There are any number of reasons why you might find yourself behind the wheel of a vehicle that’s not your own. Perhaps your favourite aunt has lent you her SUV for a few weeks while yours is being repaired, or you’re learning to drive in your parents’ car. Maybe you’re planning on borrowing a mate’s trusty ute for a reno project, or you’re flying interstate and need a hire car for a work trip? Whatever the reason, you’ll probably want to ensure you’re covered if anything happens while you’re in the driver’s seat, right?
But when you jump online to search for “short-term car insurance”, you might start to realise that taking out a policy that covers you for a few days or weeks isn’t necessarily as straightforward as you’d hoped.
So, what’s the deal? Is it possible to get car insurance on a temporary basis? Do you actually need your own policy if you’re driving someone else’s car? And if you are renting a car for work or on holiday, isn’t car insurance automatically covered in the cost? This guide explains how short-term car insurance might work and covers a few of the circumstances when you may – and may not – need it.
Does short-term car insurance exist?
Yes and no. While dedicated temporary car insurance policies aren’t readily available in Australia, you may still be able to get short-term car insurance cover if you want it.1 Here are a couple of options you could consider:
Get added as a listed driver on someone else’s policy
When someone buys a car insurance policy, they're usually asked to list the regular or primary driver and anyone else who frequently drives the vehicle on the policy schedule.2
If you’ll be driving that car occasionally or for a short period of time, it’s worth checking with the policyholder whether you’re covered as an unlisted driver and what additional excesses may apply. Or, you could consider being added as a listed driver, which may reduce the excess you would need to pay in the event of a claim, but do bear in mind this could impact the premium.3
“At Youi, most policies cover both listed and unlisted drivers, but there are some exceptions. If cover is limited to listed drivers only, this will be noted on the Policy Schedule as a Special Condition. You can find information about any applicable excesses there too.” says Marni Jackson, Youi’s Head of Product – Vehicle and Lifestyle.4
“At Youi, policy-holders can add a driver to their car insurance policy – or remove them when it’s no longer necessary – simply by logging into their account online or giving us a quick call on 13 9684.”
Buy a standard car insurance policy and cancel it once you no longer need it
Typically, you can cancel a standard car insurance policy at any time and receive a refund for whatever portion remains unused – although cancellation fees may apply.1
While a standard car insurance policy is usually a 12-month contract, some insurers may allow you to pay for a standard policy on a monthly or even fortnightly basis.1 Paying in instalments means you don't have a large lump sum of cash tied up in your policy upfront, which can be helpful if you need to cancel and are waiting for a refund on the unused portion of your cover.
Here’s how cancelling a car insurance policy works at Youi:2
- If you cancel your policy during the 20-day cooling off period, provided you haven’t made an insurance claim, you’ll receive a full refund of your payment, whether you’ve paid an annual premium or just one month’s worth.
- If you cancel your policy at any stage after the cooling off period, you’ll receive a refund of the unused portion of the premium you’ve paid, minus a $30 cancellation fee.2
Keep in mind that if you make a claim and the car is deemed a total loss, any unpaid premium instalments for the full 12-month contract period will be deducted from the amount we pay you.
Do temporary drivers need to worry about Compulsory Third Party insurance?
No. If you’re driving someone else’s car, you’ll automatically be covered by the vehicle’s Compulsory Third Party (CTP) insurance. This means that if you injure someone while you’re driving, any compensation costs you’re liable for will be taken care of.5
But CTP insurance doesn’t cover damage to cars or property – that’s where additional car insurance cover, such as Comprehensive, Third Party Fire & Theft or Third Party Property Only insurance comes in.4
Who might consider a temporary car insurance policy?
You may decide you don’t need to organise temporary car insurance if you’re just borrowing someone’s car for a few hours to run some errands. However, in other scenarios and situations, you might find yourself weighing up whether to get short-term car insurance. These could include:
If someone’s learning to drive in your car
If you’re teaching someone to drive, it can be worth talking to your car insurer to check whether your car is covered for learner drivers.7
“At Youi, learner drivers are generally covered when they’re driving your car, as long as they’re following the conditions of their learner’s permit, including being supervised by a fully licensed driver.4 But if they’re not listed as a driver on your policy and they’re under 25 years of age, you could be required to pay a significantly higher additional excess on top of your basic excess if you need to claim for an incident that occurs while they are driving,” says Jackson.6
In contrast, the additional excess for learner drivers under the age of 25 years who are listed on your policy is typically much lower.6
“So, while listing a driver who’s under the age of 25 on your policy might increase your premium, it can mean that the additional excess you’d need to pay in the event of a claim could be significantly less,” adds Jackson.
Even for learner drivers over the age of 25, being listed on the policy may still be worth considering. “At Youi, an additional excess can apply to unlisted drivers over the age of 25, whereas driver-specific excesses typically don’t apply when they’re listed on the policy,” Jackson explains.4
If you’re a P-plater and you drive a parent’s car
If you drive a parent’s car and they’re the primary driver, it’s best not to assume that you’re automatically covered by their insurance. Instead, they might like to contact their insurer to ask about getting you listed on their policy.7
“At Youi, even though P-platers may have more road rules and restrictions that they need to follow, they’ll generally be covered whether they’re listed or unlisted on a car insurance policy,” says Jackson.4
“That said, some policies may limit cover to listed drivers or apply age-based restrictions, and additional excesses may apply so it’s important to check your policy before getting behind the wheel.
If you’re borrowing someone’s car for a few months
If someone’s loaned you their car and you’re now the person who drives it most often, it’s important that the car’s insurance policy lists you as the vehicle’s primary driver.8,9 If you need to make a claim, failing to do this could void the insurance altogether.9
The owner of the car could list you as the regular or primary driver on their insurance policy, or you could take out your own insurance policy, even though you don’t own the car.1,8
Do you need to take out rental car insurance when you hire a car?
No, not usually, because cover is typically included as part of the agreement.10 However, it can be a good idea to make sure you understand how insurance that comes with a hire car works.
When you hire a car – whether you’re on holiday or travelling for work – CTP insurance is usually included as part of the rental fee.10
However, any car rental insurance that’s included in that fee isn’t the same as the car insurance you might have for your own car. It typically only provides limited cover if you damage the car and often comes with significant exclusions.11
For example, if you have an accident that’s your fault while you’re driving a hire car, you may not be covered for any damage you cause to someone else’s car or property.11
So, when you’re renting a car, it may be a good idea to read the fine print in the rental agreement carefully so you understand what’s covered,12 and can decide if it meets your needs. If you need to drive in regional or remote areas, a contract that specifically excludes damage caused by hitting wildlife, for example, may not be the best fit.11
Could pay as you drive insurance suit if you need temporary car insurance?
Maybe – but you might want to take some time to understand how usage- based insurance works before you decide if it suits you as a short-term cover option.
While pay as you drive insurance might sound like a policy that you’ll only need to pay for when and if you need to jump behind the wheel, most are still year-long policies,1,13 and typically you:
- Pay regular premium instalments based on the number of kilometres you predicted you’d drive over the life of the policy, when you initially bought it1,13
- May need to pay an additional excess if you make a claim and your odometer shows you’ve driven more kilometres than anticipated.13
However, while pay as you drive car insurance is typically designed for people who drive less than 15,000 kilometres over the course of a year,13 some of the handful of insurers in Australia that offer this kind of policy may be willing to provide cover for the kilometres you think you’ll drive in a much shorter period of time, even if the policy still lasts for a full year.1
Trying to work out how to organise short-term car insurance – and who might need it in the first place – may seem confusing until you understand your options. Hopefully, now that you know a bit more about how temporary car insurance can work in Australia, you might feel more confident when it comes to getting the cover you need before driving someone else’s car – or letting someone borrow yours.
And, if you’re keen to find car insurance that’s a bit more you-shaped after reading this guide, why not consider starting a quote online or by giving us a call on 13 9684?
1 Source: Canstar – Short-term car insurance – what are some options?, May 2025
2 Exclusions, limits and additional fees may apply. For full details, see the Car Insurance PDS.
3 Source: Finder – Adding a driver to car insurance, March 2026
4 Special conditions and restrictions may apply and will be stated on your policy schedule (for example, for some cars, we may restrict cover to the listed and regular drivers only, or apply a special condition of “no cover for drivers under 30 years of age”. The driver specific excess dollar amounts listed are current as of January 2026. For full details, see the PDS.
5 Source: Youth Law Australia – Car insurance, February 2024
6 Source: Moneysmart – Choosing car insurance
7 Source: CHOICE – Best car insurance for drivers under 25, February 2026
8 Source: CHOICE – How to find the best car insurance policy, 2026
9 Source: Finder – Can I insure a car that is not registered in my name?, February 2025
10 Source: Canstar – Rental car insurance in Australia, April 2025
11 Source: Financial Rights Legal Centre – Rental Cars and Insurance, August 2025
12 Source: Legal Aid New South Wales – Car accidents involving hire cars
13 Source: Canstar – Pay as you drive car insurance Australia, May 2025
