Cooling-Off Periods for Car Insurance

To some, a cooling-off period might be two weeks in Bali sipping cheap mai tais by the pool, or a parent and their toddler taking a much-needed mutual time-out. But in the world of car insurance, it helps protect you if you rush into buying a policy or simply change your mind – in other words, a financial failsafe if you’re hit with buyer’s remorse.

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Written by

Kervin Mathew

Edited by

Ellie Garran

Reviewed by

Adrian Bennett

Last Updated 13/06/2025

Fact checked

Written by

Kervin Mathew

Last Updated 13/06/2025

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Long story short

If you cancel your car insurance within its cooling-off period, you’ll get a full refund

You won’t need to pay any penalties or cancellation fees, either.

Cooling-off periods help you switch policies if you find a better deal

It’s a form of consumer protection and a fallback for buyer’s remorse.

If you make a claim, the cooling-off period ends

Instead, you’ll move to your policy’s standard terms and conditions.

What is a cooling-off period for car insurance?

A cooling-off period is a period of time right after you buy car insurance when you can cancel your policy with no penalty. And the kicker is, you’ll get a full refund of the money you’ve paid.

Say you buy car insurance for a new car in a hurry, but soon after, you find another policy that actually suits you better. In this instance, the cooling-off period will allow you to end your contract with no cancellation charge and switch to the other insurer.¹

So, whether it’s buyer’s remorse, a change of mind, or any other reason prompting you to cancel your car insurance, cooling-off periods help ensure you’re not pressured to stick with a policy you don’t want.

Why are cooling-off periods important?

Cooling-off periods exist to protect you from any rushed or uninformed decisions you make when it comes to buying car insurance. Consider the following fictional scenario.

Sonya, a young driver excited about getting their first car, purchased car insurance on the advice of an older colleague.

About a week later, Sonya comes across a pay as you drive policy, which they feel is perfect for their situation, given they only drive on the weekends.

Keen on saving and feeling the cost-of-living pressures, Sonya anxiously calls their insurer asking if they can cancel their policy.

The insurer gives Sonya the go-ahead and offers them a full refund. Thank you, cooling-off period!

Relieved and wiser to the world, Sonya is now free to purchase the policy that they feel is more suited to their needs – and that saves them money, to boot!

Even if you’re absolutely sure about the policy you’ve bought from the get-go, life can take unexpected turns. Maybe you find that you won’t need to drive for a while, or your budget takes a hit and you can’t afford the premium. In situations like these, cooling-off periods can be the handy reset button meant to safeguard you from the financial fallout.

Ultimately, consumer protection is the name of the game. But cooling-off periods come with a time limit. So, it’s best you make your move before time’s up.

How long is a cooling-off period?

All good things must come to an end, they say. Unfortunately, this applies to cooling-off periods as well.

Depending on the insurer, cooling-off periods for car insurance can range from 14 to 30 days. You can find out how long your policy’s cooling-off period is by asking the insurer or reading the product disclosure statement (PDS).

How does a cooling-off period work?

Helpful tip

Cooling-off periods can apply even to third-party car insurance, but third-party policies offer limited cover. If you’ve just taken out third-party insurance but you want more coverage – like protection for your own car – you can cancel and switch for free during the cooling off period. And with a comparison tool like iSelect’s, you’ll be able to compare and switch to a comprehensive policy in minutes!

Adrian Bennett

General Manager for General Insurance

Frequently asked questions

Can I make a claim during my cooling-off period?

Yes, you can. Your cover, along with the cooling-off period, starts from the time you pay for your policy. So you can make a claim from day one onwards if you need to.

Fair warning – if you make a claim during the cooling-off period, you’re effectively forfeiting the feature. As in, you then move to your policy’s standard terms and conditions, complete with cancellation fees.

How do I cancel my policy during the cooling-off period?

You should be able to cancel your policy online or by calling your insurer and letting them know that you’re keen to move on. When you do cancel, your cover will end and your insurer will kickstart the refund process, which should take from a few days to a few weeks.

Can I change policies with the same insurer during the cooling-off period?

Yes. You can do this either online or over the phone with your insurer. You might need to cancel your current policy before you move to another one with the same insurer. So, the cooling-off period is an ideal time to switch policies if you want to avoid any fuss around cancellation fees!

What happens if I cancel my policy after the cooling-off period?

If you cancel your car insurance after the cooling-off period, you move to the standard terms and conditions of your policy. This means you’ll need to pay cancellation fees plus government charges and taxes, and you won’t be eligible for a full refund.

Undecided on car insurance?

We get it. With so many insurers and policies to choose from, it’s easy to get hot and bothered about whether you’re making the right choice. Why not cool your heels and let the iSelect car insurance comparison tool do some of the legwork?

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