• Tue. Nov 29th, 2022

Guide to Fire and Theft Liability Insurance – Forbes Advisor Australia

ByElla E. Kidwell

Oct 7, 2022

Whether you’re cruising around the neighborhood or parking your wheels for the night, auto insurance can provide you with financial peace of mind in the event of an accident and emergency. By paying an insurance premium, the insurer will step in to cover the costs of accidental damage you may cause to property or other people’s vehicles while on the road, as well as cover agreed for your own car.

In the case of fire and theft liability insurance, this guarantee for your own wheels includes damage linked to these major events: fire and theft. Each policy will vary based on specific circumstances and resulting payouts, so be sure to compare policies and read your Product Disclosure Statement (PDS) carefully for all the fine print.

If you’re not yet sure which type of car insurance is best for you and your wheels, read our guide to car insurance. It unravels all the different levels, features, exclusions and requirements of car insurance in Australia. Read everything you need to know about car insurance against fire and theft here.

What is third party fire and theft auto insurance?

Third party fire and theft auto insurance is actually a mid-level type of policy. Below that is basic third-party property damage insurance and above that is comprehensive car insurance.

As with these other tiers, this is an insurance product you can choose to purchase to protect yourself financially in case you run into a sticky situation down the road. The only type of compulsory insurance you need to legally drive in Australia is Compulsory Third Party Liability Insurance (CTP).

What does auto fire and theft insurance cover?

Fire and theft coverage includes all the protections of a basic liability insurance policy. This covers the cost of repairing other people’s vehicles or property if you are found liable for damage caused by a car accident. Typically, insurance companies set a maximum payout limit of $20 million to cover these costs in a single accident. Some providers may also include a small coverage for your own wheels (usually no more than $5,000) if an uninsured driver is responsible for the accident.

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

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

What is not covered?

Like all levels of car insurance, general wear and tear (like rust and worn tires) and electrical or mechanical breakdowns are not included in a fire and theft car insurance policy. Likewise, any damage that occurs while you engage in illegal activities (such as driving under the influence of drugs, over the legal alcohol limit, or breaking the rules of the road) will not be covered by your insurance.

Who Should Get Third Party Fire and Theft Insurance?

If you regularly park your car on the street, it may be a good idea to purchase 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 is secured in a garage or off-street parking lot.

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

Advantages and disadvantages of third party fire and theft

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


  • Covers the costs of damage you may cause to other people’s cars and property while driving so you don’t have to foot the bill.
  • Also covers your own wheels for damage caused by fire and theft (payment limits may differ).
  • You will usually have some control over how much you insure your car for if it needs repairs or replacement after a fire or theft.
  • Generally more affordable than comprehensive auto insurance.

The inconvenients:

  • Damage to your own car resulting from other traffic accidents is not covered.
  • The standard payment cap of $10,000 may not fully cover car repairs or replacement if your vehicle is more valuable.
  • Parking your car on the street generally increases your insurance premium compared to parking in a safe place.

How to Choose the Best Third-Party Fire and Theft Policy

It’s almost impossible to single out one auto insurance policy and call it “the best.” The factors that will make a fire and theft policy more attractive to you are inherently subjective: you may be looking for the most affordable premium, a policy that includes rental car coverage, or a policy with the highest possible payment limit. . The best policy for you is the most affordable option that meets your criteria.

Is fire and theft insurance worth it?

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

For others, it will 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 may consider going back to a basic third party policy. Although your own ride is not insured against damage, it means you are still financially protected if you need to cover repairs or replacement of other people’s cars and belongings.


How is fire and theft coverage different from comprehensive auto insurance?

Comprehensive car insurance covers damage both to your own car and to other people’s vehicles and property in a wide range of circumstances (but not in all situations). This usually includes cover for fire and theft, as well as things like road accidents or knocks from runaway shopping carts in supermarket car parks.

Third party fire and theft insurance does not include coverage for those additional circumstances where your car could be damaged. It exclusively covers the cost of repair or replacement necessitated by damage related to fire, theft or attempted theft, as well as damage you may cause to the property of others while driving.

Does third party fire and theft include coverage for damage to my car?

Can you buy third party fire and theft insurance for young drivers?

How much does third party fire and theft insurance cost?

What is the cheapest third-party fire and theft insurance?