. Dollar figures are typical ranges for illustration, not quotes.
Example 1: rear-ending a new SUV at the lights
A driver in a 15-year-old hatchback misjudges a stop and runs into the back of a near new SUV. The SUV needs a new bumper, tailgate, parking sensors and a camera, and the repair bill reaches about $12,000.
With TPPD: the policy pays the SUV owner's repair bill, less the driver's excess. The driver pays to repair their own hatchback, or writes it off.
With no insurance beyond CTP: the driver owes the full $12,000. Moneysmart gives a similar example of an uninsured driver who hit a new sports car, owed $20,000 in repairs and had to take out a personal loan to pay it.
Example 2: backing into a fence and garage door
Reversing out of a friend's driveway, a P-plater clips a brick fence and dents a roller garage door. The property owner gets a repair quote of about $4,500.
With TPPD: this is covered as damage to someone else's property. The P-plater pays the excess, plus any young or inexperienced driver excess listed in the policy.
Example 3: hit by an uninsured driver
A driver is waiting at a give way sign when another car hits them side on. The other driver is at fault but has only CTP.
With TPPD only: there is no automatic cover for your own car. If the policy includes an uninsured motorist benefit and you have the other driver's name, address and registration, it may pay for repairs up to the policy cap. Without that, you would need to recover the cost from the other driver yourself. Moneysmart also warns that a driver who switched from comprehensive to TPPD to save money ended up paying their own repair bill after a crash with a driver who held only CTP.
Example 4: the car is stolen
An older ute is stolen from the street overnight and never recovered.
With TPPD: no payout. With third party fire and theft: the policy pays the insured value, usually market value, less any excess. With comprehensive: the same, plus cover for any damage if the car is recovered.
Example 5: a hail storm
A storm dents the bonnet, roof and boot of a 12-year-old sedan worth about $6,000. The repair quote is close to the car's value.
With TPPD or third party fire and theft: no cover for hail. With comprehensive: the insurer may repair the car or pay out its value as a write off, less the excess.
Who third party property car insurance suits
Budget drivers
If your priority is a low premium and your car is not worth much, TPPD covers the biggest financial risk of driving: damaging someone else's expensive car. Moneysmart suggests asking yourself whether you could afford to be without your car, whether you could pay to repair or replace it, and whether you could pay for damage you cause to someone else.
For context on rising premiums and what drivers can do about them, see our report on car insurance premiums climbing more than 40 per cent since 2019 and our guide to how much car insurance costs by state.
Owners of older cars
When a car's market value is low, comprehensive cover can cost a large share of what the insurer would ever pay out. A rough rule many owners use: if one year of comprehensive cover plus the excess approaches a big chunk of the car's value, third party property or third party fire and theft may be better value. Remember that comprehensive pays market value or agreed value, not what you paid, and agreed values usually fall every year.
P-platers and young drivers
Young drivers often pay the highest premiums and the highest excesses, and many drive older, cheaper first cars. TPPD can keep insurance affordable while still protecting against the cost of hitting someone else's car. If the first car was bought new or with a loan, comprehensive is usually the safer choice. Our best first cars for P-platers guide covers the cars worth looking at.
Who should not rely on TPPD alone
Anyone with car finance. Lenders often require comprehensive cover, and you would still owe the loan if the car were written off.
Owners of new or valuable cars. Losing the car in a crash, theft or storm would be a major financial hit.
People who park on the street in high theft areas, who should at least consider third party fire and theft.
Drivers in hail and flood prone areas, where weather damage is a real risk.
Anyone who could not afford to replace their car and still needs it to get to work.
If you are weighing up a new or used car partly on running costs, our breakdown of whether it is cheaper to buy a new or used car includes insurance in the total cost.
How to choose a third party property policy
Check the liability limit. It should be high enough to cover serious damage to expensive cars or property.
Look for an uninsured motorist benefit and note the cap and conditions.
Compare excesses, including age, inexperienced driver and unlisted driver excesses.
Ask about fire and theft as an add-on if your car is parked on the street.
Check who is covered to drive, especially if a young driver uses the car.
Read the exclusions in the PDS, such as unlicensed, drink or drug affected driving and unregistered vehicles.
Compare at every renewal. Moneysmart recommends checking your renewal notice carefully and comparing insurers each year.
If you need to make a claim, swap names, addresses, licence and registration details and insurer details with the other driver, take photos, and call 000 if anyone is hurt. If you are unhappy with how a claim is handled, you can complain to the insurer and then to the Australian Financial Complaints Authority (AFCA).