What happens to my insurance when I sell my car?

Now that you’ve done the hard bit in finding a prospective buyer, here are a few admin tasks you’ll need to complete once you’ve sold your car, including what happens to your car insurance.

Having prepared your car for sale and drafted the online ad, you may be thinking that you can cancel your car insurance, seeing as you don’t plan to drive your car anywhere.

However, having no insurance means you won't be covered if any damage occurs when potential buyers test drive your car. If you cancel your insurance too soon, you may be held accountable for any accidents or damages that occur before the sale is completed.

Additionally, if you cancel your insurance before the new owner takes possession of your car, you won’t be covered if it’s stolen, damaged or impacted by hail storms during this time. 

Exclusions apply to some policies, so it's important to review your policy documents to understand any coverage limitations.

So, until you’ve transferred your rego and the car is out of your possession, it’s best to keep a hold of your current insurance policy, at least for now.

If you've ever tried to sell your car privately, you'll know test drives are a usual part of the process. Letting potential buyers drive your car can come with its fair share of risks, but that's where your insurance policy steps in to protect you. 

If you have comprehensive car insurance, test drives may be covered in your policy. Before you let any potential buyers drive your car, make sure you check your policy details and the Product Disclosure Statement to know whether test drives are covered and under what conditions.

Each policy is different, which is why it's important to double-check the specific requirements for your insurance.

Now that you’ve sold your car, what you decide to do with your insurance will normally depend on whether you buy a replacement car.  

If you're selling and buying a new vehicle at the same time, and you're insured with Budget Direct, you can quickly update and transfer your existing car insurance cover to your new vehicle. 

Unless you request otherwise, these changes can take effect immediately.  All changes to your insurance policy are subject to meeting underwriting criteria. When transferring your insurance to a new vehicle, it's best to review the specific cover stated in your policy for any terms, limitations or exclusions you might need to know.

If you need to request a car insurance refund after selling your vehicle, or a policy transfer to cover your new vehicle, contact Budget Direct. If you cancel your insurance policy within the cooling-off period (typically 21 days) and no claim has been made, you will be entitled to a full reimbursement of any premium you have paid. If a claim has been made, you will not be able to receive a full refund.

It's worth noting that when you transfer your existing policy to a new car, your premium may increase or decrease depending on many factors including the car and drivers. Your premium may increase if your new car is more valuable or considered a higher risk.

If you’ve paid a lump sum premium toward your car insurance, we will work out the cost difference between your existing and new car. We’ll recalculate and either charge you the difference or refund the unused amount. If you pay your insurance by instalments, these will be updated to reflect the new premium.

If you decide to cancel your policy, your refund will be calculated from the date you confirm cancellation or the day you let your insurer know. This means a delay in notifying your insurer can reduce the refund you receive.

If you're selling your car without buying a new one, we can help you cancel your existing insurance policy and process any applicable refund once your vehicle is sold. However, a cancellation fee may apply. For further details, please consult our Product Disclosure Statement.