Short-term car insurance – what are some options?

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If you want to make sure your vehicle is fully covered, then a comprehensive car insurance policy might be a suitable option, but these policies tend to run for a full year. What happens if you are in a situation where you don’t need insurance for a full year, or don’t want to pay for insurance for that long?

While dedicated short-term car insurance isn’t commonly offered by insurance providers in Australia, you may be able to find policies that allow you to pay monthly or fortnightly. Even if you choose an annual plan, you can usually cancel it at any time and receive a refund for the unused portion of your premium, although a cancellation fee may apply.

Other options to consider may include pay-as-you-drive car insurance policies or renting a car if your driving needs are temporary.

Can you get temporary car insurance in Australia?

Temporary car insurance isn’t common in Australia, but you may find some options with standard car insurance policies that offer short-term coverage. Some insurance providers will allow you to take out a standard car insurance policy that offers the option of monthly or fortnightly payments, instead of annual ones. These kinds of policies offer more flexibility than standard ones, which generally require you to pay your premiums annually to insure your car. In many cases, a policy for short-term car insurance in Australia can be cancelled at any time, although it is likely you’ll be charged a fee for doing so. Before signing up for a temporary car insurance policy, it could be worth checking with the provider to confirm whether you’ll be charged a fee or a higher premium for the convenience of paying by the month or fortnight.

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Can you insure a car for one, three or six months at a time?

If you wish to insure your car on a month-to-month basis, there are some insurance providers who offer this option in Australia, although the number who do so may be comparatively limited compared with those who offer car insurance on an annual basis. If you’re looking for six-month car insurance, or insurance for a shorter period than that, it is therefore advisable to check with an individual insurance provider to confirm whether they offer month to month car insurance.

Does temporary car insurance have any drawbacks?

The drawbacks of short-term car insurance can include high cancellation fees and the potential for higher month-to-month costs than a traditional car insurance policy. When you sign up for short-term car insurance in Australia, you are typically signing up for a one-year contract, albeit one that can be cancelled at any time. While you can usually cancel a short-term car insurance policy on request, the fee you incur for cancellation could potentially be quite high. This means if you only require insurance for a short period of time, the cost for a few months may end up being comparable to the cost of a year’s worth of insurance on a standard comprehensive car insurance policy.

If you wish to know more, you can compare comprehensive car insurance policies with Canstar. You can use the filters in the table to sort by policies that allow you to pay by the month at no extra cost.

Do you get temporary insurance when you buy a car?

When you buy a car, the dealership may offer car insurance through one of their preferred providers. However, this will typically be a standard annual comprehensive policy, not a short-term or temporary cover.
It may be a good idea to compare your options and arrange your insurance before you drive the car off the lot. If you choose the dealership’s insurance but later change your mind, you can usually cancel the policy. You may be able to cancel within the cooling-off period for a full refund, or cancel later with potential fees applying.

What is short-term car insurance?

Short-term or pay-as-you drive car insurance is a kind of car insurance policy that is typically geared towards people who do not drive often. It is intended to provide the benefits of comprehensive car insurance, but at a potentially lower cost. These kinds of car insurance policies typically only require you to pay for the kilometres you plan on driving in a certain period, usually a year.

While most pay-as-you-drive policies have a year-long term, they may still potentially be an option to consider if you only require car insurance for a short period – an insurance provider may be willing to provide cover for the kilometres you think you’ll drive in that short period, even if the policy lasts for a full year. These temporary policies typically also allow you to pay to ‘top up’ your kilometres for an additional cost, which could potentially make them a fairly flexible option for the occasional driver.

How do you apply for a pay-as-you-drive car insurance policy?

The handful of Australian insurance providers who offer pay-as-you-drive car insurance tend to have similar application processes. Typically, you will need to contact an insurance provider that offers this type of policy, either online or by phone, and provide them with details such as your current odometer reading and the distance you plan to drive. Assuming you qualify for cover, the insurance provider will provide you with a quote based on your driving history and nominated number of kilometres.

How does a short-term car insurance policy work?

An insurance provider will typically provide an ‘end odometer’ reading, which represents the maximum amount of kilometres that you anticipate will be on your odometer once you have completed your planned trip. If you are nearing the ‘end odometer’ reading before the end of the policy term, you can typically contact the insurance provider to ‘top up’ the kilometres allowed under the policy, typically for an additional premium.

If you make a claim and the odometer is in excess of the policy’s end odometer reading, you will typically be required to pay a surcharge on top of your standard excess, and any other excess fees that may apply at the time.

Do short-term car insurance policies have any drawbacks?

The main potential downside of a short-term car insurance policy is that it requires you to plan ahead for quite a considerable period of time, generally around a year. Circumstances out of your control may lead to you having to drive more than you plan to in any given 12-month period, so you could have to pay for either additional kilometres or an ‘out of odometer’ excess. This can add to the overall cost and should be carefully considered before taking out a pay-as-you-drive policy.

Another potential drawback of one of these policies can be estimating the kilometres you’ll drive over the course of an entire year. Unless your driving habits are set in stone, you may find it difficult to accurately estimate how many kilometres you drive annually – especially if you’re taking out a pay-as-you-drive policy because you need insurance for a short period, in which you’ll presumably be driving more than during the rest of the year. There is the potential that you could end up having to make an overly generous estimate to be on the safe side, likely leading to a higher-than-desired premium which may not compare as favourably as you’d hoped with the costs of a standard car insurance policy.

It is important to note that if you plan on driving a car on a public road, that car must be registered and have Compulsory Third Party or Green Slip insurance. CTP insurance is legally required to register your car and is an included cost of vehicle registration in most states and territories. The legal liability for injury or death from an accident can stretch into hundreds of thousands of dollars, which is why CTP insurance is considered necessary everywhere in Australia, although the exact rules differ between states and territories.

How does renting a car work?

If you only need a car for a short period of time, a rental or hire car may be another option you could consider. If you choose this option, you will simply need to find a rental car provider who can provide you with the kind of car you require for a set period of time.

What are the drawbacks of rental cars?

While renting a car is perhaps a relatively straightforward option, it can also potentially be expensive, depending on how far you will be driving and for how long you need the car. Rental car insurance is typically offered as an opt-in insurance policy pre-arranged by the company providing the vehicle. However, along with various once-off fees you may be required to pay, hire cars typically have a daily hire cost that could quickly stack up, depending on the length of time you need the vehicle.

It is also a wise idea to carefully check the type of insurance that comes with the car. Sometimes the policies have a number of exclusions, or you may need to pay a high excess (sometimes a few thousand dollars) if you have to make a claim.

If you do decide that insuring your own car is the best option for you, you can compare car insurance policies with Canstar.

How much does short-term car insurance cost?

There is no set cost for short-term car insurance in Australia. The price you’re quoted will depend on a number of factors including:

• The level of cover, whether basic or more comprehensive

• The age of the driver or drivers

• The driving history of the driver or drivers

• The make and model of the vehicle being insured

• The excess you choose (a higher excess generally means lower premiums, but more to pay in the event of a claim)

Can you get temporary insurance for someone else’s car?

Generally speaking, the owner of a vehicle will be the primary policy-holder of a car insurance policy. If you are planning on driving someone else’s car, then it is advisable to make sure that their policy will cover you if you’re not the named driver, and that there are no other restrictions that may apply. It’s worth noting that in some cases, the main listed driver of a vehicle could be charged an unlisted driver excess if a claim needs to be made in relation to a driver not named on the policy.

How do I compare short-term car insurance policies?

If you are in the market for a short-term car insurance policy, you can start by comparing car insurance with Canstar, to find providers that will let you pay car insurance premiums month to month – some of these may even offer no cancellation fees, so you can insure your vehicle for a short time and then cancel when you no longer need coverage. When comparing short term car insurance, it pays to consider such factors as the inclusions and exclusions that come with each policy, the amount of coverage you’ll need and how long you’ll need it for, and whether a policy might offer you lower premiums if you opt for a higher excess.

Keep in mind, though, that an excess is payable upfront before your claim is paid out, so while opting for a higher excess can lower your premiums, it can also mean that, if you find yourself needing to make a claim on your insurance, your out of pocket expenses could be higher, cancelling out the potential savings.

Also, while short-term car insurance offers convenience, there’s a risk of being without coverage if the policy expires and you forget to renew it. Always track your policy’s status to ensure you have coverage whenever your car is on the road.

Cover image source: Maridav/Shutterstock.com