Insurance companies in Australia don’t offer specific short-term car insurance products. However, if you’re looking for a week or a month’s worth of cover, there are options available that may offer you the same benefits as short-term car insurance.
Normal insurance for a vehicle extends for a period of 12 months. However, you may only need temporary insurance for a vehicle for a week, month, or even six months. There are various options to choose from if you’re looking for a short-term car insurance solution, which you can learn about with Savvy today.
The average full-time salary in Australia is just over $94,000 per annum, according to ABS data from November 2022 (based on an average weekly salary of $1,807.70). However, considering the cost of an average new car is around $40,729 (according to data from December 2021), this expense may consume a high proportion of one’s spending money. When other living costs and debts are taken into account, some people may opt not to buy a car at all. However, they may still occasionally need the use of a car.
Can I get temporary or short-term insurance for my car?
Yes – there are options available when it comes to temporary or short-term car insurance arrangements. The most notable of these is built into some comprehensive car insurance policies, in which your existing coverage can be transferred to a replacement vehicle if you're buying a new car and have already sold or given away your previous one. In most cases, this coverage extends to a maximum of 14 days until it expires or you're required to let your insurer know and arrange suitable coverage.
However, this isn't always included in comprehensive coverage by all insurers, nor does it appear on most third party policies. Because of this, it's important to note that you won't always have access to this coverage. Also, while specific short-term policies are no longer available in Australia, there are several other options which can provide temporary coverage in certain situations.
What are my other short-term or temporary car insurance options in Australia?
If you’re only going to use a car for a few months or your policy is going to end and you do not wish to renew it before you leave for overseas, for instance, a temporary insurance solution for your vehicle could be useful. However, it’s important to note that if you own a car, irrespective of how little you may use it, you’ll still need to have compulsory third party (CTP) insurance. This cover is mandatory for all drivers in Australia and offers cover for compensation in the event another person is injured or dies as a result of an accident.
The main options for temporary or short-term car insurance are by paying premiums monthly, adding a driver to a policy, renting a car or making use of a pay-as-you-drive car insurance policy. Each of these options has its own benefits and drawbacks, so you’ll need to weigh these differences up to gauge which will work best for your needs.
Pay premiums monthly
Most insurance companies offer the flexibility to pay car insurance premiums every month, which can be a convenient option if you only need coverage for a short period.
An example of how this approach works is by taking out a normal 12-month policy and opting to pay the premiums monthly. You may then cancel the policy at any time once you no longer need it. However, you may have to pay a cancellation fee of up to $40 in some cases if you elect to do so.
In effect, this is simply purchasing a standard policy and exercising your right to cancel it, creating a temporary solution in the process. This can enable you to obtain short-term comprehensive car insurance if you wish to have greater coverage over this period.
Add a driver to a policy
To save yourself from taking out a new policy, you may be able to simply add your name to an existing car insurance policy belonging to someone else. This can be useful if you need to borrow a partner, family member or friend’s vehicle for a brief period, but not long enough to justify the purchase of a policy.
The monthly premium of the policy you’re added to as a driver may increase, based on your gender, age, driving history and parking place of the vehicle. For example, if you’re younger than 25 years, you’re likely to attract a higher premium and excess based on your age and lack relative lack of driving experience.
Fronting is an illegal practice in which, for example, a driver below the age of 25 uses an older person’s name to obtain cheaper premiums. Therefore, those adding the name of another driver to their policy must always accurately reflect that driver’s profile to their insurer.
Rent a car
When renting a car, you’ll be required to take out insurance coverage for the duration of the rental period as part of most hire packages. This can provide temporary coverage for damage to the rental car and other people’s property while it’s in your care. It's essential to review the terms and conditions of the rental insurance policy and consider any excess or exclusions.
It's important to note that this can be an expensive option; however, it’s often suitable for those who have very short-term vehicle needs. You may also be able to take advantage of special deals and discounts offered by your rental company. In many cases, provided you’ve stuck to the requirements laid out in your agreement, you can simply hand back the vehicle after you’ve finished using it.
Pay-as-you-drive policies
Some insurance providers offer pay-as-you-drive policies, where your premium is based on the distance you drive. This can be beneficial if you only need coverage for occasional or short-distance driving. In most cases, these policies are taken out for 12 months at a time, but some insurers may be willing to insure you for the distance you plan to drive over your short term with the car.
This type of insurance isn’t available with all insurers, however, so if you’re looking for a pay-as-you-drive policy, it’s important to consider your policies carefully and take the time to compare providers.
How do I compare short-term car insurance policies?
Comparing short-term car insurance policies in Australia involves considering several key factors. Here's a step-by-step guide to help you in the process:
- Determine your coverage needs: start by assessing the specific coverage you require for your short-term car insurance. Consider factors such as how much coverage you need and the amount of time you need it for.
- Compare coverage options: review the coverage options provided by different insurers. Assess the policy limits, inclusions, exclusions and other terms and conditions, as this will help you ensure the coverage aligns with your needs and provides adequate protection.
- Consider premiums and excesses: compare the premium rates offered by different insurers for your desired coverage. These may differ depending on where you live, such as for those in South Australia and Queensland. Take note of any excess amounts applicable to the policy and consider the balance between affordability and the level of coverage provided.
- Evaluate policy terms and conditions: carefully read the terms and conditions of each policy you're considering. Look for any specific limitations, restrictions or requirements that may impact your coverage, claims or the cancellation process (if applicable).
- Seek discounts and promotions: determine whether there are any available discounts or promotions which can help reduce the cost of your short-term car insurance. Some insurers may offer discounts for bundling policies or safe driving records (depending on the type of cover you take out).
