The Vehicle Insurance Gap: Why CTP / Green Slips Are Not Enough

July 16, 2018


Road safety


Jacqui Jubb

Why your CTP insurance won’t cover you for damage to other cars or property

Millions of Australians are driving without property damage insurance under the false belief that they'll be covered by CTP/Green Slip insurance if they damage someone else’s vehicle and they are not at fault.

Did you know that your Green Slip or compulsory third-party insurance (CTP) covers only covers injury compensation to other motorists and road users but provides zero protection for damage caused to vehicles or property?

If so, you’re not alone. A recent survey of 1500 motorists conducted by Smith’s Lawyers showed that only a third of drivers understand what CTP/green slip insurance covers you for and two thirds of survey participants believe their them for property and vehicle damage to other vehicles.

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Drivers aged 18 to 24 had the least amount of clarity on the issue with only 19.4% correctly understanding the level and scope of CTP insurance cover  and of all the states, NSW drivers came out on top as having the highest overall awareness that CTP only cover injury to other drivers (not property damage).

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The stats on uninsured drivers on Australian roads

According to car insurance data from the 2015-2016 General Insurance Code of Practice Report, around 4 million uninsured drivers are out and about on Australian roads and out of 18.5 million registered vehicles on the roads, only 14.5 million consumer vehicle insurance policies issued. Using our firm’s 2018 study as a benchmark, this could mean there are more than 2.4 million drivers unknowingly driving on Australia’s roads without the right level of cover.

What does CTP/Green Slip insurance cover me for?

“We receive hundreds of enquiries every year from drivers holding CTP only (greenslip) who are not at fault in an accident but have been surprised to find they can't claim for property damage. The problem is worse when both drivers lack property damage insurance as there is no insurer to step in and cover the costs”, says Greg Smith, Principal and Founder of Smith’s Lawyers.
They ask us: 'What if someone crashes into my car and I need to make an insurance claim? or 'What do I do if I hit another car – is my Green Slip enough to pay for the damage to their car as well as mine?'

Our typical answer is this: your Green Slip insurance (CTP) insures you against liability for any death or injury to other road users caused by your car, no matter who is driving but does not cover damage to property (including the other person’s car).

So how do uninsured drivers affect me if I already have cover?

If you’ve got comprehensive car insurance, you’ll likely be compensated for the cost of the full damage (up to a certain total loss) however if you have the cheaper third party property damage car insurance, your cover could be limited.

For example, you might only get $2000 of cover which might not help if you’re involved in an accident which means the other car is a complete ‘write-off’.

And even if the uninsured driver is at fault and liable for the damage, they may not have the money to pay for the damage to your car. If you’ve only got CTP, you’ll fall into the insurance ‘gap’ which could leave you pulling out your wallet to pay for damages or having to commence legal action to seek compensation and enforce payment.

The right level of insurance cover bridges this insurance gap - your insurer will pay you under your insurance claim and then pursue a legal claim (at their own expense) to recover monies from liable uninsured drivers.

What you can do now to bridge the insurance gap

  • Review your existing car insurance to check your level of cover: if you have third party property insurance, investigate the limit of the cover and whether it includes “uninsured motorists benefit”
  • If you think you’re underinsured, get a quote for comprehensive car insurance to make sure you’re not left out of pocket
  • Educate yourself on your insurance requirements and legal rights: ask your car about what happens when you’re involved in an accident-related claim, whether your policy covers legal expenses and how you can pursue monies from at fault drivers.

Steps to take when you’re involved in an accident with an uninsured driver

  • Immediately exchange details with the other driver, take notes of the accident details (time, date, weather conditions, etc) and take photos of the damage caused to both vehicles
  • If necessary, contact the police and lodge an insurance claim ASAP.

About Our Study

Smith's Lawyers Green Slip / CTP Understanding Survey and Distracted Driving Survey was conducted between April 26 and June 3 2018 with 1,500 respondents (drivers aged 18-64 across Australia). Conducted via Google Surveys.

Jacqui Jubb

Jacqui Jubb is a senior lawyer and writer for the Smith's Lawyers blog on legal interest and workers rights topics.