In Australia, third-party personal-injury insurance is always included in the vehicle registration cost. This ensures that every registered vehicle carries at least minimum insurance. You'd be wise to extend that minimum to at least third-party property insurance as well – minor collisions with other vehicles can be surprisingly expensive.

If you're bringing your own car from within Australia, take out the most comprehensive roadside assistance plan you can. It's not a matter of if your car will break down, but when. Having the top cover will offset your recovery costs considerably.

For hire cars, establish exactly what your liability is in the event of an accident. Rather than risk paying out thousands of dollars if you do have an accident, you can take out your own comprehensive insurance on the car, or (the usual option) pay an additional daily amount to the rental company for an 'insurance excess reduction' policy. This brings the amount of excess you must pay in the event of an accident down from between $2000 and $5000 to a few hundred dollars. However, check your travel insurance policy as well as any insurance you have through your credit card before forking out the cash to reduce your excess, as excess reduction may already be covered by a policy you already have. Alternatively, companies such as Tripcover and RAC offer excess-reduction policies that often cost much less than those offered by car-hire companies.

Be aware that if you're travelling on dirt roads, you may not be covered by insurance. Because of potential accidents with wildlife, some insurance policies may preclude driving after dusk. Also, most companies won't cover the cost of damage to glass (including the windscreen) or tyres. Always read the small print.

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