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General information only: Tax, registration, insurance and credit rules can change. Confirm the current position with the linked government authority and your finance or insurance contract before acting.
Quick answer
Comprehensive insurance can cover insured damage to your vehicle and liability for damage to other vehicles or property, subject to the policy. A secured financier commonly requires it because CTP does not protect the financed vehicle itself.
Why this matters when financing a car
Insurance can be a settlement condition and a continuing contract obligation. The insurance payout after a theft or write-off may still be lower than the loan payout, leaving a shortfall the borrower must resolve.
CTP and comprehensive insurance solve different risks
CTP covers eligible personal injury under the local scheme. Comprehensive insurance addresses insured loss of or damage to the vehicle and property liability. Registration evidence is therefore not proof that the lender’s insurance condition has been met.
Agreed value, market value and the loan payout are different
Agreed value is an amount set under the policy, while market value is determined under the insurer’s policy terms at claim time. The loan payout is calculated under the credit contract and can include the remaining principal, accrued interest and permitted charges.
None of these figures is guaranteed to equal the others. A vehicle can be insured correctly and still leave negative equity after a total loss.
What to check before settlement
Use the exact VIN and confirm the start time, insured value, excess, listed drivers, usage, modifications, finance interest and exclusions. Tell the insurer how the car will actually be used.
- Whether the lender must be noted as an interested party
- Agreed or market value and how it is determined
- Standard, age and unlisted-driver excesses
- Business, rideshare or delivery use
- Accessories, modifications and replacement-car conditions
- Claim payment direction where finance remains owing
Treat add-on insurance as a separate decision
GAP, loan termination, tyre and rim and other add-on products are separate from comprehensive insurance. Moneysmart warns that add-on insurance is often poor value. Compare the premium, exclusions, benefit cap, term and overlap before adding it to a loan and paying interest on the premium.
A write-off can leave debt after the insurance payout
Assume a financed car is written off when the credit-contract payout is $34,000 and the comprehensive insurer pays $30,000 after applying the policy and excess.
- Loan payout: $34,000.
- Net insurance payment: $30,000.
- Illustrative shortfall: $34,000 − $30,000 = $4,000.
Result: The vehicle is gone but the $4,000 illustrative shortfall remains to be resolved with the lender. Actual claim and payout figures depend on both contracts.
Primary sources
Government and statutory sources checked on 8 August 2026:
See BaseRate’s editorial policy and the complete car-buying costs hub.