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Motoring

Is car insurance compulsory in Australia?

Driver's view of sparse traffic on wet Melbourne road.
RACV

May 01, 2026

Find out the minimum car insurance you need to drive legally in Australia with this handy guide.

If you drive a vehicle in Australia, Compulsory Third Party (CTP) insurance is mandatory. It covers your legal liability if you cause injury or death to other road users, including drivers, passengers, pedestrians and bike riders.

CTP insurance is required by law. However, it does not cover damage to cars or property, or theft. That’s why many car owners choose additional car insurance – such as third party property damage or comprehensive cover – to better protect themselves and their vehicle.

Whether you drive a new car, a family SUV, or an electric vehicle, this guide explains how CTP works in Australia.

More: Why choose RACV Car Insurance?

    What is CTP insurance?

    Compulsory Third Party (CTP) insurance is the minimum level of car insurance required by law in Australia. It covers your legal liability if you cause injury or death to another road user, including drivers, passengers, pedestrians and bike riders.

    CTP is required for all vehicles nationwide, but how it’s provided and purchased differs by state and territory.

    What does CTP insurance cover?

    CTP insurance only covers your legal liability if another road user is injured or killed.

    CTP insurance does not cover damage to cars or property, including your own vehicle. It does not cover your car being stolen. That’s why many drivers choose additional car insurance, such as third party property damage or comprehensive cover, for broader protection. 

    How does CTP work in Victoria?

    In Victoria, CTP insurance is automatically included in your vehicle registration. When you register or renew your vehicle registration, part of the fee pays for the Transport Accident Charge, which funds Victoria’s CTP scheme. Cover is provided by the Transport Accident Commission (TAC). 

    CTP covers any licenced driver who is driving a registered car with the owner's permission. If a vehicle is unregistered, it is not covered by CTP.

    If you sell a registered (and roadworthy) car to someone else in Victoria, the CTP insurance transfers to the new owner. If you sell a vehicle to someone interstate, VicRoads outlines the procedure, which includes cancelling your registration.

    How does CTP work in New South Wales?

    In New South Wales, CTP insurance is known as a Green Slip. Unlike Victoria, it isn’t included in registration. Instead, you must buy a Green Slip from a licensed insurer before you can register or renew your vehicle.

    How does CTP work in other states and territories?

    While CTP insurance is compulsory across Australia, each state and territory runs its own scheme. This means there are differences in:

    • whether CTP is built into registration or purchased separately
    • how premiums are set
    • how claims are managed

    Regardless of where you live, you can’t legally drive a vehicle without it being registered and having CTP insurance in place.

    What insurance is legally required to drive a car?

    Many people think “car insurance” means comprehensive cover – but legally, that’s not the case.

    Mandatory

    • CTP insurance – required to legally drive a registered car in Australia. Covers injuries or death to other road users (drivers, passengers, pedestrians, and bike riders).

    Optional

    You arrange these optional types of car insurance yourself, though an insurance company such as RACV, which also offers Mozo award-winning Complete Care®.

    What happens if I drive without car insurance?

    Driving without CTP insurance is illegal in every state and territory. In Victoria, if your car is unregistered, then you don't have CTP insurance. It means:

    • If you cause a crash resulting in injuries or someone's death, you will be personally, financially liable for damages and compensation claims.
    • You could face fines, demerit points, licence suspension, or your vehicle being impounded.

    If you drive without any other type of car insurance, the consequences are financial, with repair, replacement or liability costs that can quickly add up.

    More: What is comprehensive car insurance

    Aerial view of busy traffic at night on Princes Highway and Warrigal Road in Melbourne.

    Damage to vehicles is a common risk not covered by Compulsory Third Party (CTP) insurance.

    FAQs

    CTP insurance isn’t the same as car insurance, and it serves a very specific purpose.

    CTP (Compulsory Third Party) insurance only covers your legal liability for injuries or death to other people if you’re involved in a collision. This can include drivers, passengers, pedestrians or bike riders. It doesn’t cover damage to vehicles or property – including your own car or someone else’s.

    When people talk about “car insurance”, they’re usually referring to policies like third party property damage or comprehensive insurance, which are designed to cover vehicle damage and other costs. CTP is about personal injury protection, not car damage or theft.

    In Victoria, CTP is automatically included in your vehicle registration, which is why many drivers don’t realise it’s a separate type of cover.

    Comprehensive car insurance isn’t required by law, but it can help provide important financial protection.

    Comprehensive insurance can help cover:

    • damage to your own car, even if you’re at fault
    • damage you cause to other people’s vehicles or property
    • theft, fire, vandalism and weather damage (depending on the policy).

    Without comprehensive cover, you may need to pay these costs yourself, which can be expensive — especially if you’re involved in a serious crash or your car is stolen.

    While not compulsory, many drivers choose comprehensive insurance to avoid financial risk and for peace of mind.

    CTP insurance is linked to the vehicle’s registration, not the individual driver. Anyone legally driving the car is covered.

    Award-winning comprehensive car insurance for Victorians

    Discover RACV Car Insurance

    The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.

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