Cover note insurance is rare these days but was originally designed to provide temporary cover while transitioning to a new car. The idea was to protect your car in the short term (typically up to 14 days) until you got your insurance for the new car.
Car insurance cover notes didn’t have upfront costs, but you would have to pay if you wanted to keep the policy or needed to make a claim on it.
If you didn’t need to use your temporary cover note insurance, you would then buy a full car insurance policy and let the cover note car insurance run out or cancel it.
Cover note insurance was once common for car buyers in Australia, but it’s now almost completely unavailable in the market and rare to find. While insurance companies no longer offer cover note insurance, most insurance policies offer immediate purchase and have 21-day cooling-off periods instead. Cooling-off periods have effectively replaced cover note insurance as they’re used in a similar way.
To check that your car is properly covered by your existing policy, read your policy documents including the Product Disclosure Statement (PDS) for all inclusions and exclusions that may apply to you, as well as the Target Market Determination (TMD) to see whether the policy is suitable for you.
Cooling-off periods are the initial time frames after purchasing a policy during which you may switch or cancel it if you change your mind. If you exercise this option, you may be eligible for a full or partial refund provided you haven’t already made a car insurance claim.
Typically, insurance companies offer 14-day cooling off periods (with some offering up to 21-day cooling-off periods) regardless of your level of cover.
Cover note insurance isn’t available from Australian insurance providers anymore, but our online comparison tool makes it easy to compare insurance quotes for a variety of other types of car cover policies.
Simply enter your car’s details, answer a few simple questions and decide which type of car insurance you want. The four main types of car insurance are:
Comprehensive insurance covers the cost of damages to both your vehicle and others involved in an accident, regardless of who is at fault. It’s the broadest level of car insurance available and also usually covers your car if it’s stolen or damaged by vandalism, fire, storm or hail. Depending on your policy, it can offer new car replacement for a brand new vehicle that is a total loss and written off within a year or two of purchase if you’re the first registered owner. It’s best to read the PDS for any terms and conditions that may apply.
You can also add optional extras to comprehensive cover like windscreen excess reduction cover and personal effects cover.
Third Party Fire and Theft covers the damage you cause to another vehicle or someone else’s property if you’re at fault for an accident, as well as the costs if your vehicle is stolen or damaged by fire or theft. Keep in mind that it won’t cover the damages to your own vehicle in a collision.
If you cause damage to another vehicle or property, Third Party Property Damage is designed to cover those repair costs (subject to limitations and exclusions). Note that it won’t usually cover the costs of repairs to your car or property except in very limited circumstances.
As the name suggests, CTP insurance is compulsory for all registered vehicles in Australia. This insurance is designed to cover your liability for the death and injury of other people if you cause an accident while behind the wheel.
No, cover note insurance isn’t the same as cooling-off periods. Both ensure that your car is protected from the point of purchase with the option to swap or cancel the policy at no cost provided no claims have been made, but there are some key differences between the two.
Cover note insurance was short-term cover until you purchased a more permanent policy. You didn’t have to pay upfront costs for cover note insurance and it was designed to give you time to weigh up your insurance options.
Conversely, a cooling-off period isn’t something you purchase; it’s included when you take out car insurance. If you change your mind and haven’t made a claim during the agreed time frame (typically 14-21 days), you can cancel or switch the policy and receive a full refund for the cost of your insurance, provided you haven’t made a claim.
Car insurance providers in Australia typically don’t offer cover for periods less than 12 months, meaning it’s difficult to find short-term car insurance. You always have the option of cancelling a policy even after a cooling-off period, but this may attract cancellation fees. In most cases, if you haven’t made a claim, you’ll be entitled to a pro-rata refund of your unused premium.
If you’re driving a hire car for a short time, the insurance is usually organised by the hire car provider, which may come at an additional cost to you.
If you make a car insurance claim during your cooling-off period, you’ll still go through the claim lodgement process as normal. However, you’re unlikely to receive a full refund of your premium if you choose to cancel your insurance after making a claim.
If you buy a new car, some insurance providers let you transfer your car policy if you still have a period of insurance left on your current pay cycle. That way, you don’t have to go through the hassle of finding a new policy for your new set of wheels.
When transferring your policy to your new car, you may need to pay an additional car insurance premium depending on the circumstances, which could include:
Cooling-off periods differ between providers and car insurance products. Many have a 21-day cooling-off period, whereas others only have 14 days which is the legal minimum required.
You can view the details of your cooling-off period in your policy’s relevant Product Disclosure Statement (PDS). You’ll also find other policy information such as payout limits, exclusions, definitions, terms and conditions, so it’s always a good idea to read this policy document when considering a product.
Most car insurance policies will have a waiting period for specific events where you won’t be covered if you make a claim; this can sometimes be referred to as an embargo period. For example, you typically cannot claim for fire, storm, cyclone or flood damages that happen within 72 hours of purchasing a new car insurance policy. Details of any waiting periods applicable to your specific car insurance policy can be found in the PDS.
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