Car insurance
We'll help you choose the right cover at the right price.
Find out what you need to know when shopping for car insurance with our buying guide, then compare comprehensive policies in our database.
Types of cover
Comprehensive 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 also offer extra benefits. For instance, they’ll cover the cost of towing your car to the nearest repairer or safe location following an accident, and provide reasonable costs to transport you home.
See our policy comparison database for cover details.
Third-party cover
Third-party only policies cover you if you damage someone else’s car or property. They’re not designed to 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. Trade Me Insurance is an exception here: it doesn’t provide third-party only policyholders with protection against uninsured drivers.
Based on our annual premium survey, a third-party only policy for an individual is about 3 to 4 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, AMP and Warehouse Money offer 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.
Agreed or market value
One of the biggest questions when you shop for car insurance is what value to place on your car.
Many members have told us they don't find the companies helpful here. There are two options: market value (indemnity insurance) or agreed value.
Market value
Market value policies cover the cost of your car immediately before the damage occurred. The payout is based on the amount a similar car would fetch on the retail market as determined by your insurer.
Agreed value
With agreed value policies, 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, the agreed amount should be revisited whenever your policy is renewed.
Agreed value policies give you greater certainty about the amount you’ll receive if your vehicle is written off.
Excesses
If you need to make a claim, it’s likely you’ll have to contribute the first few hundred dollars towards your car’s repair or replacement. This is called the excess.
All policies come with a standard excess. Most 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 can be as much as $1750 for a driver under the age of 21 with a learner’s licence.
What about the kids?
You should ask your insurer to list your children on your policy if they regularly drive the family car. This will usually mean a higher premium as young drivers are seen as 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. For example, Trade Me charges an additional $1950 if you claim for damage caused by an unnamed driver who has held a licence for less than 2 years. You can avoid this excess if you add cover for unnamed drivers.
Tip: Parents sometimes take out policies in their own names to cover cars typically driven by their children. This 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 you might find it difficult to get cover in the future.
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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 do take a higher 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. This is “stepped” – the more years without a claim, the higher the discount – and you can reach a maximum discount of around 60 to 65% after five years of claims-free motoring. 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 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.
Is it worth making a claim?
Making a claim for minor damage can affect your no-claims discount. You may be better off paying the repair bill. Here are two scenarios showing what could happen where the policy-holder is at fault.
Major windscreen crack
Middle-aged male driver, Auckland
- Repair bill: $600
- Your excess: $400
If you have excess-free glass cover
- Insurer pays: $600
- Effect on no-claims bonus: Nil.
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Is it worth claiming? Yes. Your repair bill will be taken care of and your premiums should be unaffected.
If you don’t have excess-free glass cover
- Insurer pays: $200
- Effect on no-claims bonus: You haven’t made a claim for more than five years. The new claim knocks two years off your no-claims bonus. This may cost you an estimated $550 in extra premiums over two years.
- Is it worth claiming? Probably not. In the long run, you could be $350 worse off if you make a claim.
Car door dent
Older female driver, Dunedin
- Repair bill: $1000
- Your excess: $400
- Insurer pays: $600
- Effect on no-claims bonus: While you were claim-free for years prior, you were the at-fault driver in a minor fender bender 12 months ago. This second claim knocks another two years off your no-claims bonus, reducing it from 50 percent to 30 percent for the next year and to 40 percent for the second year. This will cost you an estimated $975 in extra premiums over two years.
- Is it worth claiming? Probably not. On balance, you may be $375 better off if you can pay the full bill yourself.
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 his or her name, address, phone number, car registration and insurance company.
- Write down the name and phone number of anyone else who witnessed the accident.
- Note down 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.
Tips for making a claim
When a disagreement arises with a car insurer, policyholders may turn to the office of the Insurance and Financial Services Ombudsman (IFSO) Karen Stevens to resolve a dispute. Last year, nearly 1000 vehicle owners contacted the office with car insurance issues. We asked Ms Stevens for her advice on reducing the risk of a claim being rejected. Here are her tips:
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Review your policy. “Ask yourself: do you understand the policy and what you are – and aren’t – covered for? People often think they have agreed value comprehensive policies when they have market value. So they have an accident and their car is written off, they think they will get the $20,000 cover that was on the original application, but they only get what the car would have sold for prior to the incident, $10,000.”
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Check the listed value. “For agreed and market value policies, make sure the ‘sum insured’ is realistic – this may affect your premiums. If you disagree with your insurer’s valuation when setting up your policy or making a claim, get your own independent valuation.”
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Disclose everything. “When applying for insurance, answer all questions and provide accurate information. When you renew your policy you must tell your insurer if anything has changed in the last year, including any convictions, or if you modify your vehicle. Claims can be declined if you haven’t told the insurer all the information you are required to.”
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Obey the road rules. “Comply with your licence and don’t drive under the influence. Insurance claims are likely to be declined if there is an accident while you (or a driver of your car) drive in breach of your licence conditions or under the influence of alcohol or drugs. This means that the damage to your, or any other, vehicle won't be covered by insurance. Make sure you warn all drivers about this (especially those without a full licence).”
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Be truthful in claims. “Think twice before you exaggerate an insurance claim. The long-term consequences of insurance fraud are hard-hitting. Declined claims are the tip of the iceberg. If your insurance policies are cancelled, and your name is listed on the Insurance Claims Register, it can be difficult to get future insurance. This can be devastating, for example, if you’re trying to buy a house.”
