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Paul Coughran

Paul Coughran

Updated 07/03/2025

Short term car insurance

Need car insurance for just a few weeks or months? Whether you’re borrowing a mate’s car, hiring one for a holiday or only driving every now and then, short term car insurance could be the temporary cover you need. But how does it work in Australia, and is it even an option?

Key Points

  • Traditional short term car insurance isn’t common in Australia, but there are lots of alternatives.

  • Options include pay-as-you-drive, monthly premium policies and hire car insurance.

  • Choose the best option by balancing cost against the level of cover.

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Understanding short term car insurance

Unlike some other countries, short term car insurance – where you get a policy for just a few days or weeks – isn’t really available in Australia. Most insurers only have annual car insurance policies, but that doesn’t mean you’re stuck paying for a full year’s cover if you only need insurance temporarily.

Instead, drivers looking for short term car insurance in Australia can find flexible alternatives that let you pay monthly or cancel when you no longer need to be covered. It’s a great way to get the temporary protection you need without committing to a long-term (and expensive!) policy.

Alternatives to short term car insurance

If you’re looking for temporary car insurance, here are your main options in Australia:

  • Monthly premium policies: Take out a standard car insurance policy with monthly payments. You can cancel once you no longer need it, although make sure you check to see if any cancellation fees will apply.

  • Adding a driver to an existing policy: If you’re borrowing someone else’s car, the owner can add you as a nominated driver for the duration you need cover.

  • Hire car insurance: If you’re hiring a vehicle, you can take out insurance directly from the rental company for the length of your hire.

  • Pay-as-you-drive insurance: This type of policy charges you based on the kilometres you drive, which can be perfect for occasional drivers.

Benefits and drawbacks of each option

Pros

Cons

Monthly premium policies

Flexible cancellation; instant cover

Cancellation fees can apply

Adding a driver

Cost-effective and simple to arrange

Requires the car owner’s consent and might impact their premiums

Hire car insurance

Just for the hire period; very convenient

Can be expensive; usually has exclusions

Pay-as-you-drive

Ideal for low kilometres; flexible

Not truly short-term; relies on odometer tracking

Considerations when choosing temporary car insurance

Before committing to any of these options, think about:

  • How long do you need cover for? A few days, weeks or months?

  • Compare the premiums, excess and cancellation fees across all your options.

  • Do you need comprehensive cover or is basic third-party enough?

  • Check the PDS for any hidden fees, restrictions and extras (like roadside assistance).

5 steps to arrange short term car insurance

If you’re ready to organise short term car insurance in Australia, follow these five simple steps:

  1. Decide what you need: How long will you need cover, and what level of protection do you want?

  2. Explore your options: Compare monthly policies, hire car insurance and pay-as-you-drive plans to decide on the best fit.

  3. Get quotes: Compare premiums, excesses and cancellation terms across different insurers.

  4. Check the fine print: Read the terms carefully, especially around cancellations and restrictions.

  5. Lock in your cover: Once you’re happy with a policy, purchase it and keep all the paperwork handy.

What's new in car insurance - Feb 2025

  • Cheaper cover: A few providers have slashed prices for comprehensive policies.

  • EV insurance: Cover options are expanding as more Aussies go electric.

  • Tech-driven savings: Telematics are driving discounts for safer drivers.

Why compare short term car insurance?

Even temporary insurance can have big differences in terms of price and the level of cover. Taking some time to compare means you can find the right balance between cost and protection, so you won’t be overpaying for cover you don’t need or being caught out without enough insurance.

Whether you’re borrowing a car for a few weeks or simply cutting back on driving for the foreseeable future, short term car insurance in Australia doesn’t have to break the bank – if you compare smartly.

Sources

https://moneysmart.gov.au/car-insurance/choosing-car-insurance

Things You Should Know

Compare Club Car Insurance is an online financial comparison service and is owned and operated by Compare Club Australia Pty Ltd (ACN 634 600 007). Compare Club does not compare all brands or all products offered by all brands.

The financial products compared on this website do not necessarily compare all features that may be relevant to you. Please check with a financial professional before you make any major financial decisions.

Any advice given here is general and has been prepared without considering your current objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of the advice having regard to those objectives, situation or needs.

You should consider the insurers PDS prior to making the decision to purchase their product. For more information please read our Financial Services Guide (FSG) which contains further information about how our service works and how we make money.

Paul Coughran is the General Manager of Emerging Verticals at Compare Club. Paul has over 20 years of experience across a wide range of industries including Banking and Finance, Telecommunications and Energy. Paul leads a team of trusted experts dedicated to helping individuals make informed decisions about their insurance and utilities needs.

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Meet our car insurance expert, Paul Coughran

Paul's top car insurance tips:

  • 1

    Regularly compare your insurance policies – You could be paying for cover you don’t need. Shopping around every so often can save you a fair bit, maybe even hundreds each year.

  • 2

    Don’t just look at the premium—check the excess too. While a higher excess might bring down your premium, remember you’ll have to fork out more if you do need to claim.

  • 3

    Double-check what’s included in your policy. Extras like windscreen cover or roadside assistance might not be part of the deal and could cost you more.

  • 4

    If you don’t drive much, consider usage-based insurance. Some policies base your cost on how much you actually drive, if you work from home or only use your car for short trips this might be a much better option.