Tyre and rim insurance

Added protection or unnecessary cost?

If you buy a car from a car dealership, you might be offered tyre and rim insurance to protect these parts of your car. Here we explain what these policies cover, and why they might not be good value.

What is tyre and rim insurance?

Tyre and rim insurance is an add-on insurance policy that a car dealer might offer you when you buy a car. It covers damage to tyres and rims that occur as a result of blowouts, punctures and various road hazards (like driving through a pothole). Unlike comprehensive insurance, tyre and rim cover does not usually cover for damage that occurs as part of an accident. Also, general wear and tear is typically excluded.

Do I need tyre and rim cover?

Before you buy this type of policy, work out how much it would cost to pay to repair or replace your tyres if they were damaged. Depending on the type of car you have, the cost of repairing or replacing your tyres and rims might be a lot less than the cost of the insurance policy.

Is tyre and rim insurance worth it?

Tyrerim Infographic ThumbnailOur tyre and rim insurance infographic explains in pictures what this insurance really covers, the average cost and claim and gives you some important things to consider before you buy it.

Things you should know before you buy

Car dealers get commissions

Car dealers receive a commission when they sell these insurance policies. The incentive to make the sale might be in their best interests but might not be in yours.


Tyre and rim insurance only covers you for a limited range of situations. This means the chance of you making a claim on your policy can be quite low and, even if you do make a claim, the payout may be lower than the premiums you have paid.

Adds to your loan costs

Tyre and rim policies often charge premiums that are packaged into your car loan. Because you pay interest on the premiums, the insurance is even more expensive and the amount you have to borrow is higher.

Our MoneySmart Cars app can help you work out the real cost of buying a car and crunch the figures on add-on insurance.

Work out the real cost of buying and running a car.

MoneySmart Cars app

Cancellations and refunds

Most policies have a cooling-off period when you can cancel the policy at no cost, but if you cancel after this period you may have to pay cancellation fees or administrative charges.

Making a claim, cancelling or complaining (H3)

See our add-on insurance webpage for details on how to make a claim on your insurance policy, cancel it or make a complaint.

What to ask before getting tyre and rim insurance

Here are some questions to ask if you are offered a tyre and rim policy by a car dealer:

  • Cost - Ask for the full cost of the premium, including the cost of any interest payable if it is added to your loan.
  • Inclusions, restrictions and exclusions - Find out what is - and is not - covered. Make sure the coverage is worth the cost.
  • Coverage period - Find out how long you will be covered for.
  • Commission - Ask the car dealer how much commission they'll get if you buy the insurance policy.
  • Cooling off period - How long is the cooling off period? Then you know how much time you'll have to cancel the policy at no cost.

There are a lot of decisions to make when it comes to buying a car. Before you buy tyre and rim insurance, make sure you understand what the policy costs and what it includes.

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Last updated: 04 Oct 2018