Insurance for a new car
Tips on getting insurance for a new car from our expert, Adrian Taylor
Adrian Taylor
Executive General Manager – General Insurance
Research insurance for the car you’re purchasing
It’s important to research car insurance options when purchasing a new car to ensure you’re getting the most appropriate policy for your new set of wheels.
Consider the replacement costs for your new car
A third party insurance policy (that only covers damages you cause to other vehicles and property) might have been fine for your old vehicle, but it could be worth paying more to get comprehensive cover for your new car so it’s covered in case it gets damaged.
Don’t just settle for the dealership’s insurance provider
If you find a better car insurance policy than the one provided by the car dealership or finance company, you can cancel that cover and switch to a new policy at any time. You may even receive a refund of your unused insurance premiums if you cancel the policy before its renewal. Just keep in mind that cancellation fees may apply if this is done outside the cooling-off period.
What type of insurance can I get for a new car?
Under Australian law, your new car must have at least Compulsory Third Party (CTP) insurance before being driven. CTP insurance (which can be known under different names in certain states) typically covers your legal liability for any loss of life and injury as a result of an at-fault car accident, but not damage to other people’s property.
To cover damages you cause to other vehicles and property in a motor vehicle accident, you’ll need Third Party Property Damage or Third Party Fire and Theft insurance as a minimum level of cover. However, these levels of insurance offer little cover to your own car except in limited circumstances (e.g. it’s damaged by an uninsured driver).
So, if you’re looking to protect your new car, a comprehensive car insurance policy offers the highest level of cover. A comprehensive policy may cover the cost of repairs or replacements if your new car is damaged in an accident or by a number of events, like storms or thefts.
Before purchasing any type of car insurance, always read the Product Disclosure Statement (PDS) for full details on inclusions, exclusions and annual limits. The Target Market Determination (TMD) may also help you decide whether an insurance product is suited to your needs.
Can I get insurance for a new car before the transfer?
Insurers typically allow you to purchase insurance for your new car before it’s transferred to you. If you’re buying a registered vehicle, the current CTP insurance will remain active as this type of 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 days of ownership. This registration remains active until its expiry date; before it expires, you need to register the car under your own name.
Do I need insurance to drive my new car home?
Technically, the only insurance you legally need is CTP. However, it’s worth considering at least a third party car insurance policy for your car from day one.
If you 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. You’ll also have to pay for any damages you cause out of your own pocket.
Insurance for a new car purchased under finance
If you’ve just purchased a car using a finance company, they’ll generally offer insurance for you to purchase through their standard provider. However, it might not be the most competitive offer, and you can always choose from other car insurance options.
Finance companies for motor vehicle purchases usually require you to provide a Certificate of Currency (COC), which is a document that shows insurance cover is in place for the financed vehicle. Your insurance company will typically provide this free of charge.
New for old car replacement
What is new for old car replacement?
Under a comprehensive car insurance policy, new for old replacement may provide you with a replacement car of the same make/model if your existing car is stolen or written-off because of an insured event, including collision accidents, weather events, fires and theft.
If you make a claim for a total loss of your new car and are approved for a new car replacement, you may be covered for:
- A car of the same make and model or a similar car available in Australia
- A cash settlement (to the agreed value or market value) if the exact make/model or a similar car can’t be sourced in Australia
- The same accessories as the insured vehicle or similar accessories that can be sourced in Australia (as listed in your COC)
- A replacement vehicle in your driveway within 90 days
- Payment of all applicable on-road expenses (stamp duty, transfer fees, registration, CTP insurance).
Under new car replacement cover, you could also be eligible for a hire car to drive while you wait for your new car to arrive. Check your policy documents like the PDS to find out more about your policy and the type of cover it provides.
What vehicles are eligible for new for old car replacement?
If you’ve purchased insurance for a brand-new car, some insurers may offer lifetime new car replacement with a comprehensive policy if you’re the first registered owner of the vehicle.
Otherwise, new car replacement cover usually only applies to vehicles that are less than two years old, with less than a certain number of kilometres on the clock. Always read the PDS for more specific details on eligibility.
Does it cost extra for new for old cover in car insurance?
Typically, new for old cover is automatically included in eligible policies without any extra charges.
Meet our car insurance expert, Adrian Taylor
As Executive General Manager of General Insurance at Compare the Market, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.