Compulsory third party (CTP) insurance or a ‘green slip’ is a mandatory insurance policy for every registered motor vehicle in Australia (though requirements and coverage vary across the states and territories).
In NSW, you must purchase CTP insurance separately from and prior to registration. This is because having a CTP policy in place is a requirement for registering the vehicle and using it on public roads. The length of a CTP policy can be 6 or 12 months but must align with length of the accompanying vehicle registration.
CTP provides cover for injury and death to parties in a motor vehicle accident. This includes drivers, passengers and any other road users, though at fault drivers are not covered for all injuries.
Accidents all over Australia, regardless of the state in which the vehicle is insured and registered, are covered by CTP insurance.
In NSW, special protection is granted to all children under 16 injured in accidents. If they are a NSW resident at the time of the accident they will receive cover regardless of fault.
NSW CTP has two components based on the loss suffered from an accident.
- People killed or not severely injured
These parties can be compensated for medical and rehabilitation costs, loss of earnings and pain and suffering. This compensation is only available to parties not at fault in the accident. Under the generic and mandatory CTP insurance at fault drivers would not receive compensation for this kind of loss.
At-fault drivers can be compensated in specified lump sums for non-severe injuries and death as a result of an accident they cause. This ‘at-fault driver cover’ is provided as an optional extra by some of the CTP insurers in NSW.
- People severely injured in accidents
These parties must meet eligibility criteria for injuries including traumatic brain injury, spinal cord injury, amputations, burns, and permanent blindness. Compensation for these injuries will be paid without regard to an at-fault party. This means the at-fault driver would be entitled to the same compensation as an injured third party. Compensation received will cover reasonable and necessary services related to the accident injury including medical treatment, rehabilitation, aids and equipment, home and vehicle modifications, attendant care services, and help to return to study or work.
What’s not covered?
CTP does not provide cover for damage to vehicles, property, fire or theft. Cover for these potential losses must be purchased through separate insurance policies.
Why is CTP insurance compulsory?
CTP is compulsory in Australia so that compensation for loss (injury or death) is not dependent on the wealth of the at-fault party. This is important as expenses related to serious and permanent injury and death are very high and have the potential to bankrupt at-fault drivers, leaving the injured person without recourse. Making CTP insurance mandatory provides protection for all road users.
Providers and pricing
There are 7 insurance companies that offer CTP insurance in NSW. The base product they offer is identical (the mandatory cover) though each offer extras (e.g. at-fault driver cover) at an additional cost. As the basic CTP product is a generic product, these extras are mainly designed as a marketing differentiator to justify differences in price.
The cost of CTP insurance varies between providers and based on the individual policy. Factors that affect the price of a policy can include vehicle use, make, model and year, how the vehicle is garaged, geographical location, policy length, driver age, claim history and driving record.
As each of insurer uses a different formula to calculate the premium you pay, it’s important to compare the companies to ensure you get the best price. This is especially true if you purchase the most basic CTP cover as the products will be identical regardless of provider.
Before purchasing CTP insurance, you should read the policy document that outlines the benefits, injuries, exclusions, and terms and conditions. These policy characteristics vary between providers and it’s important you fully understand the cover you will receive.