Do I Need A Car Insurance Policy If I’m Not Driving?

white car in garage - if your car will be parked and not used you might not need a car insurance policy

You probably know by now that a comprehensive car insurance policy is recommended for safeguarding your finances from driving-related accidents and incidents. But if you’re not planning on driving over the next few months, do you really need car insurance? Or can you go insurance-free to save a few bucks while you’re away from the wheel?

Let’s take a look.

The legal stuff and car insurance

Like third party car insurance, comprehensive car insurance isn’t compulsory in Australia but that doesn’t mean it’s not a good idea. It increases your financial protection against road-related incidents, so you’re not stuck with enormous out of pocket expenses after a claimable event.

Working alongside your insurer, you’ll get back on the road quicker and easier than if you were flying solo. And very likely with much more left in the bank.

Different insurance providers have different inclusions, add-ons and discounts with their policies so it pays to do your research. Read more about comprehensive car insurance in Australia here.

Some insurance is compulsory

Remember that even if you’re not driving, your car is still registered for the time being. In that case, under Australian law compulsory third party insurance (CTP) is required. In every state and territory.

There’s no way to get around this – you can’t pay for your car registration without it. And without it you can’t legally drive.

CTP insurance is this important because it protects you financially if you’re involved in an accident which causes injury or death to someone else. That could be occupants of your car, another car, or even pedestrians or other road users.

And by protecting you financially we mean it covers the compensation pay outs for these people. It doesn’t cover any costs for damage you cause to other people property, or your and other people’s cars. That’s what comprehensive and third party car insurances are for.

It also doesn’t cover any damage to your car that might happen due to theft, fire, flood or another weather-related event. Like a tree branch falling on it due to high winds. Or damage someone else causes to your car – someone who might be uninsured themselves so can’t cover repair costs.

To leave it be or not to be

With this in mind, let’s further explore today’s topic…

Maybe you’re on holiday sans car (COVID-allowing!), injured, using a work vehicle for the time being or just don’t need to drive for a bit. Whatever the reason, it is possible to cancel car insurance if you won’t be getting behind the wheel for a while.

But do the pros outweigh the cons? Are you really willing to leave your car unprotected all that time?

There are a few things you need to consider before you potentially ditch your car insurance.

Not renewing your car insurance policy

If your current car insurance policy is coming to an end and you’re completely sure you won’t be driving, you can look at not renewing it. This means that for the time period you’re uninsured, you won’t be covered should you need to drive in an emergency.

Nor will you be insured for anything of the above-mentioned situations.

You’d save some money until you renewed again, sure. But is your car garaged properly? Is your house weather-proof? Natural disaster proof? Do you have all kinds of habits to prevent car theft locked into place? Is nobody else planning on using your car while you’re not?

Also, if you’re paying a car loan or lease against your vehicle your financier usually needs to see adequate insurance against it. To protect what is still – in part – their asset. Not renewing your car insurance policy could mean you’re in breach of contract.

Is the risk worth the money saved?

lower your car insurance premium and get a new car insurance policy

Can you cancel a car insurance policy mid-term?

But what if your car insurance policy is still active and you want to take a short break? Then you’d have to look at cancellation.

In Australia, car insurance policies are usually 12-month agreements. If you don’t need cover for the remainder of the year, you can normally cancel your policy early.

However, this may attract a cancellation fee. Whether the fee is worth it for you will depend on your premium, the cancellation fee amount, and how much time is left in your contract.

Other things to remember about your car insurance policy

Remember to check your product disclosure statement and your policy. This should outline any conditions of cancellation.

Also know that if there’s any gap in your car’s insurance cover the next time you go to insure it the insurance provider could see that as a red flag. And deem you a higher risk customer.

Further, if you move to a new insurer for your next car insurance policy then you may risk the great driving record you’ve proven with the previous provider not being transferred across. Some insurers take it into account, some don’t.

Always speak to your insurance provider for clarification if you’re unsure about anything. The need for a cancellation or a break in cover cannot always be predicted. But where it can, honesty and clear communication is always the best policy.

While there are some situations where it seems to make more sense to not have car insurance, it isn’t usually a smart idea. Here are some tips on how to lower your car insurance premium instead.

And here’s how to look after your car when you’re not driving it.

Consider keeping your car insurance

If you’re hoping to save some cash on your car insurance, why not get a quote from PD Insurance?

We offer competitive rates on comprehensive car insurance (plus a range of inclusions, discounts and add-ons), so you can keep your cover without breaking the bank.

Over to you

Have you ever thought about taking a break from your car insurance policy? What were the circumstances for that and what did you end up doing? Let us know your experience in the comments.

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