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When Should I Start My Car Insurance?
When Should I Start My Car Insurance?
Written by
Kervin Mathew
Edited by
Ellie Garran
Reviewed by
Adrian BennettCompare car insurance policies the easy way
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Long story short
Consider insuring your car before you buy it
Getting cover from day one helps protect you from costly accidents.
A car bought on finance can often require immediate cover
Lenders may insist on comprehensive insurance to protect their investment (and yours).
Buying a used car means buying a new policy to insure it
If you want to insure a used car, you’ll need to get your own cover from the moment the car is yours.
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. The best way to minimise risk is to make sure your car is insured from day one, so you can enjoy driving it with peace of mind.
Car insurance is designed to help protect you from liabilities if you have a car accident or your car is stolen, damaged, or vandalised. So it’s a good idea to start your policy from the moment you start driving your car – whether that’s out of a dealership or the previous owner’s driveway.
Usually, insurance policies purchased online or over the phone come with the option to start cover immediately. However, you can also choose to pre-purchase your insurance policy and have it start on a day you prefer – provided it’s within a certain timeframe; for example, within 30 days of buying the policy.
Most insurance providers offer a few payment options to give you flexibility and help make your insurance more affordable. Typically, you could expect to pay a slightly cheaper rate if you pay the full annual premium in one go or a slightly higher rate if you opt for the flexibility of paying your premium in month-to-month instalments.
You usually have the option to start the policy immediately, regardless of which payment option you choose.
Starting car insurance for a new car
Do I need insurance before picking up a new car?
Ideally, it’s a good idea to have a car insurance policy locked and loaded before you pick up your new car – because imagine having a prang just few minutes after getting behind the wheel!
Of course, you could sign up for a policy right before or after you’re handed the keys. But think about that last-minute rush to buy a policy when you’re itching to experience your first drive in your new car!
Pre-purchasing car insurance can give you time to compare policies and make an informed decision, to give you the best chance of getting better cover at a better price. A bonus of having pre-purchased car insurance is that it helps fend off any insurance offers from the dealer (which can be poor value).
What if I’m financing the car?
If you’re buying a car on finance, your lender may require you to insure your car from the get-go. This is because the lender has a vested interest in your car and car insurance is a failsafe for their investment in case the vehicle is written off.
Let’s say, in an unfortunate turn of events, a car you recently bought on finance becomes a total loss. You’ll still be required to repay the loan. In this case, your car insurance payout can help settle your debt to the lender.
Many lenders may require that you get a comprehensive policy as it’s the only level of car insurance that can cover a write-off where you were at fault. You may also need to provide your lender with a certificate of currency as proof that your car is insured.
Starting car insurance for a used car
Will a used car already be insured?
When you’re buying a used car, it might be insured by its previous owner or the dealership you’re buying it from. But this cover doesn’t extend or roll over to you when you become the vehicle’s new owner.
So regardless of whether it was previously insured or not, it’s always a good idea to get your own car insurance when you take ownership of a used car. Doing this helps ensure that you or anyone else you authorise to drive the vehicle is covered from day one.
Can I get car insurance for a used car before title transfer?
Yes, as the new owner of a used car you can purchase a new car insurance policy to commence from the moment you take ownership and start driving.
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’ll typically have 14 days to notify your state or territory’s road authority that you’ve purchased a used car and transferred the title to your name.
Cancelling a car insurance policy early
Can I get a refund if I sell my car during the policy term?
Yes, but the details depend on your policy.
If you sell your car, you’ll cancel your car insurance policy for that vehicle and the new owner will then purchase their own car insurance.
If you’ve 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, minus any potential cancellation fees and government charges.
If you cancel your policy within its cooling-off period, you can get a full refund so long as you haven’t made a claim.
Can I get a refund if my car is written off during the policy term?
Generally no, you won’t get a refund on a comprehensive policy. If you only have third-party cover (and therefore aren’t getting a payout for your written-off car), you should be able 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.
Keep in mind that if you have third-party, fire, and theft insurance, you generally won’t be covered for damage to your own car from an accident you caused. Make sure you consider your car’s value when choosing a policy.
Helpful tip
Not sure what kind of car insurance you should start off with? As a minimum, you might want to take out third-party property insurance, so if you damage someone else’s property or vehicle while driving you’ll be covered. You can always upgrade to a comprehensive policy later on.
This might be particularly useful if you suddenly find yourself doing a lot more driving. Or maybe you have a big road trip planned in the future. Taking out comprehensive car insurance in advance might give you a greater level of protection on those busy freeways!
Toby Hagon
Motoring Journalist
Types of car insurance in Australia
Compulsory third-party (CTP) insurance
Depending on your state, CTP insurance may already be included in your car registration, or you might need to buy it separately. You should always double-check this with your provider or your state/territory vehicle authority.
Third-party property insurance
Third-party property insurance covers you for damage to other people’s property, but it generally doesn’t cover damage to your own car.
Third-party, fire, and theft insurance
Third-party, fire, and theft insurance covers the same things as third-party property insurance, plus damage to your own car when it’s caused by fire or theft.
Comprehensive insurance
Comprehensive insurance gives you the highest level of protection if you want to cover damage to your car. So if your car is essential to your daily life, a comprehensive policy might be worth considering.
Which car insurance do I need?
All car owners in Australia must have compulsory third party (CTP) insurance, which is called Green Slip insurance in New South Wales.
Additional car insurance isn’t compulsory, but it’s a very good idea if you don’t want to be left with a huge bill after an accident.
If you just want to be covered for damage to another person’s car, then you might consider taking out third-party property insurance.
If you also want to be covered for damage to your own car, then comprehensive insurance is probably the way to go.
With so many providers out there to choose from, we can help make things a bit simpler. With a comparison service like iSelect, you can choose from a variety of car insurance providers and types of insurance.
Frequently asked questions
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 might 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 purchased a policy at the beginning of June 2025, you will typically be covered until the end of May 2026. But if you don’t need your car after December 2025, 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 more about them in the policy’s product disclosure statement (PDS).
Is car insurance cheaper if I don’t drive much?
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.
For example, a pay as you drive policy may offer a lower premium if you drive within a specific number of kilometres, say 10,000 km or 15,000 km, during the policy term. So, the less you drive, the less you pay. Bear in mind that insurers may ask you to disclose your odometer reading to keep track.
It’s important that you’re up-front 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 and Flexicar are readily available in several Australian cities and suburbs.
Typically, car share companies sort out car insurance for you, so you might not have to worry about finding a policy yourself. Just make sure you read the product disclosure statement (PDS) 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.
How do I compare car insurance policies?
It’s quick and easy to compare policies with iSelect. Simply open our car insurance comparison tool, and enter your postcode and suburb, along with some details about your car and yourself. And in just a few minutes, you’ll have access to a detailed comparison of matching insurance policies.
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