Compulsory third party insurance (CTP) is, as the term 'compulsory' implies, a legal requirement for all cars. In other words it is illegal to drive a vehicle which does not have CTP Insurance.
In most states and territories your insurance is covered when you pay for your registration fee for your motor vehicle. However, in New South Wales and Queensland, you will need to purchase your green slip separately.
If you cause a motor vehicle accident where someone is killed or injured, your standard car insurance (whether it be comprehensive or third party car insurance) will not provide cover for the medical or compensation bills for the person(s) injured. This cover is provided by CTP insurance.
What does CTP Insurance cover?
In the event that a claim is made for personal injury a CTP insurance (or a greenslip as it sometimes known) will indemnify the driver of the vehicle and the owner of a vehicle from any legal liability (subject to the terms of the policy selected). This means that if you are responsible for an accident which injures another driver, passengers, a cyclist, motorcyclist, or a pedestrian, you should be covered for any personal injury claims.
Your CTP insurance does not cover you for any claims made against property that may be damaged as a result of the accident. To cover yourself for this you will need to take out a third party or comprehensive car insurance policy.
Also CTP insurance does not provide the same level of car insurance cover for a driver at fault, unless the driver is what is termed as 'catastrophically injured'.
When purchasing your CTP insurance in NSW or Queensland you will be able to shop around for your insurance and buy a policy which can offer different types of cover. For example, some policies will provide compensation for at fault drivers, so if this is an important feature for you it will be important to compare insurance policies to find out whether this cover is offered. Where at fault driver cover is offered, insurers provide the driver with lump sum compensation for injuries specified in the policy and some may even provide a death benefit.
CTP or green slips have been made compulsory to protect innocent people from injuries sustained in a road accident. Severe injuries can be life-changing and the victims have to be compensated. Even more minor injuries cause pain, suffering and involve medical expenses.
These articles are provided as reference material to allow more informed decision making, but are not intended as being a complete source of information on any topic. All readers should make their own independent analysis on the topic to make sure they have considered the aspects that are important to them.