Whether your new car is straight off the showroom floor or purchased from a private owner, it’s a new car as far as you’re concerned. Of course, there are some differences between insuring a car bought off the lot and insuring a car you bought from a previous owner. We’ve got the answers to some of the most common questions people ask when it comes to getting insurance for a new car.
Do I need new car insurance before I buy a new car?
Absolutely! Under Australian law, you are required to have at least Compulsory Third Party (CTP) insurance prior to driving your new car. This will cover you for any loss of life and injury as a result of an at-fault accident, but not other people’s property.
Choose the right insurance for a new car
Once you’ve learned about insuring a new car, you can use our comparison service to search for new car insurance options that are right for you. Once you select an insurer, thoroughly read the full details in their product disclosure statement (PDS) and note the exclusions and what may be required as optional extras for your new policy.
Do I need insurance to drive my new car home?
As a rule, it’s always best to purchase a third-party car insurance policy for your car from day one (unless you plan on towing it to your property without it being driven on the road). When driving your new car off the lot, please make sure you are covered for your trip home.
It would be advisable to have at least Third Party Property Damage cover and/or Third Party Fire and Theft to ensure you are protected against any damage caused to other vehicles on your trip home, and/or fire and theft cover for your own vehicle. A comprehensive car insurance policy provides a higher level of cover.
If you’re uninsured and cause accidental damage to your own or someone else’s car or property, you may attract costly penalties that can significantly affect your driving record.
Can I get new car insurance before the transfer?
Most insurers typically allow you to purchase insurance up to 14 days before the title of your new car is transferred to you. If you’re buying a registered vehicle, the current CTP remains active as insurance follows the car, not the driver.
Most states in Australia share the same grace period for you to transfer your name to the car’s current registration within 14 to 15 days of ownership and this registration remains active until its expiry date. Before it expires, you need to register the car under your own name.
Can I drive my new car on my old car policy?
Most insurers will typically offer a grace period that allows you to drive your new car on your existing policy for a limited time. This benefit usually lasts from a week up to 14 days so you have time to update your policy or shop for a new one.
Depending on your current insurance policy, this benefit should provide you with the same cover you had with your existing car. It may cover unfortunate scenarios such as accidental loss, attempted theft or vandalism until you update your insurance policy to cover your car.
You should inform your insurer that you have purchased a new vehicle as soon as possible, or even inform them prior to picking up the new car, so you are covered on the road.
What is new car replacement insurance?
Under a fully comprehensive car insurance policy, a new for old replacement car insurance policy can provide you with a replacement car of the same make/model if your existing car is stolen or written-off during a collision accident, a weather event-related accident, fire and/or theft.
Important factors for eligibility could be –
- Your insured vehicle must be under two years old with you as the first and only registered owner (which may differ between providers)
- Kilometre limit for ex-demo purchased vehicles.
New car replacement type of cover protects you from the total loss of your new car, and can provide benefits such as:
- A car of the same make and model or a similar car that is available in Australia
- A cash settlement (to the agreed value or market value) if the exact make/model, or a similar car cannot be sourced in Australia
- The same accessories as the insured vehicle or similar accessories that can be sourced in Australia; as itemised in your Certificate of Insurance (COI)
- A replacement vehicle in your driveway within 90 days
- To pay all applicable on-road expenses (stamp duty, transfer fees, registration, CTP insurance).
Under a new car replacement cover, you may also be eligible for a hire car to drive or alternative transport while you wait for your new car to arrive. Check your policy documents and PDS to find out more.
Does it cost extra for new for old car insurance?
Some insurers offer a lifetime new car replacement add-on for your comprehensive policy if you are the first registered owner of the vehicle. Otherwise, the cover would only apply to vehicles that are less than two years old, with less than a certain number of kilometres travelled.
Insuring your new car while under finance
If you have just purchased your replacement vehicle (either brand new or used) using a finance company, usually, they will offer insurance for you to purchase through their standard provider. Usually, this is comprehensive cover that’s not the most competitive option.
There’s no need to spend more than you should. If you would prefer to choose your own CTP cover, you can, of course, do so.
Finance for motor vehicle purchases usually requires you to provide proof of insurance – usually the COI – a document that shows insurance cover is in place for the financed vehicle. Your insurance company will provide this free of charge on request.
How to reduce your excess with added cover options
If you’re looking to shave costs off your insurance without compromising your overall protection, there are small add-on covers you can look into to add to your existing policy such as adding cover to reduce your basic excess for windscreen cover claims (windscreen and side windows).
Use our free comparison service to get car insurance quotes for car insurance cover best suited to your new car.