Car insurance

How should you choose a car insurer? We recommend the following steps:

• Look at what you’re paying. Then check our policy database to see how your insurer’s prices compare with other companies’. If you're not in need of comprehensive cover, check out our survey of third-party only and third-party fire and theft premiums.

• Get quotes from at least three insurers. The price you get depends on your age, gender, car, driving history and where you live.

• Take the time to read the policy before signing up. The worst time to discover the limitations of a policy is after you make a claim.

Types of car insurance cover

Comprehensive policies cover your car if it’s damaged or stolen, as well as the damage you cause to someone else’s car or property.

They may also offer extra benefits. For instance, they might cover the cost of towing your car to the nearest repairer or safe location following an accident or provide reasonable prices to transport you home.

Third-party only policies cover you if you damage someone else’s car or property. They do not cover damage to your vehicle. That said, most policies offer a limited payout if an uninsured driver crashes into you and you’re able to supply their registration and contact details.

Based on our annual premium survey, a third-party only policy for an individual is about three to four times cheaper than a comprehensive policy.

Third-party fire and theft policies provide the benefits of third-party only policies, plus they cover you if your car is stolen or damaged by fire. As this level of cover provides some protection for your car, you may get access to benefits not offered to third-party only policyholders (for instance, limited cover for contents in your car if you hold a fire and theft policy, but nothing if you hold a third-party policy).

See our third-party premium survey to compare premiums.

Other factors that influence your car insurance

Agreed or market value

• Market value policies cover the cost of your car immediately before damage occurs. The payout is based on the amount a similar car would fetch on the retail market as determined by your insurer.

• Agreed value policies are where you and your insurer agree on your car’s value. Your insurer will pay the agreed amount if your car is written off, provided you’ve met the policy’s terms and conditions. As your car’s value decreases with age, you will need to revisit your car’s agreed value with your insurer whenever you renew your policy. Agreed value policies give you greater certainty about the amount you’ll receive if your vehicle is written off.

Insurance excesses

If you need to make a claim, you’ll likely have to contribute the first few hundred dollars towards your car’s repair or replacement – this is called the excess.

Most policies come with a standard excess. Generally, insurers allow you to choose a higher excess in exchange for lower premiums or vice versa.

Younger drivers, or those on a restricted or learner’s licence, usually get stung with a higher excess. This excess can be as much as $1,600 for a driver under the age of 21 with a learner’s licence.

High-theft excess

Frequently stolen models may also be stung with a higher excess in the case of theft.

For example, Tower Insurance customers who own a Mazda Demio newer than 2004 must pay an additional excess of $1,200 when they make claim for theft.

In a recent email, Tower Insurance told customers, “We won’t apply the additional excess if you can provide proof of purchase or photo evidence that your vehicle was fitted with a functioning alarm system with an immobiliser at the time of the loss.”

If your vehicle is a frequently stolen model, shop around for the best insurance deal. Some providers don’t charge a high-theft excess.

Adding young drivers to your policy

You should ask your insurer to list your children on your policy if they regularly drive the family car. Adding young drivers usually means a higher premium as they are considered a bigger risk. Depending on your insurer, you may also lose your “no under-25 drivers” discount.

But if you don’t get your children listed on your policy, you may not be covered if they crash your car. Alternatively, you could incur a sizeable excess. You can avoid this excess if you add cover for unnamed drivers.

Parents sometimes take out policies in their names to cover cars typically driven by their children, which is a bad idea. If the insurer deduces you’re “fronting” for your kids, it can decline any claims and avoid the policy. You’ll be out of pocket and might find it difficult to get cover in the future.

How to save on premiums

Opt to increase your excess

Some providers will lower your premium if you take on a higher excess. If you opt to increase your excess, don't make it higher than you could comfortably afford to pay if you had to make a claim.

No-claims discount

Most policies offer a no-claims discount on your premiums, which is “stepped” – the more years without a claim, the higher the discount. After five years of claims-free driving, you can reach a maximum discount of around 60 to 65%. The discount can save you hundreds of dollars on your annual premiums.

Your no-claims discount won’t necessarily be affected if you have to make a claim. For instance, most providers won’t penalise you if you’re not responsible for a crash and you can supply the other driver’s registration and contact details. Claims for broken windows and lost keys aren’t always tied to the discount either.

Other car insurance discounts

Ask about any other discounts, such as:

• Having other insurance policies with the company can save you up to 20%.

• Having an alarm fitted.

• Parking your car in a garage.

• Restricting the policy to named drivers.

• Being over a certain age.

• Paying an annual premium by direct debit.

Bargaining

If you like your existing company but it's not cheap, try bargaining – ask if it will match another's quote before deciding whether to leave.

What to do after an accident

• Check the driver of the other car is OK.

• Don’t admit liability for the accident.

• Get the other driver’s details, including their name, address, phone number, car registration and insurance company.

• Write down the name and phone number of anyone else who witnessed the accident.

• Note other particulars about the crash, such as the time, location and chain of events.

• Take all reasonable steps to prevent further loss or damage to your car.

• Hang on to damaged property in case your insurer wants to inspect it.

• Notify the police as soon as possible (and within 24 hours) if someone was hurt in the accident and required medical attention.

• Contact your insurer as soon as possible following the crash.

Beware of buying flood-damaged vehicles

Following 2023’s Auckland floods and Cyclone Gabrielle, there may be an influx of flood-damaged vehicles on the market.

What you need to know:

• Be cautious of private sales at bargain prices.

• Check Waka Kotahi NZ Transport Agency's written off and damaged vehicle register to see if the vehicle you’re eyeing up is listed there.

• Water damage can be hard to detect, so you should get an expert’s professional opinion on a vehicle’s roadworthiness and safety before buying it.

• Keep the details of whoever you buy a vehicle from. If you discover water damage after purchase, you should talk to the person who sold you the vehicle.

• Private sales are not covered by the Consumer Guarantees Act or the Fair Trading Act. You might be able to claim a refund or compensation under the Contracts and Commercial Law Act, which may involve taking your claim to the Disputes Tribunal.

• There’s a full list of what to look for on Waka Kotahi, New Zealand Transport Agency’s website.

• Water-damaged write-offs must be inspected, repaired and then have that repair certified by Waka Kotahi-approved agents (see RepairCertNZ for more details of certifiers) before they can be re-registered and put back on the road. However, the vehicle will have a permanent record of its previous water damage.

When things go wrong with your vehicle

Getting repairs

When you’ve had a prang, insurers will usually steer you in the direction of their approved repairers.

If you want fixes done by a repairer of your choice, double- check that your policy allows this before you sign up, and let your insurer know when you make your claim. If the insurer unreasonably refuses, you can take the case to the Insurance and Financial Services Ombudsman.

Making a complaint

Price is important when choosing your insurer, but when things go wrong, you want a company that makes the claims process as painless as possible. If your car insurance gives you the runaround, you can complain to the Insurance and Financial Services Ombudsman (IFSO). It’s free to use.

In the 2022-23 financial year, the IFSO received 4,120 complaint enquiries, up from 2,847 the previous financial year. It accepted 327 complaints for investigation. The most complained about issue was the scope of cover.

In one recent case, a consumer made a claim after his vehicle, which had an agreed value of $19,000 a year prior, was damaged in the Auckland floods. He thought he would be fully covered but was surprised when the insurer only offered $14,000 after excesses.

The consumer had renewed his policy a month before the floods. The policy changed his vehicle’s agreed value and decreased it by 24%. The consumer complained because he thought the insurer hadn’t properly communicated the decrease in agreed value.

The IFSO found that even though it is the customer’s responsibility to read the policy, the insurer breached the law by failing to fairly bring the clause, which was unusual, to the customer’s attention.

The insurer offered to settle the complaint with the consumer after discussions with the IFSO.