Insurance companies in Australia don’t offer specific short-term car insurance products. Policies are generally sold on an annual basis, meaning you take out cover for a full year – even if you only need it for a shorter time.
However, if you're only after cover for a limited period or want a more flexible policy, there are still options available.
Short-term car insurance options
While you can’t take out temporary car insurance, there are flexible ways to get cover when you don’t need it long term. Depending on your situation, here’s what you could do:
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Take out a standard policy and cancel when you no longer need it
Car insurance policies in Australia typically run for 12 months, but you can cancel at any time. This means you’d be able to buy your policy and cancel it once you no longer need cover, whether you’ve paid the full premium upfront or in monthly instalments. You might do this if you need to secure the purchase of the vehicle but haven’t had a chance to properly compare your car insurance options.
Unless specified otherwise, your policy will start from the day you buy it, so you're covered immediately. If you cancel outside the cooling-off period, you may be charged a cancellation fee, but you will get a refund on the unused portion of your premium.
Getting a refund on your car insurance
Brian has just bought a 2024 Toyota RAV4 GX and wants to take out a comprehensive car insurance policy. He compares his options and finds an annual policy for $1,200 with a leading insurer. This insurer has a cooling-off period of 30 days.
At the 30-day mark, Brian comes across an even better deal of $1,100 per year. Because he’s still within the cooling-off period and hasn’t made any claims, he receives a refund of the full $1,200 and buys the $1,100 policy instead.
If he had taken out a policy with an insurer with a 14-day cooling-off period, he would’ve been outside the allotted time during which he could’ve received a full refund. This means, depending on the insurer, he would’ve received a refund minus an amount where he was deemed to have been covered, such as $100 plus government fees in this case.
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Add yourself as a listed driver
If you’re borrowing someone else’s car for a short time, you may be able to avoid taking out your own policy by being added as a listed driver on theirs. This can be ideal for short-term use of a friend or family member’s vehicle.
Keep in mind that this could raise their premium, especially if you’re a P-plater or a driver under 25, so you’ll have to work out what that means for your contribution with the owner of the car. If you're an unnamed driver, a higher or additional excess will often apply if you cause an accident.
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Rent a car
When you need a vehicle for just a few days or weeks, hiring might be a practical short-term solution. Rental agreements usually include basic insurance, but this often comes with a high excess and limited cover.
To reduce your out-of-pocket risk, you can take out separate car hire excess insurance, which covers you for damage to the vehicle while it’s in your care and is typically charged by the day. Renting a car often isn’t a cheap exercise, so if you need to extend into a long-term agreement, it’ll likely end up costing you a pretty penny.
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Consider a pay-as-you-drive policy
If you don’t drive often but still want comprehensive cover, a pay-as-you-drive (PAYD) policy may be worth exploring. These policies base your premium on the distance you drive, offering a more cost-effective option for low-usage drivers such as seniors or people who work from home. You’ll usually nominate a set number of kilometres for the year, based on which your premium is calculated.
They aren’t, however, a short-term option in the same way the other three are. While PAYD policies are still annual contracts, they can suit those who need flexible, lower-cost insurance without sacrificing cover. You could be hit with steep fees for exceeding your nominated kilometre limit, though.
Exceeding your PAYD car insurance kilometre limit
Claudia is a low-kilometre driver who usually catches the bus to work. She decides to take out a PAYD car insurance policy of up to 8,000km per year, which is set to save her hundreds of dollars compared to a regular comprehensive policy.
However, six months into her policy, she switches to a new job where she has to drive up to an hour each day. She lets her insurer know straight away and they adjust her kilometre limit, which in turn increases her premium by several hundred dollars.
If she hadn’t let her insurer know and had ended the year with an odometer reading of 1,500km above her nominated maximum, she’d likely incur a fee of up to $1,000.
What is a cooling-off period and why is it important for short-term car insurance?
A cooling-off period is a mandatory period after you purchase your car insurance policy during which you can cancel it for free and receive a full refund from your insurer. This period changes depending on the insurer but can generally range from a minimum of 14 days up to a maximum of 30.
The reason cooling-off periods are so important is that they give drivers an immediate out if they make the wrong call on their car insurance. For short-term car insurance purposes, it also means you can cover your car for up to a month without needing to commit to an annual premium.
While you can still make a claim during the cooling-off period, doing so will forfeit the ability to cancel the policy without any fees or a portion of your premium. Essentially, once you make a claim, you can’t cancel your policy for free.
Finding the right insurance after buying your car
Sarah is on the lookout for her first car. She finds a great deal for a car in her town being advertised on social media that she has to snap up today, so she does just that. Because the car is now hers, she needs to take out car insurance immediately. She goes to a big insurer and takes out a comprehensive car insurance policy so that her vehicle can be covered.
In the days after she buys her car, she spends more time digging around and comparing car insurance options. She comes across another policy with a different provider that offers better cover for a lower premium. Because she hasn’t made a claim yet on her original policy, she cancels it and receives a full refund. From there, she goes ahead and buys her new policy.
When might you need short-term car insurance?
Short-term car cover can make sense in certain one-off or temporary situations. You might find yourself needing flexible insurance if:
- You're in between cars: maybe you’ve sold your old vehicle and are borrowing one while you shop around. Temporary cover can bridge the gap without locking you into a long-term policy.
- You’re picking up a new vehicle: you’ll need valid insurance for the trip if you’re driving a car home after buying it, even if it’s just for a day.
- You’re borrowing a car: whether you’re using a friend’s car for a weekend or helping someone move, short-term arrangements like being added to their policy as a listed driver could cover you for the brief stint behind the wheel.
- You’re driving a second car occasionally: if you have a car you only use seasonally or for certain trips, you might prefer an option that lets you save money when it’s sitting in the garage.
- You aren’t a frequent driver: if your car spends more time parked than moving, a PAYD policy could keep you covered without paying for distance you aren’t using.
- You’ve hired a car: insurance is usually bundled into rental contracts, but it’s often basic. You may choose to take out extra cover to avoid costly excesses if something goes wrong.
How much does it cost to cancel a car insurance policy?
The cost of cancelling your car insurance largely comes down to your insurer, as each one will have its own set of fees or other charges. Some insurers don’t charge cancellation fees even if you cancel during your policy term. Here’s a list of insurers and what they charge for early car insurance policy cancellation:
| Insurer | Cancellation fee |
|---|---|
| AAMI | No fee, but non-refundable government costs will be deducted from your refund and refunds won’t be granted for less than $10 |
| Allianz | No fee, but a pro rata proportion of your premium may be deducted |
| Budget Direct | $40 |
| NRMA | Pro rata deduction plus $30 cancellation fee |
| QBE | Premium refunded minus any non-refundable government cost |
| Youi | $30 |
| All information correct as of 4 November 2025. | |
Can I get a cover note for short-term car insurance?
No, cover notes are no longer available in Australia. These were temporary car insurance policies that provided short-term cover to drivers until a full policy could be arranged. Typically ranging from a few days to a few weeks, they protected against third-party claims in the event of an accident.
Today, cover notes have been phased out and essentially replaced by the car insurance cooling-off period. They effectively serve the same purpose that cover notes once did: giving you immediate cover while still allowing flexibility if you change your mind. You can switch policies or insurers without penalty, making it easier to find the right fit for your needs.
