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Car insurance cover notes are so rare they’re essentially a thing of the past now, but they used to be a handy way to get your brand-new car home from the showroom before you had figured out what car insurance policy to buy. They provided insurance coverage for a limited time.

What is cover note insurance?

Cover note insurance provided short-term protection for your car. It gave you time to choose a policy and required no upfront payment. However, if you needed to make a claim before taking out a full policy, you had to pay the cost of your cover note insurance before claiming.

How cover note insurance worked

Cover note insurance was originally designed to provide new car owners with temporary cover. The idea was to protect your car in the short term (like when driving it home from the place of purchase) until you decided which car insurance provider and policy to insure your vehicle with.

Car insurance cover notes didn’t have upfront costs, but you would have to pay if you wanted or needed to use the policy.

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.

Is cover note insurance for cars still available?

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 have 21-day cooling-off periods instead. Cooling-off periods have effectively replaced cover note insurance as they’re used in a similar way.

Car insurance cooling-off periods

Cooling-off periods are the initial time frames after you purchase a policy during which your car will be fully covered, but you’ll have the opportunity to switch or cancel your policy if you change your mind. If you do happen to cancel or switch your insurance during the cooling-off period, you may receive a full refund (provided you haven’t made a car insurance claim already).

Not all insurance companies will offer 21-day cooling-off periods; some only offer 14-day periods instead, regardless of your level of cover.

Person getting keys to new car

Deciding which car insurance you’ll need

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 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 include:

Comprehensive car insurance

Comprehensive covers the damages for both your vehicle and other involved in an accident, regardless of fault. It’s the highest level of car insurance available and also 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 brand new motor vehicles written off (i.e. a total loss) within a year or two of purchase if you’re the first registered owner.

Comprehensive cover also allows you to add optional extras like windscreen excess reduction cover and personal effects cover.

Third Party Fire and Theft insurance

Third Party Fire and Theft is similar to Third Party Property Damage insurance but will also cover the costs if your vehicle is stolen or damaged by fire. Keep in mind that it won’t cover the damages to your own vehicle in a collision.

Third Party Property Damage insurance

If you cause damage to another vehicle or property, Third Party Property Damage will cover those repair costs. Note that it won’t cover the costs of any repairs to your car or property.

Compulsory Third Party (CTP) insurance

As the name suggests, CTP insurance is compulsory for all registered drivers. This insurance is designed to cover the death and injury of other people if you cause an accident while behind the wheel.

Frequently asked questions

Is cover note insurance the same as a cooling-off period?

No, cover note insurance isn’t the same as cooling-off periods. While both ensure that your car is protected from the point of purchase while giving the option to swap or cancel the policy at no cost provided no claims have been made, there are some key differences between the two.

Cover note insurance gave you 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 days minimum), it allows you to receive a full refund for the cost of your insurance.

If you had purchased car insurance after obtaining cover note insurance, that new policy would still be subject to a cooling-off period.

Are there any short-term car insurance options?

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 generally organised by the hire car provider, which may come at an additional cost to you.

What happens if I make a car insurance claim during a cooling-off period?

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 won’t receive a full refund of your premium if you choose to cancel your insurance after making a claim, regardless of what you were claiming for (e.g. accidental damage, theft, roadside assistance).

If I buy a new car, can I transfer my car insurance policy?

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 another 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:

  • The level of cover you have (e.g. a comprehensive car insurance policy or Third Party Property Damage)
  • The market value of the new car
  • Any changes to your driving history
  • If you park or use the car differently

When the policy renews your new premium will reflect the vehicle it was transferred to.

Are all cooling-off periods the same?

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). Some may even have periods as long as 30 days.

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 document when considering a product.

Are waiting periods the same as cooling-off periods?

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.

Some car insurance companies may let you claim for damage that would otherwise be uninsured because of a waiting period if you buy car insurance the same day as you buy the car. Also, if you switched policies and previously had the same level of cover, some providers may waive the embargoes s for specific events as well.

Stephen Zeller, General Manager

Tips on purchasing car insurance without a cover note from our expert, Stephen Zeller

  1. A cover note is a temporary insurance contract however it is extremely rare to find it being used by an insurer today. You will need to purchase an insurance policy to get cover for your car instead, and you can cancel this policy at any time. Just be aware of the cooling-off period and any cancellation fees that may apply.
  2. Consider raising the standard excess of your car insurance, as this reduces the premium you pay. Keep in mind that this means you will have a more expensive excess if you make a claim.
  3. Many insurers will give you a discount for purchasing car insurance online, but this is just for the first 12 months. After that, the discount ends, so it pays to compare car insurance at least once a year.
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