Cover types, costs and 2026 rules
Car insurance rules in Australia in 2026: your rights at purchase, renewal and claim
The consumer rules that apply to car insurance in 2026, including the duty of reasonable care, renewal notices, unfair contract terms, claims handling and AFCA.
As of October 2026, car insurance bought by individuals in Australia is governed mainly by the Insurance Contracts Act 1984, the Corporations Act 2001 and ASIC's rules, with the insurer's commitments under the industry General Insurance Code of Practice on top. In practice that means: you must take reasonable care not to make a misrepresentation when you buy, renew or change a policy; your insurer must send a renewal notice at least 14 days before expiry, and insurers that sell directly show last year's premium under the Code; unfair terms in the policy can be void; claims handling is regulated as a financial service; complaints must be answered within set time frames, and AFCA is a free external dispute body. CTP is separate and governed by each state's scheme law.
This guide is part of the car insurance overview. Consumer reforms from the Banking Royal Commission response took effect between 2021 and 2023 and all apply now.
The main rules at a glance
| Rule | Where it comes from | What it means for you |
|---|---|---|
| Duty to take reasonable care not to make a misrepresentation | Insurance Contracts Act, in force for consumer contracts since 5 October 2021 | Answer the insurer's questions honestly and carefully; you no longer have a broad duty to volunteer everything |
| Insurer cannot refuse a claim just because of something you did after the policy started, if it caused no loss | Insurance Contracts Act, section 54 | The insurer may reduce a claim by the amount its interests were prejudiced, rather than refuse it outright, in many situations |
| Renewal notice before expiry | Insurance Contracts Act, section 58; General Insurance Code of Practice (clause 50, since 1 July 2021) | Notice at least 14 days before expiry; for car insurance sold directly by the insurer, the notice compares this year's and last year's premium (broker-arranged renewals are outside the clause) |
| Unfair contract terms | ASIC Act, applying to insurance contracts entered or renewed since 5 April 2021, with penalties since 9 November 2023 | A term found unfair can be void; insurers can face penalties for including them |
| Product Disclosure Statement | Corporations Act | You must be given a PDS describing cover, exclusions, excesses and costs |
| Target Market Determination | Design and distribution obligations, since 5 October 2021 | The insurer must define who the product is designed for and distribute it accordingly |
| No hawking | Corporations Act, since 5 October 2021 | Insurance generally cannot be sold to you through unsolicited contact |
| Claims handling as a financial service | Corporations Act, since 1 January 2022 | Insurers and their claims handlers must act efficiently, honestly and fairly |
| Internal dispute resolution | ASIC Regulatory Guide 271 | Most complaints must be answered within 30 calendar days |
| External dispute resolution | Australian Financial Complaints Authority | Free complaints service if internal resolution fails |
The dates are the commencement dates of the relevant reforms. For exact wording and any later amendments, check the legislation on the Federal Register of Legislation and ASIC's guidance.
Buying and renewing: what you must tell the insurer
The duty to take reasonable care not to make a misrepresentation means you answer the questions the insurer asks honestly and with reasonable care. If the insurer asks "Who will regularly drive the car?", list every regular driver. If it asks about modifications, claims in the past few years or licence suspensions, answer fully.
The same duty applies when you renew or change the policy. If your circumstances have changed (a new address, a new regular driver, rideshare use), update the insurer. Many renewal notices ask you to check the details and tell the insurer if anything has changed. The factors insurers usually ask about are listed in what affects car insurance premiums.
If you do make a misrepresentation, the insurer's remedy depends on whether it was fraudulent and what the insurer would have done if it had known. It may be able to reduce a claim to the amount it would have been liable for, or in serious cases avoid the policy. See misrepresentation and underinsurance.
Renewal notices
Your insurer must give you a renewal notice in writing at least 14 days before the policy expires. For car insurance, the notice must show the premium for the previous period alongside the new premium, so you can see the change.
Worked example (illustrative)
Your renewal notice arrives on 10 November for a policy ending on 1 December. It shows: last year $1,180, this year $1,390. The increase is $210, or 17.8% ($210 / $1,180). That is your cue to compare quotes, ask the insurer to explain the increase, or both. Under the notice rules, if the insurer had not sent a notice in time, your existing cover may be extended until you take out a new policy or until certain dates, under section 58. Do not rely on that: arrange cover before the expiry date.
See the renewal checklist.
Claims: what insurers must do
Since claims handling became a financial service, insurers and anyone handling claims on their behalf must act efficiently, honestly and fairly. The General Insurance Code of Practice adds commitments such as keeping you informed about your claim, deciding claims within set time frames, explaining reasons in writing if a claim is refused, and extra support for customers experiencing vulnerability or financial hardship. Check the current version of the Code on the Insurance Council of Australia website, as the Code is reviewed and updated periodically.
Complaints
If you are unhappy with a decision, complain to the insurer in writing first. Under ASIC's internal dispute resolution standard, most complaints must be finally responded to within 30 calendar days. If the response is late or you are not satisfied, you can lodge a complaint with AFCA at no cost. See disputing a refused claim.
Add-on insurance sold with cars
Since October 2021, many add-on insurance products sold in connection with a car purchase or car finance are subject to a deferred sales model, with a pause before they can be sold. Comprehensive car insurance itself was exempted by ASIC, so a dealer can still arrange comprehensive cover at the time of sale. Check whether any extra product offered with a car, such as gap cover or tyre and rim insurance, is something you actually need.
CTP is different
CTP is regulated by each state and territory under its own scheme law. Changes to CTP benefits, premiums or insurer choice come from state legislation and regulators such as SIRA in NSW or MAIC in Queensland. See CTP insurance by state.
Frequently asked questions
Do I still have a duty of disclosure for car insurance?
For consumer insurance contracts such as private car insurance, the broad duty of disclosure was replaced on 5 October 2021 by the duty to take reasonable care not to make a misrepresentation.
Is there a cooling-off period on car insurance?
Most car insurance PDSs set out a cooling-off period during which you can cancel and receive a refund, provided you have not made a claim. The length is stated in the PDS.
Can my insurer refuse to renew my policy?
Yes, an insurer can decline to offer renewal, but it must tell you in time under the renewal notice rules. If you are refused, ask why and shop around, or use a broker.
Does the Code of Practice apply to every insurer?
The Code applies to insurers that subscribe to it, which includes most general insurers. The PDS usually says whether the insurer subscribes.
Sources
- ASIC — design and distribution obligations, IDR standard, unfair contract terms
- Federal Register of Legislation — Insurance Contracts Act 1984 and regulations
- Australian Financial Complaints Authority — free complaints service
- Insurance Council of Australia — General Insurance Code of Practice
- Moneysmart — consumer guidance
