Can you buy temporary car insurance?

You may need to buy temporary car insurance for various reasons, including when planning to rent a car. You could also need it when your current car insurance policy is about to expire, and you want more time to find a new policy.

As these situations and the name suggests, temporary car insurance or short-term car insurance is a stop-gap measure. It cannot really substitute for your regular car insurance policy. Aussie insurance providers may not offer a temporary car insurance policy, which means you have to research the options you do have for your situation. 

Where can I get temporary car insurance?

If you are looking specifically for temporary car insurance, Australian insurers may not have a policy for you. All vehicles in Australia are required by law to have at minimum a comprehensive third party (CTP) policy to be registered to drive. The only circumstances you may find you can get a temporary car insurance policy is for a comprehensive policy or third party fire and theft policy.

Buying a temporary car insurance policy, however, can put you at risk of driving without the coverage you’d like, which can end up costing you more.  You’ll need to find less straightforward ways of buying car insurance to make sure you’ve got the coverage you want for a short duration. Even by doing this, you may not find many suitable options.

One option is to look for a car insurance policy which offers a suitable level of coverage with flexible payment options. You’ll need to find out the terms and conditions around cancellation for such a policy or see if you can negotiate with the insurer to minimise the cost. An insurer may be more willing to help you with this if you’re an existing, previous or potential long-term customer of theirs. You can then pay a monthly premium for the policy as long as you need it and then cancel it when necessary.

Alternatively, you could consider buying a ‘pay as you drive’ policy. This will usually be a comprehensive car insurance policy, but the cost of the policy is calculated based on the distance you drive rather than any lump sum payment. If you’re sure about the amount of driving you’ll be doing, or not doing, this policy may be a convenient option. But you have to remember that if you end up driving a lot, a ‘pay as you drive’ policy can prove quite expensive. This increased cost may be comparable to the costs that come with renting a car, although they are charged by the day.

How much is temporary car insurance likely to cost?

When you buy temporary, full coverage car insurance, you may feel like you’re paying a smaller amount compared to the annual cost of car insurance. However, beyond a month or two, buying a temporary policy will probably not be a cheaper option. You’re also unlikely to find the information to compare temporary car insurance quotes. This means you have no way of checking if you can get a more affordable policy. You’ll need to consider how long you’ll need the insurance policy and decide if it makes more sense to buy a regular policy and cancel at a later time.

If you’ve rented a car, you may be familiar with the expense involved in buying car insurance for a few days. This is especially true if you’ve bought rental car insurance from the car rental agency. Not only is the premium higher, but you also have to contend with a phenomenally high excess, which is the out-of-pocket expense of any claim against your insurance policy. You may need to buy another insurance policy just to cover this excess called car rental excess insurance policy.

How do I compare temporary car insurance policies?

You may not be able to use the usual tools to compare temporary car insurance policies. But with a little work and some individual research, you can still compare policies. Suppose you find an insurer offering a car insurance policy that you can sign up for temporarily, meaning you can cancel when you need to. The first factor that you should compare is the cost of the policy. Look at how much the temporary period you need the policy will cost and compare it to the annual cost of the policy. 

For example, if the insurer offers you a policy with an annual premium of $1,200 and the monthly premium for your temporary policy is $150. This is a significant difference in cost. Theoretically, the $1,200 annual premium divided by 12 should equal a monthly premium of $100. This difference in cost means you may be making the trade-off between getting a discount for paying an annual premium and buying what you see as a temporary policy.

In addition to charging a higher monthly premium, the insurer may also charge you an administration fee for giving you a flexible payment option. There may also be more fees you have to pay when you decide to cancel the policy before the year is complete. Ideally, you should ask the insurer for information about any fees or charges before you agree to buy the policy.

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