If you own a motor vehicle, you are required to buy compulsory third-party (CTP) insurance every year as part of the vehicle registration process.
CTP insurance covers other people (including drivers, passengers, pedestrians, cyclists, motorcyclists and pillion passengers) injured in a motor vehicle accident found to be your fault or the fault of someone else driving your car.
All personal and fatal injury claims resulting from motor vehicle crashes that involve an ACT registered vehicle are handled by third-party insurers licensed to provide CTP insurance in the ACT. Since 1 July 2013, there are four licensed CTP insurers in the ACT, comprising:
- GIO; and
Motorists can choose from one of the insurers when registering their vehicle. The Commonwealth and ACT Governments self-insure their vehicles. CTP processes and procedures will apply in the event of a motor accident involving a government vehicle.
Vehicles owned by the Commonwealth of Australia or the Australian Capital Territory are not required to be insured, but the governments involved must meet claims under their own arrangements in the same way as an insurer would.
As the CTP insurer is named on the vehicle registration certificate, a separate CTP certificate does not need to be issued. A CTP policy document is not issued as the insurance is provided under legislation.
Without CTP insurance, if you are found to be at fault in a motor vehicle accident and other people were injured, you are personally responsible for the compensation costs arising from those injuries. These costs could amount to many thousands, and sometimes hundreds of thousands, of dollars. This is why CTP insurance is compulsory in every state and territory in Australia.
The legislation for the CTP Scheme is mainly contained in the Road Transport (Third-Party Insurance) Act 2008 and the Road Transport (Third-Party Insurance) Regulation 2008, and is administered by the Chief Minister, Treasury and Economic Development Directorate. CTP claims are also subject to the Civil Law (Wrongs) Act 2002 and the Limitation Act 1985, which are administered by the Justice and Community Safety Directorate. The interpretation of legislation is a matter for the courts.
For claims arising from accidents before 1 October 2008, the relevant legislation was the Road Transport (General) Act 1999 and the Road Transport (Third-Party Insurance) Regulations 2000.
Your vehicle is covered by CTP insurance while it is registered.
Third party means that there are three parties involved in a motor accident claim for personal injury.
- First party - this is the owner/driver 'at fault' vehicle .
- Second party - this is the CTP insurer of the 'at fault' vehicle at fault'.
- Third party - this is the injured person.
The ACT has an at-fault system, which means you need to prove another person is at fault in order to receive compensation. If nobody involved in a crash admits they are at fault, the injured person will need to bring a court proceeding against the other driver to rule that they are at fault.
Comprehensive or third-party property motor vehicle insurance only covers damage to vehicles or other property in the event of a motor accident. It does not cover you against personal injury caused to another person in a motor accident.
Without CTP insurance, if you were found to be at fault in a car accident and other people were injured, you would be personally responsible for the compensation costs arising from those injuries, which could amount to many thousands, sometimes hundreds of thousands of dollars. If you could not pay, the injured people could be left without a way to recover their loss and manage their injuries. This is why CTP insurance is compulsory in every state and territory in Australia.
CTP insurance is compulsory and must be paid with your motor vehicle registration. If an accident occurs involving a vehicle that is unregistered, the vehicle will also not be covered by CTP insurance and the driver and owner may ultimately be financially liable for the damages paid to the injured person. In addition, owners and drivers of unregistered vehicles face hefty fines.
If you forget to pay your registration renewal, which includes your CTP premium, you have
14 days after your registration expired to pay the renewal.
If you pay within this 14-day ‘grace period’, you will maintain continuous CTP coverage during the period and have CTP insurance until your next renewal. If your renewal is after the 14 day period, your coverage commences at the time of the renewal.
An injured person may claim compensation from the CTP insurer of the owner/driver of the 'at-fault' vehicle provided negligence can be established. You can still claim if you were partly at fault, but the compensation you are entitled to may be reduced.
You cannot make a claim if you:
- were the driver and totally at fault; or
- no-one was at fault, e.g. a collision with wildlife on the road.
If the driver who caused the accident does not have CTP insurance or cannot be identified (e.g. a hit and run accident) you can claim compensation from the Nominal Defendant. The Nominal Defendant can recover the cost of claims from the owner or driver of an unregistered vehicle.
There is an early up-front payment for medical expenses arising from your injuries that is generally available and payable regardless of who is at fault (refer to question 10).
You will need to rely on sick leave, social security, Medicare and the public health system, unless you have other personal injury insurance and/or private health insurance.
If you are an employee and have an accident during a work-related journey, you may be covered by Workers’ Compensation insurance.
Drivers should consider having some form of personal insurance to cover accidents in which they are at fault of or no-one is at fault. Some CTP insurers provide extra cover in relation to their brand of CTP cover. You can visit an insurer’s website for more information.
To be able to claim compensation under the ACT CTP scheme, a person has to be injured in a motor accident that was someone else’s fault. Fault must be established for a claim to succeed.
A CTP notice of claim form may be lodged by:
- any person who has sustained personal injury as a result of a motor vehicle accident in the ACT for which they were not at fault. This may include a driver, motorcyclist (or cyclist), passenger or pedestrian, but not the driver of the vehicle at-fault;
- dependants or the estate of someone fatally injured as a result of a motor vehicle accident in the ACT for which the deceased person was not at-fault.
If you are partly at fault you can still claim but your entitlement will be reduced by the extent of your contributory negligence.
See 'How to Claim' for more information
If you are injured in a motor accident, you may be able to access money immediately to cover your medical expenses. This is known as an 'early payment'. The joint Motor Accident Notification Form/Motor Accident Medical Report (MANF/MAMR) provides early, convenient access to treatment and rehabilitation payments for up to 6 months after an accident.
The payment is generally available to any person who has sustained personal injury as a result of a motor accident and is payable regardless of who is at fault.
See 'How to Claim' for more information
As a driver of a motor vehicle involved in a crash where someone is injured or killed, you are required by law to stop and give any assistance that you are able to give.
You are also required by law to provide the following details to any other driver or person injured in the crash (or their representative):
- your name and address;
- the name and address of the owner (registered operator) of the vehicle being driven by you;
- your vehicle’s registration number; and
- any other information necessary to identify your vehicle.
This information should be provided at the scene of the crash. If that is not possible, the law requires it to be provided as soon as possible. Except in exceptional circumstances, this means within 24 hours of the crash.
For any motor accident in the ACT, the law also requires the same information to be provided to a police officer, together with an explanation of the circumstances of the crash. The same time limit applies.
It is also helpful if you can let any other driver or person injured in the motor accident know the CTP insurer for the vehicle being driven by you.
If you receive any contact or correspondence from an injured person or his/her lawyer, you should immediately refer him/her to your CTP insurer so that they can deal with it.
You should not admit liability or promise payment.
Unlike many other types of insurance, CTP provides unlimited indemnity to the insured. Benefits paid to the injured party depend on the extent of the injuries and can include the cost of ambulance, hospital and medical treatment, rehabilitation, loss of income and long-term care. Limits may apply with respect to loss of income (the upper limit being three times average weekly earnings per week) and limits may apply in certain circumstances to the payment of legal costs.
The benefit structure and court-based model to resolving claims influence premiums, which are paid for through your CTP insurance premium. In setting premiums insurers consider the estimated claims cost for the year, the estimated number of claims and their own costs to administer the policies.
Licensed CTP insurers are responsible for setting their own premiums. Neither the ACT Government nor the CTP Regulator sets CTP premiums. However, before an insurer can alter the premiums it charges, the new premiums must be submitted to the CTP regulator for approval.
The CTP regulator may reject premiums if they will not fully fund the insurer’s current and future liabilities, if they are excessive (in light of actuarial advice and other financial information available to the regulator) or if they do not comply with the CTP premium guidelines.
See current Premiums in the ACT for more information.
Since 1 July 2013, there have been four licensed CTP insurers in the ACT- Insurance Australia Limited (trading as NRMA Insurance), GIO, AAMI and Apia. Motorists have the ability to choose from one of the CTP insurers when renewing their vehicle registration.
The premiums of the different insurers are available on the Premiums of the ACT page. You can also visit insurers’ websites for information on CTP and extra cover or rebates that they offer in the ACT.
The ACT has an at-fault common law scheme, which means you need to prove another person is at fault in order to receive compensation. If nobody involved in a crash admits they are at fault, the injured person will need to bring a court proceeding against the other driver to rule that they are at fault. This means insurers need to include legal costs in addition to the compensation expenses when deciding how much to charge for CTP.
Some states operate their schemes on a no-fault basis, in some cases with limited common law access. A no-fault scheme provides some benefits regardless of who was at-fault for the accident, without the need to sue and go to court.
In NSW, premiums are risk rated allowing insurers to charge much higher premiums for motorists they consider to be high risk (e.g. young drivers up to 25 years old). In the ACT, all motorists pay the same CTP insurance premium, which is a community-rated premium that applies to each vehicle class. Insurers cannot charge different premiums based on personal information, or based on anything other than the vehicle class applicable to the vehicle registration.
Most jurisdictions only allow payouts for pain and suffering to go to persons who have severe injuries, and maximum limits are placed on payouts such as for loss of income and for pain and suffering, which also helps make premiums cheaper. The ACT does not have these limitations.
CTP insurance is provided by an authorised insurer and the applicable premium includes the Goods and Services Tax (GST).
You may be entitled to claim an input tax credit on the GST component of your CTP premium, if the insured entity is GST registered and it is business related.
Premiums are priced differently depending on the GST registered status of the insurer and are higher for those persons with an entitlement to claim an input tax credit. This is due to the increase in claims costs for CTP insurers on GST registered vehicles as a result of changes to the GST legislation.
The information above is not intended to give you advice about the legal position that will apply to you and whether or not you will be entitled to claim GST credits. If you require further information about the effect of GST on your CTP insurance, contact the Australian Taxation Office, Tax Reform Information Line on 13 24 78 or your tax adviser.