It is easy to confuse between compulsory third-party and basic third-party insurance. As much as most compulsory third-party risks are also covered in third-party insurance, here is a clear differentiation between the two.
For car owners in Australia, a ctp is a compulsory policy, and in most cases, it is taken during a car purchase. It covers people who have suffered injuries as a result of an accident apart from the vehicle owner. It does not include property damages or car replacement.
Unlike the CTP, also known as green slip, third-party insurance also covers property damages. It might not cater for car replacement and personal injury, but its scope is broader than that of its counterpart. It is not a compulsory policy, though recommended, especially if the vehicle is old and only needs a minimum risk cover.
The common aspect of these two policies is that with either, you will not need to pay for medical bills incurred by pedestrians or passengers involved in the accident. The significant advantage of having a compulsory cover is that you will be in good terms with the law. On the other hand, a third-party policy cover has more advantages though it is not compulsory.
Some people opt to take both policies since one is mandatory in whichever case. The third-party policy then acts as a build-up of the other. In any case, at some point, you will need both types of insurance if not the comprehensive plan as a CTP is quite limited.
Without either of these policies, an accident may not only destroy your assets, but it will also drain your finances as you try to pay for damages directly from your personal accounts. Some third-policies offer add-ons such as personal injury cover to cater for the car owner. You should note all inclusions in a third-party policy before signing the policy document.
