Guide to Third Party Fire and Theft Car Insurance

Third party fire and theft car insurance is effectively a middle-tier policy type. Below it is basic third party property damage insurance and above it is comprehensive car insurance.

As with these other tiers, this is an insurance product you can elect to take out to protect yourself financially in case you get into a sticky situation while on the road. The only type of mandatory insurance you need to legally drive in Australia is compulsory third party (CTP) insurance.

Fire and theft cover includes all the protections of a basic third party policy. This covers costs for repairs to other people’s vehicles or property if you’re deemed responsible for damages in a car accident. Generally, insurance companies set a maximum pay-out limit of $20 million to cover these costs in a single accident. Some providers may also include a small amount of cover for your own wheels (usually no more than $5,000) if an uninsured driver is at-fault in the accident.

Where fire and theft cover differs is right there in the name. This type of policy includes additional cover for your vehicle if it’s damaged by fire, theft or attempted theft. The coverage limit is often relatively low at around $10,000, with most providers allowing you to set your car’s value accordingly within this bracket.

Some policies will include allowances for extra cover beyond vehicle repairs or replacement. This could cover costs for towing to a repairer, a hire car for you to use while yours is at the mechanic (usually up to 21 days), and cover for specific personal property stolen from or damaged inside your car (usually up to $500).

Like all levels of car insurance, general wear-and-tear (like rust and worn-down tires) and electrical or mechanical faults aren’t included in a fire and theft car insurance policy. Similarly, any damages that happen while you’re undertaking illegal activities (like driving under the influence of drugs, above the legal alcohol limit or breaking road rules) won’t be covered by your insurance.

If you park your car on the street regularly, it could be wise to investigate third party fire and theft insurance – especially if you live or work in an area with a higher-than-average crime rate. Generally, thieves and vandals are less likely to damage or steal a vehicle if it’s secured in a garage or off-street parking.

If your ride is worth a pretty penny, fire and theft cover may not provide adequate protection, whether you’re looking to simply cover costs related to fire damage and theft or broader damages that could occur while driving. In this case, it would be worth considering a comprehensive policy.

It’s imperative to always consider your personal and financial circumstances before making a decision on insurance cover. Like any level of car cover, fire and theft insurance comes with its own set of pros and cons. These include:

Pros:

• Covers costs related to damages you may cause to other people’s cars and property while driving so you don’t have to foot the bill.
• Covers your own wheels as well for damages caused by fire and theft (pay-out limits may differ).
• You’ll usually have some control over how much you insure your car for if it requires repairs or replacement after a fire or theft.
• Generally more affordable than comprehensive car insurance.

Cons:

• Damages to your own car that are the result of other road accidents aren’t covered.
• The standard $10,000 pay-out cap may not fully cover repairs or car replacement if your vehicle is more valuable.
• Parking your car on the street usually increases your insurance premium compared to if you park in a secure spot.

It’s near impossible to point to any car insurance policy and call it ‘the best’. The factors that will make a fire and theft policy more appealing to you are inherently subjective—you may be looking for the most affordable premium, a policy that includes hire car cover or one with the highest possible pay-out limit. The best policy for you is the most affordable option that meets your criteria.

The age-old question of ‘is insurance worth it’ is also a personal one. Some people simply prefer the peace of mind insurance brings, so they don’t have to worry about budgeting for certain emergencies.

For others, it’ll be a mathematical question: does the cost of paying an annual premium for a fire and theft policy outweigh the value of the car? If the answer is ‘yes’, you might consider dropping back to a basic third party policy. While your own ride won’t be insured against damages, this means you’re still financially protected if you need to cover repairs or replacement for other people’s cars and property.