What does vehicle insurance cover in Melbourne?

Why understanding your insurance matters more than ever

If you’ve noticed your insurance premium creeping up year after year, you're not alone. According to the Insurance Council of Australia, the average cost of comprehensive car insurance has risen by 42% since 2019, now sitting at $1,052 per year. And it’s not just insurers increasing their margins: costs have surged across the entire industry.

Rising repair bills, pricier parts, and more complex technology mean the average claim now costs far more than it did five years ago. In fact, according to the Insurance Council of Australia’s 2025 report, repair costs alone make up around 60% of total claim expenses. Add in vehicle replacement spikes and escalating fraud costs, and premiums go up fast, even for drivers who’ve never made a claim.

That’s why it’s more important than ever to know exactly what your insurance does and doesn’t cover. Whether your car is damaged in a storm, stolen from your driveway, or hit in traffic, understanding your policy means fewer surprises when you need support most. If your car is stolen or declared a total loss, your insurer may offer a payout to replace your car, depending on your policy’s terms.

This guide breaks down the different types of car insurance policies, what’s covered under comprehensive car insurance cover, and how to make sense of the fine print. We want you to know where you stand long before you need to make a claim.

What types of vehicle insurance are available in Australia?

Before you can understand what your insurance covers, you need to understand what kind of insurance you actually have. In Australia, there are four main types of car insurance policies, and each offers a very different level of cover. These different types of car insurance each fall under the umbrella of general insurance, a category of insurance product that covers your personal assets, like vehicles and property. Some will only cover damage you cause to others. Others will only pay for personal injury. And only one of them includes cover for damage to your own vehicle, whether it's a well-loved older car or a brand new car fresh off the lot.

Compulsory Third Party (CTP)

CTP insurance is mandatory in every state and territory. It covers injury or death caused to other people in a motor vehicle accident. It does not cover damage to vehicles, yours or anyone else’s.

Third Party Property Damage

This provides cover if your car causes damage to someone else’s property, such as their vehicle or fence. It doesn’t cover your own car, only the damage you cause to others.

Third Party Fire and Theft

This type of policy includes everything in third-party property damage insurance, with additional cover if your car is stolen or damaged by fire. It still won’t cover repairs to your own vehicle after an accident.

Comprehensive Car Insurance

Comprehensive is the highest level of cover. It includes all the above, plus protection against accidental damage to your own car, weather events, vandalism, theft, and more. Comprehensive car insurance protects you from many risks that other policies don’t, offering a higher chance that your car will be covered in most road incidents. Many policies also include optional benefits like a hire car during repairs.

[sheen_usps][/sheen_usps]

What does comprehensive car insurance actually cover?

If you’re paying for comprehensive car insurance, you should know exactly what it includes. This type of policy provides the broadest protection available These comprehensive car insurance policies often appear in car insurance FAQs and comparison sites, and are generally the most robust car insurance options for protecting your vehicle. and is usually the one people mean when they ask, “Am I covered for that?”

But even with comprehensive cover, the answer depends on what happened and how your policy is written. Here's what you're typically covered for:

Damage to your vehicle

This is the core of most comprehensive policies. If your car is damaged in an accident (whether you’re at fault or not), your insurer will usually cover damage to your car. This includes collisions with other vehicles, poles, walls, or any fixed object. Some policies also cover single-vehicle accidents caused by driver error. However, your claim may be reduced or denied if the car was being driven illegally or wasn’t roadworthy at the time.

Damage to other people’s property

If your car causes an accident that damages someone else’s vehicle, fence, garage, or other property, your comprehensive policy will usually provide cover for the repair or replacement costs. This part of your insurance helps protect you from paying thousands out of pocket. It also ensures that damage to your own car and damage your car causes to others can be addressed in a single claim if you hold comprehensive cover, especially in multi-vehicle collisions. Your excess still applies, and if you’re found at fault, your insurance premium may increase at renewal.

Fire, storms, hail and natural disasters

Comprehensive insurance typically includes protection from unpredictable natural events (something Melbourne drivers know too well). If your car is damaged by hail, floodwaters, falling branches, or even bushfire, your policy will usually cover your car. It’s important to check if a specific event (like flash flooding) has special conditions or exclusions. These vary between insurers.

Theft and attempted theft

Most comprehensive policies cover damage caused by theft or attempted theft. If your car is stolen and later recovered with damage, or if a thief breaks in but fails to take the car, your insurer may pay to repair broken locks, smashed windows, or ignition damage. If your car is not recovered, the insurer may offer a payout based on market or agreed value.

Vandalism and malicious damage

Keyed paintwork, broken mirrors, smashed windows: this type of damage is often random, but still stressful. Most comprehensive policies include cover for intentional damage caused by others. Just be aware you’ll need to make a police report to lodge a claim, and some insurers may limit this cover if the vehicle was left unsecured.

Accidents involving animals

If you collide with an animal (like a kangaroo, dog, or wombat), your comprehensive policy will generally cover damage to your vehicle. These incidents are common in suburban fringes and rural roads around Victoria. Some policies have conditions, such as needing to prove it wasn’t avoidable. Damage from swerving to miss an animal may also be excluded, so always read your PDS.

Towing and recovery

If your car is undriveable after a covered incident, most comprehensive policies include towing to a repairer (usually one approved by your insurer). If you have a preferred repairer like Sheen, check if your policy allows this. Some insurers automatically allocate a repairer unless you’ve chosen an option that lets you nominate your own.

Emergency repairs and accommodation

Some comprehensive policies provide limited benefits for emergency expenses after an incident. This could include temporary repairs to make your vehicle roadworthy, or a night or two of accommodation if you're stranded far from home. These benefits are usually capped. For example: up to $500 for repairs or $150 per night for accommodation (and may require receipts).

Does car insurance cover repairs in Melbourne?

This is one of the most common questions we hear from Melbourne drivers. The answer is usually yes, but with a few important conditions.

If your car is damaged in an accident, storm, or theft-related event that your policy covers, your insurer will generally cover damage and pay for necessary repairs. However, not all types of insurance will do this, and even comprehensive policies come with exclusions.

Here’s how it works:

• Covered incidents: If the damage was caused by something your policy includes (like a crash, fire, hail, vandalism, or attempted theft) repairs are typically covered.
• Non-covered incidents: If your engine fails due to lack of maintenance, or you’ve let your registration lapse, it’s unlikely your insurer will pay.
• Partial cover: If your policy excludes certain drivers or modifications, your claim might be denied. Always check your certificate of insurance and period of insurance to confirm what’s included.

What about a hire car? Many comprehensive policies include a hire car during repairs, but not all do. It may be an optional extra or only apply in not-at-fault situations. Always check the fine print.

Not sure how claims work? Read about how insurance works after an accident.

What’s not covered (and where people get caught out)

Even comprehensive insurance has its limits, and unfortunately, many people only learn this when they’re trying to make a claim. The most common issues we see at Sheen involve:

• An unlisted driver getting behind the wheel
• Cars that haven’t been maintained properly (e.g. bald tyres, broken lights)
• Drivers who were under the influence at the time of the incident
• Modified vehicles where upgrades weren’t disclosed
• General wear and tear or mechanical breakdowns

Understanding these gaps ahead of time can help you avoid costly surprises.

3 most common myths about car insurance

Let’s bust a few of the biggest misconceptions we hear all the time:

1. “CTP covers everything.”

This is a common one, but it’s wrong. CTP (Compulsory Third Party) insurance only covers injury to other people. It won’t cover your vehicle or anyone else’s property. You’ll need third-party or comprehensive insurance to cover repairs.

2. “If I’m not at fault, I don’t need to claim.”

Ideally, the at-fault driver’s insurance would pay, but if they’re uninsured or you can’t identify them, you may still need to claim on your own policy. That’s where comprehensive cover matters.

3. “All damage is covered by comprehensive.”

Comprehensive car insurance provides broad protection, but it doesn’t cover everything. Exclusions often apply for unlisted drivers, mechanical failures, or undisclosed modifications. Always check your policy or PDS. Comprehensive car insurance provides peace of mind because it covers more, but it’s not unlimited. Still, car insurance protects against the most common financial risks drivers face.

[upload_smash][/upload_smash]

Sheen makes car insurance repairs simple

Navigating a claim can be stressful, especially if you’re not sure what your insurance actually covers. That’s where Sheen comes in.

We work with all major car insurers across Australia. Whether you’re insured through a big-name provider or a niche brand, our team knows how to get things moving quickly and efficiently.

And we don’t just fix cars. Our in-house insurance team will handle the claims process on your behalf, from quote to final approval, so you don’t have to spend hours on hold or chase paperwork. We’ll explain your cover, liaise with your insurer, and make sure you get what you’re entitled to.

Here’s what else we offer:

• Fast, accurate repair quotes
• Lifetime guarantee on our panel work
• Access to an accident replacement vehicle while your vehicle is being repaired
• Help understanding your policy and excess
• Guidance on whether repairs are covered before you lodge a claim

Upload your smash to get started and let Sheen take care of the rest. Need help deciding whether to get a car insurance quote today or compare car insurance policies across providers? We’ll help you explore your car insurance options, whether that’s third-party property damage insurance, fire and theft cover, or a comprehensive car insurance quote online.