Most Australian motorists do not understand what compulsory third party (CTP) insurance means, and many are driving without appropriate cover, according to a survey of 1500 people across NSW, Victoria and Queensland.

It finds that 32.4% of respondents are aware that CTP or greenslip insurance covers only injury compensation to other road users.

And 50.4% believe CTP covers injury to other people and vehicles, while 17.2% believe it covers damage to vehicles only.

The survey, conducted by Smith’s Lawyers, finds that drivers aged 18-24 are the least informed, with just one in five correctly understanding CTP.

“We receive hundreds of enquiries every year from drivers holding CTP only who are not at fault in an accident but have been surprised to find they can’t claim for property damage,” the law firm’s Principal Greg Smith said.

“The problem is worse when both drivers lack property damage insurance, because there is no insurer to step in and cover the costs.

“[People] ask us, ‘What if someone crashes into my car and I need to make an insurance claim?’ Or, ‘What do I do if I hit another car – is [CTP] enough to pay for the damage to their car as well as mine?’

“Our typical answer is this: your [CTP]… insures you against liability for any death or injury to other road users caused by your car, no matter who is driving, but does not cover damage to property, including the other person’s car.”