No, comprehensive car insurance is not mandatory in Australia. The only car insurance that is legally mandatory is Compulsory Third Party insurance, known as CTP, Green Slip in New South Wales, or Motor Accident Injuries insurance in other states. CTP covers your liability for personal injury or death you cause to other people in a car accident, including pedestrians, cyclists and other drivers. You cannot register your car without CTP, and driving without it can result in fines of $1,300 to $2,800 and your car being impounded, plus personal liability for millions in injury costs. Comprehensive car insurance, which covers damage to your own car as well as damage you cause to other people's cars and property, is optional under law. However, while not legally mandatory, comprehensive is effectively mandatory if you have a car loan, because almost all car finance agreements from banks like Commonwealth, ANZ, Toyota Finance and others require you to maintain comprehensive insurance for the life of the loan, otherwise you are in breach of contract. Also, if you drive an expensive car, comprehensive is financially mandatory in practice, because without it you could be liable for huge costs. Despite being optional, about 75% to 80% of Australian drivers choose comprehensive cover because the cost of not having it is so high. The cheapest legal alternative is to have only CTP, but then you risk paying for all property damage yourself, which is why most advisers recommend at least Third Party Property Damage cover at $300 to $600 per year.
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