Backpackers sitting in boot of car

Car Insurance for Backpackers

Are you planning a backpacking trip in Australia and looking to purchase a car? Find out what car insurance you will need.

It’s not uncommon for travellers visiting Australia to feel slightly overwhelmed by the sheer size of the landscape given the huge distances between major cities and the number of attractions in between. There are bus lines, but these don’t necessarily give you enough flexibility to see the country on your terms and will usually consign you to the usual tourist stops.

Buying a cheap car can be one of the more convenient and cost-effective ways to take the trip you want. Car insurance is required, and this guide explains how to get adequate cover that won’t break your budget.

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Name Product Name Agreed or Market Value New Car Replacement Pay Monthly At No Extra Cost Choice Of Repairer Roadside Assistance Hire Car After Theft
Market
Optional - If your car is written off in the first 3 years
No
No
No
Optional - Up to $50 a day until your claim is settled
Save 24% on your policy if you've been claim free for 3 years.
Agreed
Yes - If your car is written off in the first 2 years or is under 40,000 km
No
Yes
Optional
Yes - Up to $1,000 (Max 14 days)
Buy online and save 15%.
Agreed
Yes - If your car is written off or stolen in the first 2 years
No
Yes
Yes
Yes - Reasonable costs (Max 14 days)
Emergency roadside assistance included in Comprehensive policies.
Agreed
Yes - If your car is written off in the first 2 years
Yes
No
Optional
Yes - Up to $70 per day (Max 14 days)
Save up to 10% when you buy online.
Agreed
Yes - If your car is written off in the first 2 years or is under 40,000 km
No
Yes
Optional
Yes - Up to $1,000 (Max 14 days)
Save 15% when purchasing online. Eligible customers can earn 5,000 Velocity Frequent Flyer Points when purchasing a new policy by 31 Dec 2018. Excludes NT. T&CS apply.
Agreed
Yes - If your car is written off in the first 2 years
Yes
No
No
Yes - Up to $70 per day (Max 14 days)
Transforms your driving so it's 100% carbon neutral.
Agreed
Yes - If your car is written off in the first 2 years
Yes
Yes
No
Yes - Up to $100 per day (Max 30 days)
Buy online and save up to 10% on your policy.
Agreed
Yes - If your car is written off in the first year or is under 20,000 km
No
No
Optional
Optional - Up to $60 per day (Max 14 days)
Save up to 20% on car insurance when you purchase cover online.

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Your car insurance options

Compulsory third party (CTP) insurance is mandatory. This covers you for medical costs resulting from car accidents. However, it doesn’t include any cover for property damage liability. For that, you’ll need one of the other three types of cover. Additional cover isn’t mandatory, but it’s fairly cheap, extremely useful and strongly recommended.

  • Third party property only. This is the cheapest additional cover available. This only covers your liability for third party property damage. Depending on the policy, it can also include a few extra options like towing cover.
  • Third party with fire and theft. This provides low- to mid-range cover for third party liability costs you might incur as well as fire and theft cover for your own car. The available options and extras will depend on your policy.
  • Comprehensive car insurance. This covers you for third party liability costs and also covers damage to your vehicle from floods, storms, fires, theft and more. It also tends to have the widest range of extra options, including roadside assistance, emergency repair and accommodation cover, which can be near-essential if you are driving through the outback.

Which one should I get?

You are not legally required to get additional cover, but going without means that the slightest accident could cause severe financial stress. Scratching a more expensive car, clipping a petrol pump or anything else might blow out your travel budget with a significant added cost.

Comprehensive car insurance is a popular option. The main cost is third party liability, which all the policies have, and a lot of the available discounts are for comprehensive cover only. Based on average premiums from three prominent Australian insurers, after adding a 20% online discount you might find the following prices:

  • $720 for a year of comprehensive cover
  • $520 for a year of basic, third party only car insurance

The choice is entirely yours, but comprehensive car insurance is widely used for a reason.

  • Comprehensive car insurance is the only type of cover that protects your vehicle from a wide range of damage, whether it’s fire, theft, flooding, storms, vandalism or more. If something happens to your car with only basic cover, your trip might be over. If you plan on travelling all over the country, this type of cover can deliver the right cover for all seasons.
  • Comprehensive car insurance policies will often include roadside assistance and emergency repairs cover as well as emergency cover. Being stranded in the outback can be fatal, but with the right policy you don’t have to worry about calling for help because your insurance covers the costs.
  • Options for excess-free windscreen, glass replacement and more are available. By customising your policy or by looking for one with suitable options, you can get some useful additions. These benefits may not be available with the more basic policy types.

To get a sense of the price difference, you can get a quote for third party only insurance and compare it to a comprehensive car insurance quote.

When you do, remember that there are ways to reduce the cost of car insurance, and that many of these will only be available with comprehensive cover.

How to get cheap car insurance

  • Buy your policy online, instead of over the phone or any other way, for premium discounts of around 20% or more. This is only available with comprehensive car insurance.
  • If possible, nominate anyone over 25 as the main driver. Insurers assume that over 25s are better drivers. It might not be the case for you, but it’s statistically true and you might be able to take advantage of this.
  • Choose your extras. Try to find policies that let you rule out the options you might not need, like trailer cover, and only include the most important features.
  • Drive a cheap, but safe, car. The less your car costs and the safer it is, the less you pay for car insurance.

Play your cards right and the cost of comprehensive car insurance can be close to the amount you’ll pay for third party only cover.

CTP insurance and licensing in Australia

How you get your mandatory CTP cover depends on where you register your vehicle.

In New South Wales and Queensland, you need to take out cover through an approved state insurer. There may be differences between the types of cover as well as the price.

In Victoria, South Australia, Western Australia, Tasmania, and the Northern Territory, compulsory third party insurance is included as part of the vehicle registration process, and your premiums are part of the fee. You do not need to compare cover or policies.

Driver’s license requirements

You must have a valid driver’s license on you at all times while driving. Whether you can use an overseas driver’s license depends on which state you’re in and how long you’ll be staying. In all cases, you must meet the following criteria:

  • Your overseas license must be current and valid. Any conditions that apply to your overseas license will also apply in Australia.
  • You will need a certified English translation or an International Driving Permit (IDP) if your license is in a language other than English.
  • New Zealand residents are treated as interstate drivers for licensing purposes. If you have registered your vehicle in a different state or if your visa status changes to permanent, you are subject to interstate driving rules.
  • The interstate license rules for permanent visas apply when you are officially a resident of that state, regardless of whether you are in it at the time.
  • If your overseas license expires during your visit, you should apply for a local license.

While every effort has been taken to ensure the accuracy of this information, you should check for information specific to your situation and location at the relevant website.

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Andrew Munro

Andrew writes for finder.com, comparing products, writing guides and looking for new ways to help people make smart decisions. He's a fan of insurance, business news and cryptocurrency.

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