Car insurance cover notes explained

Car insurance cover notes used to provide you with coverage for a limited time. These notes were widely used as a stand-in for insurance for drivers who had just bought a new car and hadn't figured out what policy to buy yet.

While cover notes are no longer issued in Australia, the cooling-off period included in most car insurance policies can be used in much the same way.

What is a car insurance cover note?

A cover note is a temporary insurance policy for your vehicle. They were designed to provide short-term car insurance cover for a vehicle until you bought a proper policy.

They were handy because they gave you time to compare policies and didn't require an upfront payment – unless you needed to make a claim.

Alternatives to car insurance cover notes

When you take out a car insurance policy in Australia, you're given a grace period known as the "cooling-off period" to change your mind. Typically, this lasts between 15 and 30 days, depending on the insurer. If you cancel your policy within this time, you'll receive a full refund.

The important point here is that you are still fully insured during this interim period, with all the benefits of the policy you've purchased. So long as you cancel the policy before the cooling-off period expires, you'll receive the same temporary benefits that a cover note would have provided.

Keep in mind that you'll only receive a full refund if you haven't made any claims on the policy. You might also lose a bit of money in the transaction due to administration fees during the process.

Things to know about temporary cover

As with any policy, your cover will only be effective from the date of commencement listed on your insurance certificate. If you're interested in getting instant cover, let your insurer know that you'd like it effective immediately. You'll be given a policy number that can be used to make a claim if one arises.

There is no functional difference between this method of obtaining cover and a car insurance cover note. And if you end up being happy with the cover, you can choose to keep the policy for the rest of its term, rather than refunding it.

Gary Ross Hunter, car insurance specialist

"Car insurance cover notes were convenient but a cooling-off period functions in much the same way. The only real difference is that you'll need to ring the insurer now and cancel, which is slightly inconvenient. Rather than having to do that, it's worth just setting aside 30 minutes or so to compare car insurance. Get quotes from a handful of insurers to see who comes out best for you. That way, you won't have to worry about calling up and cancelling later."

Deciding what car insurance you'll need

Comprehensive car insurance

This is the only level of car insurance that covers both damage to your own car and other people's vehicles. It also covers theft, hail, fire and storm damage. Other features include key replacements, new car replacement (if yours is written off) and a hire car if yours is stolen. No-excess windscreen damage cover is usually an optional extra.

Third party car insurance

This covers costs if you damage someone else's vehicle. It can also pay to repair or replace your car if it's damaged by fire or stolen. It won't cover damage to your own car due to an accident, storm or flood.

Third party property car insurance

This covers you for damage to someone else's vehicle. It won't cover damage to your own vehicle in a collision. It's typically only marginally cheaper than a third party fire and theft policy.

Compulsory third party

Every registered driver needs compulsory third party in Australia. In many states, such as Victoria and Western Australia, it's included in your car registration. It covers compensation costs, such as hospital expenses, if you kill or injure someone in a car accident.

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Frequently asked questions

• Do insurance companies issue cover notes?

  Not anymore. Insurers no longer offer cover notes as a temporary insurance solution. You now have to make do with a cooling-off period. This is a grace period that typically lasts around 21 days. If you cancel your policy within this time, you'll receive a full refund.

• What happens if I make a claim during the 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).

• Are there other short term car insurance options?

  If you're looking for temporary cover that lasts longer than the average cooling-off period of 21 days, check out our guide to short-term car insurance. If you don't plan to drive often, pay-as-you-drive car insurance can be helpful.

To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.

Written by

Gary Ross Hunter

Journalist

Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards. See full bio

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