Car insurance in Australia comes in layers, and the names are not obvious. Here is what each one actually covers.
CTP — the compulsory one
Compulsory Third Party insurance covers people who are injured in an accident. It does not cover any vehicle or property damage at all. It is compulsory to have it before a car can be registered. In New South Wales you buy it separately as a green slip; in most other states it is bundled into your registration payment.
Third party property damage
Covers damage you cause to other people's cars and property. It does not repair your own car. It is the cheapest optional cover and is often the sensible minimum for an older, low-value vehicle where the repair bill for someone else's new car would still be devastating.
Third party, fire and theft
The same as above, plus limited cover if your own car is stolen or burnt. A middle option.
Comprehensive
Covers damage to your own car as well as other people's, plus theft, fire, storm and usually windscreen and hire car options. It costs the most, and it is the standard choice for newer or financed cars — many lenders require it.
Agreed value vs market value
Agreed value means you and the insurer set the payout figure up front, and that is what you receive if the car is written off. Market value means the insurer decides what the car was worth at the time of the claim, which can be less than you expect. Agreed value costs a little more and removes an argument later.
Excess
The amount you pay towards a claim. A higher excess lowers your premium, but you must be able to actually pay it. Watch for extra excesses that apply to young or inexperienced drivers — these can be substantial and catch families out.
No claim discount
Built up over years without claims and worth a lot on your premium. Some insurers let you protect it for a fee.
Before you sign
Read the Product Disclosure Statement, check who is covered to drive the car, and get quotes on the specific model before you buy it — premiums vary far more between cars than people expect.