Motor Vehicle Insurance: Different Levels of Cover


Motor vehicle insurance has different levels of cover – the more cover taken, the higher the cost will be, and the more cover will be given.

Other than the Compulsory Third Party Insurance, there are options of choosing additional cover depending on your individual preferences.

Third Party Property Damage

Covers the cost of damage caused to the property owned by other people for which a driver is liable, that is, caused by the driver. It includes items such as other cars, buildings, fences, lamp posts and traffic signals.  Third Party Property Damage, Fire and Theft covers everything in the above level plus compensation for damage to the owner’s car caused by fire or theft.  It does not cover damage to the owner’s car caused in a road accident.

Uninsured Motorist Extension

This level of cover is normally automatically included in the two options above.  This additional benefit provides up to an amount (usually around $4000 ~ $5000) for drivers whose car is damaged by an uninsured driver.


Covers for loss or damage to the owner’s car, up to an agreed value or market value, as well as other property such as mentioned above under third party property.  It may also cover personal property in the car, death benefits, towing, legal costs and even hire cars needed while repairs are being done.

Legal aspects

As with many aspects of living, the law has an effect on everybody – insurance is no different. Several legal aspects are discussed below:

Duty of disclosure

An insurance company asks potential policyholders a number of questions so that it can decide whether to provide insurance and at what cost.  The policyholder has a legal obligation to disclose all relevant details that may affect the terms of insurance.  This includes any modifications made to a vehicle after the insurance policy is acquired, such as body modifications and sound systems.  ‘Hotted up’ cars can be insured, depending on a number of factors, but it is important to disclose all information relating to the modifications.  Obviously, this may affect the cost.  Some insurers will choose not to insure cars that have been modified, while others tend to specialise in this type of insurance.

Parents and children

Some parents insure the car of a young adult in their own name.  This leads to a lower cost, assuming the parent has a reasonably sound driving record.  This practice is, in fact, fraudulent as it misleads the insurance company on the level of actual risk and therefore the cost.


Under federal law (Privacy Act 1988), there are strict guidelines related to the type of information that private-sector organisations, such as insurance companies, can ask.  The laws govern the purpose for which information can be used and the way that information about policyholders is treated.


Like This