What is Compulsory Third Party (CTP) Insurance?
CTP insurance is a compulsory form of insurance that all registered motor vehicle owners are required to purchase, generally at the same time they renew their motor vehicle registration.
The operation of the scheme and the responsibilities and functions of the CTP Regulator are set out in the Road Transport (Third-Party Insurance) Act 2008 and the Road Transport (Third-Party Insurance) Regulation 2008.
Unlike other Australian States and Territories, premiums in the ACT are not differentiated on the basis of risk factors such as geographic location, age, driving record or claims history. In the ACT, the premium for a class 1 passenger vehicle is the same, regardless of those factors.
Premiums are set by the insurers. The insurers must submit those premiums to the CTP Regulator for approval. The CTP Regulator may reject premiums if they do not fully fund an insurer’s liabilities, if they are excessive or if they do not comply with guidelines issued by the CTP Regulator.
What does CTP insurance cover?
All drivers in the ACT pay CTP insurance as part of their vehicle registration fee. The insurance provides compensation for people injured or killed when your vehicle is involved in an accident.
This insurance coverage extends to all innocent road accident victims, including pedestrians, cyclists, motor bike riders, passengers and other drivers.
The ACT currently has a fair system of compensation. Injured people are eligible for compensation for their expenses and losses, including loss of income, medical expenses, domestic care and assistance and damages for pain and suffering.
Why do we need CTP insurance?
Unfortunately, motor vehicles accidents can happen to anyone. The recently released ACT Government report, the 2016 ACT Road Crash Report, outlines the number and severity of motor vehicle accidents in the ACT.
Importantly, the report notes that in 2016:
- there were over 7,900 on vehicle accidents recorded, involving 15,476 vehicles and resulting in 11 fatalities and 110 hospital admissions;
- the most frequent cause of vehicle accidents were rear end collisions. Approximately 45% of all motor vehicle accidents were the result of rear end collisions;
- there is an upward trend in the number of vulnerable road users (cyclists, pedestrians and motor-cyclists) injured on our roads; and
- collisions with animals (including wildlife) accounted for only four injury crashes.
This data highlights the importance of having an accessible and fair CTP scheme in the ACT. It is crucial that all road users are able to claim fair compensation under the ACT CTP insurance scheme when they have been injured in an at-fault motor vehicle accident.
Other forms of vehicle insurance
CTP insurance can be distinguished from other forms of optional motor vehicle insurance, including Personal Injury/ Accident Insurance, Third Party Property Insurance and Comprehensive Insurance.
Personal Injury/ Accident Insurance covers a road user for any personal injuries they have experienced as a result of driving negligently themselves or in circumstances where they cannot prove that another party drove negligently.
Third Party Property Insurance insures a negligent driver for the property damage (i.e. to another motor vehicle) that they have caused in an accident.
Comprehensive Insurance enables a registered motor vehicle owner to recover compensation for damage to their own vehicle and it also covers damage caused to other motor vehicles when they are at fault in an accident.