What are the risks of driving without car insurance?

Compulsory third-party insurance, also known as CTP insurance or a green slip, provides compensation for anyone injured in a traffic incident and is mandatory in all states and territories. In Victoria, CTP insurance is included in registering a vehicle. So as long as your car is registered, you're covered by CTP insurance.

However, CTP does not cover property damage, a costly risk if you’re involved in an accident. If you're caught driving without insurance for property damage, the financial and legal consequences can be severe.

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The risks of driving without insurance

Wondering about the penalty for driving without insurance in Melbourne? Here’s what you need to know.

Driving without CTP insurance 

This is illegal Australia-wide. In Victoria, it means your car is unregistered, which could attract fines of thousands of dollars, demerit points, and even vehicle impoundment. If you're in an accident without CTP, you could be personally liable for any injury costs to other people.

Driving without insurance for property damage 

While optional, skipping property insurance exposes you to massive financial risk. You may have to pay out of pocket for:

• Repairs to your own car
  
• Damage to other vehicles
  
• Public and private property damage
  

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What happens in a car accident without insurance

If the only type of insurance you have is CTP, here is what you can expect to happen if you're involved in a car accident:

If you're at fault

If you are at fault for causing the accident, then you will have to pay for any repairs to the other vehicle involved as well as any other damage caused in the accident. Depending on the other vehicle's value and the damage amount, you could be liable for a considerable amount of money.

If you're not at fault - call Sheen first

If the other driver caused the accident and has insurance, their provider will cover the cost of repairs.

But what if they don’t have property damage insurance? Then they are personally liable, though recovering costs may require legal action.

Regardless of who's at fault, call Sheen first. We’ll assist with repairs, organise towing, and provide a replacement vehicle to keep you mobile.

Types of insurance

1. Compulsory third party insurance

As we've already mentioned, CTP insurance pays compensation to people who are injured on the road. It's illegal to drive anywhere in Australia without CTP insurance. In Victoria, CTP insurance is included in the cost of your vehicle registration.

Risks at this level of insurance, according to iSelect:

• Not covered for damage to other people's property
• Not covered for damage to your own vehicle or property
• Not covered for fire or theft of your vehicle

2. Third-party property insurance

Third-party property insurance covers you for damage your vehicle does to other people's property. If you're at fault in an accident, your third-party property insurance will pay for repairs to other vehicles and property, but it will not pay for repairs to your own vehicle.

Risks at this level of insurance according to QBE:

• You are not covered for damage to your own vehicle or property.
• You are not covered for fire or theft of your vehicle.

3. Third-party, fire, and theft insurance

Third-party fire and theft insurance is similar to third-party insurance, but you will also be covered if your vehicle is lost or damaged due to fire or theft.

Risks at this level of insurance according to AAMI:

• You are not covered for damage to your vehicle or property in an accident.

4. Comprehensive insurance

Comprehensive car insurance covers everything mentioned above, including damage to your vehicle or property if you are at fault. There are also many optional extras and differences between insurers, so make sure you fully understand your policy and what you're covered for.

Risks at this level of insurance according to Real Insurance:

• You will not be covered if you breach your insurance policy, for example, if you are driving over the legal limit for alcohol consumption.

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What insurance do you need?

The level of insurance that's right for you will depend on your circumstances. But it's always a good idea to have some level of optional insurance to cover third-party property damage.

If you don't have third-party property cover, you could be liable for tens of thousands of dollars (or more) if you cause a vehicle to be damaged or written off in an accident.

And of course, comprehensive car insurance is the best way to get peace of mind that you're covered for pretty much anything that might happen on the road.

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FAQs about driving without insurance 

What is the penalty for driving without insurance in Melbourne?

The penalty for driving without insurance in Melbourne can be severe. If your vehicle is unregistered and lacks CTP insurance, you may face fines of several thousand dollars, loss of license, and even vehicle impoundment. According to Fines Victoria, driving an unregistered vehicle incurs a penalty of $988-$1,778. Being caught without valid insurance is treated as a serious offence under Victorian road laws. If you're involved in an accident, you could also be personally liable for injury or property damage costs.

Can you drive a car off the lot without insurance?

In Victoria, you cannot legally drive a car off the lot unless it is registered and covered by CTP insurance. CTP provides the minimum required coverage for injury liability, but doesn’t cover protection for property damage or theft. For peace of mind, it’s wise to arrange comprehensive or third-party property insurance before picking up your new car. This ensures you're insured from the moment you drive away.

Does car insurance cover me if someone else is driving my car?

This depends on your insurance policy and provider. Some comprehensive policies allow occasional drivers if they’re listed or fall under certain criteria (like age restrictions). However, if an unlisted or uninsured driver is involved in an accident, your claim may be reduced or rejected. Always check policy terms with your insurance company before handing over your keys.

What happens if I forget to renew my registration and insurance?

In Victoria, failing to renew your registration means your vehicle is no longer covered by CTP insurance, making it illegal to drive. If you’re caught uninsured, you risk large fines, loss of demerit points, and even vehicle impoundment. If you're in an accident during this lapse, you’re personally liable for all damages and injuries. Set reminders to avoid costly oversights.

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Call Sheen first

At Sheen, we can help you return to the road after an accident. We work with insurers and motorists to provide the highest-quality smash repairs and towing services you'll find anywhere in Victoria.

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