When Should I Start My Car Insurance?

Buying a new car is incredibly exciting, but the often confusing and complicated paperwork needed to get you on the road can dampen the experience.

Let’s go through the essentials before you hit the road!

When should I get my car insured? 

You can never predict when an accident will happen, and getting into one without insurance could be very costly. Making sure your car is insured from day one is the best way to minimise risk, so you can enjoy driving your new car with peace of mind. 

Since Car Insurance can protect you against liabilities if you have a car accident or your car is stolen, damaged or vandalised,¹ it’s likely you’ll want your policy to start from the moment you start driving your car!

When should the policy start? 

Usually, insurance policies purchased online or over the phone begin immediately. However, you can choose to pre-purchase your insurance policy and have it start on any day you like. 

Most insurance providers offer a few payment options to give you flexibility and help make your insurance more affordable. Options vary but often include: 

• A slightly cheaper rate if the full annual premium amount is immediately paid in full 
• A slightly higher rate to allow you the flexibility of paying your premiums in month-to-month instalments  

You usually have the option to start the policy immediately, regardless of which payment option you choose. 

Will a used car already be insured? 

It’s likely that if you’re buying a used car, then the previous owner would have taken out a policy for the car.  

If you’re buying from a used car dealer, then the dealer will likely have cover for the car.   

If you’re buying a used car from a website or online marketplace, then it can be harder to verify the car’s insurance history. 

Can I get Car Insurance before title transfer? 

Yes, it’s your responsibility as the new owner of a used car to purchase a new Car Insurance policy to commence from the moment you take over ownership and start driving. The previous owner’s policy only applies to the previously registered driver. 

You'll likely want your policy to commence as soon as the title has been transferred to you and you hit the road! Organising Car Insurance just before the title is transferred could be a smart option. 

As long as you have the details of your title transfer, including the year, make, model, colour, any modifications and the registration number of your car, your chosen insurer can set up your new insurance policy. 

Something else to keep in mind: you will typically have 14 days to notify your state or territory’s road authority that you have purchased a used car and transferred the title to your name.² 

What if I only need temporary Car Insurance? 

Temporary Car Insurance may be an option if you only need a car for a short period of time. 

Let’s say you only need to drive a car for a few weeks or months. You might want to have a look at policies that offer monthly, fortnightly, or weekly payments with a low (or no) cancellation fee. 

You might also want to consider taking out an annual policy and paying the full annual fee upfront, then cancel your policy when you no longer require it. Your insurer should refund you for the amount in your cover that you didn’t use, so long as you haven’t made any claims. 

For example, if you purchase an annual policy at the beginning of June 2023, you will be covered up until the end of May 2024. But if you don’t need your car after December 2023, then you can cancel your policy and your insurer may offer a pro-rata refund for the remaining months in your policy, subject to their individual terms and conditions.  

But beware of cancellation fees – you can ask your insurer about these or read through the policy’s Product Disclosure Statement (PDS). 

Is Car Insurance cheaper if I don’t drive much?  

Not generally no.  But if you don’t drive your car very much or very far, then Pay-as-you-drive Car Insurance or a Low Kilometre policy could be an option worth considering.  Pay-as-you-drive Car Insurance is similar to having Comprehensive Car Insurance, but can be more cost effective if you only drive short distances or you don’t drive very often. 

Pay-as-you-drive policy premiums are calculated by the number of kilometres you expect to drive. Insurers may ask you to disclose your odometer reading to keep track. So, the less you drive, the less you pay. 

Be upfront when disclosing your kilometres driven, because some insurers may require you to pay an additional amount if you drive beyond the insured amount of kilometres on your policy, or there may be additional excesses that apply at claim time 

Do I need to find Car Insurance if I’m renting a car? 

For drivers who don’t need a car on an ongoing basis, car sharing platforms such as GoGet, Flexicar and Uber Carshare are readily available for drivers in a number of Australian cities and suburbs.  

Car share companies sort out Car Insurance for you, so you don’t have to worry about finding a policy yourself. Just make sure you read the Product Disclosure Statement before you sign up to ensure you’re adequately covered. 

Car sharing can be a great way to access a car on-demand without the responsibility of car ownership, travel costs, or finding Car Insurance. You can sign up with a car sharing platform and rent a car for a few hours, a few days, or even a few weeks. 

What if I sell my car during my policy term? Can I get a refund on the unused months? 

Yes, but it depends on your policy.  

If you choose to sell your car, you must then cancel your Car Insurance policy so the new owner can purchase their own Car Insurance. If you have paid for your Car Insurance in advance, such as an annual payment, your insurer will generally offer a pro-rata refund for the unused months, so long as no claim has been made, and subject to potential cancellation fees. 

What if my car is written-off during my policy term? Can I get a refund on the unused months? 

Generally no, you won’t get a refund.  As stressful as a write-off can be, you will also need to remember to cancel your policy.  

A car is written off if the cost to repair it would be more than the actual value of the car, or if the damage is so severe that it wouldn’t be roadworthy or safe to drive.³ 

Keep in mind that if you have Third Party Fire and Theft, you generally won’t be covered for damage to your own car if an accident occurs. Make sure you consider your car’s value when choosing a policy. 

How Car Insurance works in Australia 

All car owners in Australia must have Compulsory Third Party (CTP) Insurance, which is called green slip insurance in New South Wales.⁴ In Victoria, CTP insurance is also known as the Transport Accident Charge. 

Additional Car Insurance is something you will likely want to consider, but not compulsory. With a comparison service like iSelect, you can choose from a variety of Car Insurance providers and types of insurance, so it’s worth doing your research before purchasing a policy.  

A licensed car dealer may offer you insurance as part of their offer, but purchasing insurance this way may be more expensive.⁵

Types of car insurance in Australia 

1. Compulsory Third Party (CTP) Insurance
   As above, CTP Insurance is normally paid for as part of your car registration, but you should always double-check this with your provider or your state/territory vehicle authority.
   
   
2. Third Party Property Insurance 
   Third Party Property Insurance covers you for damage to other people’s property, but it doesn’t cover damage to your own car.
   
   
3. Third Party Fire and Theft Insurance
   Third Party Fire and Theft covers the same things as Third Party Property Insurance with additional cover for damage to your own car when caused by fire or theft.
   
   
4. Comprehensive Insurance
   Comprehensive Insurance gives you the most protection and can be worth considering if your car is essential to your daily life. It’s the only type of Car Insurance that provides cover for your own car in the event of an accident.⁶ 

Which Car Insurance do I need? 

It can be difficult to decide on a policy, especially when there are so many to choose from!  

The best place to start is by considering your individual circumstances and deciding what’s important to you. 

If you can’t afford repairs to another person’s car, then you might consider taking out Third Party Property insurance as a minimum.  

If your own car is essential to your livelihood, and covering repair costs after an accident is beyond your budget, then Comprehensive Insurance may be the right option. 

A suitable insurance policy will cover you in the worst case, and won’t leave you stranded or overwhelmed with debt in the event of an accident.  

With so many providers out there, we can help you find a policy from our range of providers. 

Comparing Car Insurance policies 

It’s quick and easy to compare policies with iSelect. Simply follow these steps: 

• Click here to start your comparison 
• Enter your postcode and suburb, plus your car registration 
• If you don’t know your registration, simply enter your car’s make, model and year 
• Complete our form by entering details about you, your car and your lifestyle 

In just a few minutes, you’ll have access to a detailed comparison of matching insurance policies. 

If you have any questions, our experienced Car Insurance team members are happy to chat anytime, between 8am and 8pm AET. Simply call 13 19 20 today.

^{Sources:
1 Consumer Affairs Victoria - Car insurance for new cars
2 Vicroads - Buy and transfer a used vehicle
3 Vicroads - Written-Off Vehicles Register written-off vehicles
4 Moneysmart - Choosing car insurance
5 Moneysmart - Add-on car insurance
6 Moneysmart - Choosing car insurance}