How New Zealand Car Insurance Works
If you’re new to New Zealand and want to hit the road to see the amazing landscapes and opportunities this country has to offer, then you’re probably going to need a car. New Zealand is the ultimate road-tripping country. However, like many places, road accidents are pretty common so getting car insurance is definitely worth considering. With that in mind, we’ve put together this quick list of advice on New Zealand car insurance. If you want a more thorough version of this article, head to How Car Insurance Works in New Zealand.
A thing to note is that car insurance is not mandatory in New Zealand. However, with 40% of New Zealand highways having a two-star safety rating, meaning they either have undivided opposing lanes, are poorly aligned, feature hazards such as narrow or unsealed shoulders, or roadside objects like trees, ditches and concrete poles, it’s likely that you’ll want to seriously consider getting New Zealand car insurance.
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1. Agree to a Fair Value of Your Vehicle
Your New Zealand car insurance policy will be for either a “market value” of your car or an “agreed value”. The market value is what your car is valued on the market at the time just before your car is damaged. If your car is stolen or “written off” (i.e. damaged beyond repair), then you will receive the full market value as compensation. An agreed value is an amount of money that you have agreed to with your car insurer. This is total you will receive if your car is stolen or written off. If you don’t agree with the insurer’s proposed value of your vehicle, then you can request to provide a second opinion from a qualified car mechanic to get a better price (however, the car insurance company has to agree to this also). For making complaints about the insurance’s assessment that can’t be resolved with the insurer, go to the Insurance and Financial Services Ombudsman (IFSO). Find out more about What Are Your Consumer Rights in New Zealand?
2. Know the Difference Between Comprehensive and Third Party
If you have ever had vehicle insurance before, then it’s likely that you’ll understand what the difference between “comprehensive” and “third party” is. However, for all you car insurance newbies out there, it’s important to know the difference as comprehensive insurance and third party insurance covers completely different things! Comprehensive insurance covers both damage to your own car, as well as other people’s vehicles and property. Third-party insurance covers damage only to other people’s vehicles and property. For this reason, third-party insurance is always the cheapest option to go for.
3. Who or What is Insured?
Another thing you need to consider when choosing New Zealand car insurance is who or what to insure. You can either insure the driver, which means you will be covered on any vehicle that you drive, or you can insure your vehicle. This tends to be a better option if you are likely to have multiple drivers of your car. Think about what situations you’re likely to get into while travelling around New Zealand before making this decision. Will you be driving other vehicles? Are you travelling with a partner or travel buddies that you want to share the driving duties with?
4. Carefully Check the Conditions
This is the boring part, but it’s extremely important to read the fine print of the car insurance policy you are choosing. You need to understand exactly what’s covered, what’s not covered, as well as anything else that might affect your decision. For instance, some car insurances don’t cover windscreen chips, which is one of the most likely damages to cars in New Zealand due to the high number of gravel roads. You don’t want to spend all that money on car insurance to only realise it won’t cover you when you need it.
5. Make Sure You Have a Valid driving License for New Zealand
In order to purchase New Zealand car insurance, you need to have a valid driver license. This could be a New Zealand driver license, an overseas driver license that’s written in English, or an overseas drive license with an International Driving Permit (IDP). An IDP is mandatory to drive in New Zealand if your driver license is not written in English. You will need to convert your overseas driver license into a New Zealand driver license after 12 months of being in the country. Find out more in our guides to the International Driving Permit and Converting Your Driver License into a New Zealand Driver License.
6. Understand What is “Excess”
Excess is a common term used in car insurance policies in New Zealand. Excess is the amount of money you pay toward damages when you make a claim before the insurance company will pay the remainder. For instance, if you have a policy with NZ$500 and the damages bill is NZ$5000, then you will pay NZ$500 and the insurance company will pay NZ$4500.
7. Know How to Make a Claim Before Hitting the Road
Because yes, not all claim processes are that straightforward! Make sure you know what you need to do in the unfortunate case where you do need to make a claim. In the case of an emergency, first, call 111. When you’re in a car accident, write down the registration numbers of other vehicles involved in the accident. It’s also a good idea to get contact details of any witnesses. You’ll need to use this information when making a claim.
8. Add Fire and Theft to Your Insurance Policy
Fire and theft are not commonly included in most New Zealand car insurance policies and will need to be added as an extra. You can add it to third party insurance, meaning that your car will be insured if your car is stolen or damaged by fire, while covering other vehicles damaged in an accident that is your fault.
9. You Need to Let Your Insurer Know When You Make Any Modifications
Your vehicle is only insured for the state the vehicle was in when you first insured it. Making any changes to your vehicle, like turning it into a camping vehicle, for instance, needs to be disclosed to your insurer if you still want your vehicle to be insured.
10. Age Matters
That goes for the age of the driver and the car! The age of the driver almost always determines the price of your car insurance, so if you are travelling with a group of people, consider letting the oldest person drive. New Zealand car insurance is usually more expensive for drivers under 25 years old with the assumption that younger drivers are less experienced drivers. As for the age of your car, insurance is usually more expensive for older cars. However, if your car is an old car but well maintained, make sure you provide evidence of the state of the car to your insurance company to show it’s in good shape.