Is car insurance compulsory in Australia?

There is one type of car insurance required by law in Australia: compulsory third party (CTP) insurance.

Virtually all vehicles in Australia must have CTP insurance before they can be registered and legally driven on the road.

What’s the purpose of CTP insurance?

CTP insurance, a form of personal injury cover, insures you against injury or death in a motor-vehicle accident that was partially or completely someone else’s fault.

You (or your next of kin) can apply for compensation from the at-fault driver’s CTP insurer.

For example, you may be entitled to medical and rehabilitation expenses, income-support payments, and funeral costs.

Any injured road user can make a claim, including drivers, motorcyclists, passengers, cyclists and pedestrians.

In some states and territories – such as New South Wales, the only state in which Budget Direct provides CTP insurance – at-fault drivers may also be eligible for compensation for their injuries or death.

Limits and exclusions apply: For example, if the driver was doing something illegal when they caused the accident – such as driving an unregistered car or driving under the influence of alcohol or drugs –they may not qualify for compensation.

Read more about NSW motor accident injury claims

What if I don't have CTP insurance?

Your CTP cover expires at the same time as your car’s registration.

If you forget to renew your registration and your unregistered (and uninsured) car is involved in an accident, you could be held personally liable for any deaths or injuries to other road users.

In other words, you could be sued for potentially hundreds of thousands of dollars in damages, including the victims’ medical and rehabilitation costs, economic losses, pain and suffering, etc.

You could also be heavily fined for driving an unregistered car.

Who is the ‘third party’?

Compulsory third party (CTP) insurance involves three parties:

  • First party: the driver of the vehicle ‘at fault’
  • Second party: the CTP insurer of the vehicle at fault
  • Third party: the person injured or killed in the accident.

Who regulates / administers CTP insurance in my state / territory?

The following bodies regulate or administer their respective state or territory’s compulsory third party (CTP) insurance scheme:

State/territory Regulator/administrator
Australian Capital Territory ACT Treasury Department
New South Wales State Insurance Regulatory Authority
Northern Territory Territory Insurance Office
Queensland Motor Accident Insurance Commission
South Australia Compulsory Third Party Regulator
Tasmania Motor Accidents Insurance Board
Victoria Transport Accident Commission
Western Australia Insurance Commission of Western Australia

What is a 'green slip'?

A ‘green slip’ is what a CTP insurance policy is often called in New South Wales (they’re also referred to as ‘greenslips’ or ‘CTP green slips’).

You must buy a green slip before you can register a vehicle in NSW (excluding vehicles like trailers, caravans and trail bikes).

It protects NSW motorists from compensation claims if they (or the driver of their car) are partially or wholly responsible for accidentally injuring or killing other road users in a crash anywhere in Australia.

At-fault drivers (or their next of kin) may also be eligible for compensation for their injuries or death.

Limits and exclusions apply: For example, if the driver was doing something illegal when they caused the accident – such as driving an unregistered car or driving under the influence of alcohol or drugs –they may not qualify for compensation.

Owners of light-vehicles (GVM of 4.5 tonnes or less) can buy either a six- or 12-month green slip.

Read more about what CTP insurance covers

What’s the difference between a ‘green slip’ and a ‘pink slip’?

A ‘green slip’ is a New South Wales CTP insurance policy whereas a NSW ‘pink slip’ is the previous name of what is now called an e-Safety inspection report.

Generally, light vehicles more than five years old have to undergo an annual safety inspection.

You need a green slip and – if ‘Inspection required’ is printed on your registration renewal notice – an e-Safety check in order to register your car in New South Wales.

How do the CTP green slip reforms, which started on 1 December 2017, affect me?

For information on the NSW Government's reforms to the state's CTP green slip scheme, please visit the State Insurance Regulatory Authority’s ‘CTP Green Slip reforms’ web page.

I bought my CTP green slip before 1 December 2017 – can I get a refund?

Who is the State Insurance Regulatory Authority (SIRA)?

The State Insurance Regulatory Authority (SIRA) is responsible for regulating, among other things, motor accident compulsory third party (CTP) insurance in New South Wales.

SIRA makes sure CTP insurers comply with legislation and guidelines, and monitors insurers’ performance, including complaints and disputes.

The authority publishes Motor Accident Guidelines to support the aims of the Motor Accident Injuries Act 2017 and Motor Accident Injuries Regulation 2017.

Get a car insurance quote online