Car Insurance Myths Busted: What NZ Drivers Need to Know in 2026

1. “Car insurance only covers damage to my car”

Fact: Car insurance covers much more than just dents and scratches. In New Zealand, a comprehensive car insurance policy can include theft, damage to other vehicles, legal liability, windscreen replacement, and even roadside assistance. Some policies also cover lost keys and children’s car seats. For a full breakdown, check out our guide to car insurance in NZ.

What you need to know: Not all policies are the same. With Quashed, you can easily compare policies side by side and see whether extras like trailer cover or rental car hire are included. Always read the fine print to avoid surprises when you need to make a claim.

2. “All car insurance is the same—just pick the cheapest one”

Fact: The best car insurance depends entirely on your needs. Do you only need basic third-party cover, or do you want full windscreen replacement, rental car cover, and roadside assistance? There’s no one-size-fits-all solution. If you drive a newer car, comprehensive cover might be your best bet to avoid costly repairs. For a detailed comparison of cover types, read our Comprehensive vs Third Party guide.

What you need to know: Don’t just choose based on price. A cheaper policy might save you money now but leave you exposed when it counts. Consider what kind of protection is important to you and use the Quashed Market Scan to compare both price and cover in one place.

3. “I don’t need insurance—I’m a safe driver”

Fact: Even if you’re an excellent driver, accidents happen—and they often involve other people’s mistakes. In New Zealand, car insurance isn’t legally required, but liability cover is essential. Without insurance, you could face huge costs if you’re found at fault in an accident, not to mention potential legal fees. Insurance doesn’t just protect your car—it protects you financially if something goes wrong.

What you need to know: At a minimum, third-party cover protects you from the financial consequences of an accident you cause. If you drive a newer or higher-value vehicle—including electric vehicles, which can be more expensive to repair—comprehensive cover is worth serious consideration.

4. “Car insurance is too complicated to understand”

Fact: It’s not as confusing as it seems. Essentially, you pay a premium (monthly or annually), and in return, your insurer covers certain costs if something happens to your car. The key is knowing what’s included in your policy and what your excess is when making a claim.

What you need to know: The basics are straightforward—just make sure you understand your policy terms, your excess, and what’s included. That’s where Quashed comes in handy. Our Market Scan lays everything out side by side, so you know exactly what you're paying for and what's covered—less jargon, less confusion. One thing that does trip people up is your duty of disclosure. When you apply for insurance, you're required to tell your insurer about anything that could affect their decision—such as past claims, driving offences, or vehicle modifications. If you leave something out, even unintentionally, your insurer can decline your claim or void your policy entirely. When in doubt, disclose it.

5. “Always go for the cheapest policy”

Fact: The cheapest option isn’t always the best one. While it’s tempting to save a few dollars upfront, a cheaper policy may leave you exposed when it’s time to make a claim. Coverage is key—saving now might cost you later if your policy doesn’t include features like theft protection, roadside assistance, or windscreen cover. For more on this, read our Cheapest vs Best Car Insurance guide.

What you need to know: Look beyond price when choosing a policy. Think about what protection you’ll need in real-life situations, such as accidents, theft, or breakdowns. Balancing cost with coverage ensures you’re not caught out when the unexpected happens.

6. “Insurance premiums are just pulled out of thin air”

Fact: Insurers calculate premiums based on several factors, including your age, driving history, the type of car you drive, where you live, and how often you drive. Younger drivers tend to pay more, as they’re statistically more likely to be involved in accidents. Rising repair costs, more expensive vehicle parts, and the impact of natural disasters like flooding also push premiums higher. For a deeper look at what’s driving costs, read Why Is Car Insurance So Expensive?

What you need to know: Your car’s value and your location play a big role. Auckland drivers pay an average of $1,510 per year compared to $1,152 in Wellington and $1,215 in Canterbury (Quashed Index, Q4 2025). If you drive a high-value car or live in a high-risk area, expect your premiums to reflect that.

7. “Insurance companies are just out to get me”

Fact: Premiums have been rising, but for explainable reasons. According to the Quashed Index, comprehensive car insurance premiums increased 38% between Q4 2022 and Q4 2025, driven by factors such as inflation, higher repair costs, and severe weather events like the 2023 Auckland Anniversary floods and Cyclone Gabrielle. Reinsurance costs (what insurers pay to insure themselves) have also surged, and those costs get passed on.

What you need to know: While costs are up, that doesn’t mean you should settle for an overpriced policy. Quashed data shows that Kiwis who compared their car insurance found a cheaper policy 80% of the time, with average savings of $367 per year. Run a free Market Scan and see what you could save.

8. “Loyalty to my insurer will be rewarded”

Fact: This is one of the most expensive myths out there. Many insurers don’t reward long-term customers with better rates. In fact, new customers often get better deals through promotions and introductory offers. This is what we call the “loyalty tax”—and according to the Quashed Index, Kiwis who don’t shop around are paying an average of $1,351 per year more across their car, house, and contents policies combined.

What you need to know: Shopping around regularly can make a significant difference to your premium. The average NZ household now pays $4,959 per year for car, house, and contents insurance—that’s up 37% from three years ago. Don’t let loyalty cost you. Compare your insurance today.

9. “Once I buy car insurance, I’m stuck with it for a year”

Fact: Most car insurance policies in New Zealand allow you to cancel at any time, but it’s important to check your insurer’s terms. While you might receive a refund for any unused portion of your premium, some providers may charge a cancellation fee. If you find a better deal or your circumstances change, switching policies is often easier than you think.

What you need to know: Always review your policy’s cancellation terms before making any decisions. For tips on how to handle your renewal, check out Sorting Out Your Car Insurance Renewal.

10. “Comprehensive car insurance means I’m covered for anything”

Fact: While comprehensive car insurance provides the broadest coverage available, it doesn’t cover everything. General wear and tear, mechanical breakdowns, damage from illegal modifications, and driving under the influence are commonly excluded. That’s why it’s crucial to read the fine print and know exactly what’s included in your policy.

What you need to know: Comprehensive policies can still have significant exclusions, so don’t assume you’re covered for every scenario. Use Quashed to compare policies and find out which ones offer the best protection for your specific needs.

11. “The colour of my car affects my insurance premium”

Fact: This is a persistent myth, but it’s simply not true. No insurer in New Zealand calculates your premium based on the colour of your car. What does matter is the make, model, year, engine size, and safety rating of your vehicle—as well as your driving history and where you live.

What you need to know: Don’t let this myth influence your car-buying decisions. Focus on factors that actually affect your premium: the vehicle’s theft rate, repair costs, and safety features. Certain popular models like the Toyota Aqua, for example, attract higher premiums due to high theft rates—not because of their colour.

12. “A dashcam will automatically lower my premium”

Fact: While dashcams are increasingly popular among Kiwi drivers, most car insurance companies in New Zealand don’t currently offer a premium discount simply for having one installed. Dashcams don’t prevent accidents from happening, and there’s currently no strong evidence that they make drivers safer.

What you need to know: Where dashcams really prove their worth is at claim time. If there’s a dispute over who was at fault, dashcam footage can be invaluable evidence. Some insurers will accept dashcam footage to support your claim, which could help you avoid being held liable—and that could prevent your premiums from increasing at renewal. A dashcam is a smart investment, but don’t expect an upfront discount.

13. “Electric vehicles are cheaper to insure because they’re better for the environment”

Fact: Being eco-friendly doesn’t necessarily translate to cheaper insurance. Electric vehicles (EVs) actually tend to be more expensive to insure than their petrol equivalents. EVs often have higher purchase prices, specialised battery systems that are costly to repair or replace, and require technicians with specific EV training—all of which push premiums up.

What you need to know: If you’re considering an EV, factor insurance costs into your total cost of ownership. For a detailed breakdown, read our EV vs Petrol: Total Cost of Ownership guide. And always compare EV insurance quotes on Quashed before you commit.

14. “Multi-policy discounts will always save me money”

Fact: This was true for years, but in 2025 and 2026, most major NZ insurers have removed or significantly reduced their multi-policy discounts. Only a handful of providers—such as MAS and Cove—still offer limited bundling incentives. Bundling your car, house, and contents insurance with the same provider no longer guarantees the best price across all three policies.

What you need to know: Don’t assume bundling saves you money—it’s always worth comparing each policy individually. You may find that one insurer is cheapest for car insurance while another offers the best rate for house or contents. With Quashed, you can compare across all three insurance types to find the best combination for your household.

15. “My expired WoF or rego will automatically void my insurance”

Fact: Many Kiwis believe that if their Warrant of Fitness (WoF) or registration has lapsed, their insurer will automatically decline a claim. In most cases, this isn’t true. If your car is roadworthy and the lack of a WoF or rego didn’t directly contribute to the accident, most insurers will still honour your claim. However, if the expired WoF means your car was genuinely unsafe—for example, worn tyres or faulty brakes that contributed to the incident—you could face issues.

What you need to know: Always keep your WoF and registration up to date—not just for insurance, but to avoid fines of up to $200 and to stay safe on the road. For a full guide on costs and obligations, check out our NZ Car Ownership: Registration, Insurance & Running Costs guide.

How Quashed Helps You Cut Through the Noise

Now that we’ve busted the biggest car insurance myths, let’s talk about how Quashed makes finding the right cover simple and stress-free. No more confusion—just clear, side-by-side comparisons that help you make smarter choices.

• Debunk the confusion with real-time quotes: Compare quotes from leading NZ insurers instantly and see exactly what each policy covers—no more hours wasted searching multiple sites. With over 100,000 Kiwis already using Quashed, we’re saving you time and effort with real-time insights.

• Tailored to your needs, not the myths: Adjust your policy settings—including coverage type, sum insured, and excess—to find the perfect fit for your car and budget.

• Save time and money: Forget the myth that shopping for car insurance is complicated. With Quashed, you’ll get accurate comparisons in minutes, helping you make informed decisions faster.

No More One-Size-Fits-All

Why settle for a policy that doesn’t fit your lifestyle? With Quashed, you’re in the driver’s seat. Our platform lets you customise key policy details to match your needs—without the hassle.

• Insurance type: Switch between comprehensive and third-party cover to find the right level of protection.

• Sum insured: Adjust your coverage to avoid being over or underinsured.

• Excess amount: Choose an excess that works for your budget and risk appetite.

Quashed shows you how adjusting these settings affects your premium across multiple insurers at once—so you can make informed decisions before making a purchase. Start comparing your cover today and see the difference for yourself.

Confused About Car Insurance?

Don’t let car insurance myths steer you wrong.

With Quashed, you can compare policies side by side, see exactly what’s covered, and make smarter choices—fast.

Sign up for free today and join over 100,000 Kiwis using Quashed to compare insurance with confidence.

Further Reading

Check out these useful articles to learn more about car insurance in New Zealand.

• How to Save Money on Your Insurance: Smart ways to cut down your costs.

• 10 Insurance Mistakes That Cost You Money: Common pitfalls to avoid.

• Key Factors in Choosing the Best Car Insurance: What really matters when picking a policy.

• Why Is Car Insurance So Expensive?: The key reasons behind rising premiums.

• Smart Ways to Slash Your Car Insurance: Tips to lower your premiums without compromising cover.

• Car Insurance Quotes: How to compare and find the best deals.

• Cheapest Versus Best Car Insurance: Finding the right balance for your budget.

• Sorting Out Your Car Insurance Renewal: Steps to avoid overpaying at renewal time.

• Comprehensive vs Third Party Car Insurance: Which cover type is right for you.

• Average Cost of Insurance in NZ 2026: Full breakdown of insurance costs across NZ.

FAQs

Got questions? Here are the answers to the car insurance questions Kiwi drivers search for most.

What’s the difference between comprehensive and third-party car insurance in NZ?

Comprehensive car insurance covers damage to your own car and to other people’s vehicles or property, plus theft, fire, vandalism, and weather events. Third-party insurance only covers damage you cause to someone else’s vehicle or property—not your own car. Third-party, fire, and theft sits in the middle, adding fire and theft protection for your vehicle on top of the third-party cover. For a full side-by-side comparison, read our Comprehensive vs Third Party guide.

Can I still claim on my car insurance if my WoF or rego has expired?

In most cases, yes. If your car was roadworthy and the expired WoF or registration didn’t directly contribute to the accident, most NZ insurers will still honour your claim. However, if the lapse meant your car was genuinely unsafe—for example, bald tyres or faulty brakes that played a role in the incident—your insurer may decline or reduce your claim. The safest approach is to always keep your WoF and rego current. For a full rundown of costs and obligations, see our NZ Car Ownership: Registration, Insurance & Running Costs guide.

How does importing a car from Japan affect my insurance in NZ?

Most NZ insurers will cover a Japanese import provided it has passed New Zealand compliance and is registered with NZTA. However, premiums can vary significantly depending on the make, model, and age of the vehicle. Some imported models—particularly performance cars or older vehicles with limited parts availability—may attract higher premiums or additional conditions. If you’re considering a Japanese import, it’s worth running a Quashed Market Scan before you buy to see what insurance will actually cost for your specific vehicle.

Will modifying my car void my insurance?

It can. Performance modifications—such as turbochargers, superchargers, lowering kits, or engine swaps—can make your car more expensive to insure or, in some cases, uninsurable with certain providers. Even cosmetic modifications may need to be declared. If you don’t disclose modifications and then make a claim, your insurer can decline it. The rule is simple: always tell your insurer about any modifications before you make them, and get written confirmation that your cover remains valid.

Does my car insurance policy cover me when I rent a car in NZ?

Generally, no. Your personal car insurance policy covers the vehicle listed on the policy, not a rental vehicle. When you hire a car in New Zealand, basic insurance (CDW) is included in the rental price by law, but it comes with a high excess—typically $1,500–$3,000. You can reduce or eliminate that excess by paying an additional daily fee to the rental company, by using comprehensive travel insurance that includes rental vehicle excess cover, or—in some cases—through a premium credit card that offers rental excess reimbursement (check your specific card’s terms, as not all NZ credit cards include this and conditions vary). For a full breakdown of how to avoid paying high rental excess fees, read our NZ Car Rental and Insurance 2026 guide. If you hold a premium credit card, our Credit Card Travel Insurance in NZ 2026 guide breaks down exactly which NZ cards include rental excess cover and what the limitations are.

Which cars are the most expensive to insure in NZ?

Cars with high theft rates, expensive parts, or specialised repair requirements tend to cost more to insure. In New Zealand, the Toyota Aqua has been the most stolen car for four consecutive years, which pushes its premiums well above the national average—the average comprehensive premium for an Aqua is $1,423 per year (2026 Quashed data), compared to the national average of $1,298. High-performance imports, luxury European vehicles, and electric vehicles with costly battery systems also attract higher premiums. For a detailed look at Aqua insurance costs and how to save, read our Toyota Aqua Insurance 2026 guide. To see how insurance costs compare across NZ’s most popular models, check out Comparing Insurance Costs for Top Cars in NZ.

Do dashcams lower car insurance premiums in NZ?

No. As of 2026, no major NZ car insurer offers a direct premium discount for having a dashcam installed. AA Insurance has explicitly confirmed that dashcams, alarms, and GPS trackers do not affect their premium calculations. However, dashcam footage can be extremely valuable if you need to dispute fault in a claim. If footage proves you weren’t at fault, it can prevent your premiums from increasing at your next renewal—so a dashcam is still a smart investment for protecting your record, even if it won’t reduce your upfront premium.

Are electric vehicles more expensive to insure than petrol cars?

Yes, in most cases. Quashed data shows that a Tesla Model Y costs approximately 40% more to insure than a comparable petrol SUV like a Subaru Forester. The higher premiums are driven by expensive battery repair and replacement costs, the need for specialist EV-trained technicians, and higher purchase prices. That said, some EVs like the Nissan Leaf are more affordable to insure due to their established parts networks and strong safety records. For a full comparison of EV vs petrol insurance costs, read our Electric Vehicles: Do They Cost More to Insure? guide, and always compare EV quotes on Quashed before you buy.

What factors affect my car insurance premium in NZ?

Insurers calculate your premium based on a combination of factors: your age and driving experience, your claims and driving history, the make, model, year, and value of your car, where you live and park overnight, how many kilometres you drive annually, and the level of cover, excess, and sum insured you choose. Younger drivers, high-theft models, and Auckland postcodes all tend to attract higher premiums. To reduce your costs, consider increasing your excess, parking in a garage, maintaining a clean driving record, removing unnecessary extras, and—most importantly—comparing quotes from multiple insurers. For a full breakdown of what drives premiums and proven ways to lower them, read our Cheap Car Insurance NZ 2026: Proven Ways to Lower Your Premium guide.

How much can I save by comparing car insurance in NZ?

Potentially hundreds of dollars a year. According to Q4 2025 Quashed data, Kiwis who compared their car insurance found a cheaper policy 80% of the time, with average savings of $367 per year. The gap between the highest and lowest quotes for the same car can exceed $679. Every insurer calculates risk differently, which is why the same driver and vehicle can produce vastly different quotes. A free Quashed Market Scan compares quotes from 10+ NZ insurers in under two minutes, so you can see exactly where you stand.

Will I get a better deal if I stay with the same insurer?

Almost certainly not. In New Zealand, insurers rarely reward long-term loyalty with lower premiums. In fact, the opposite is common—premiums often creep up at renewal, while new customers receive promotional rates. Quashed calls this the “loyalty tax,” and our data shows it costs the average Kiwi household $1,351 per year across their car, house, and contents policies combined. The most effective way to avoid overpaying is to compare your policy at every renewal using a free Quashed Market Scan.

What should I check before renewing my car insurance?

Before you auto-renew, check three things: whether your car’s value has changed (you may be over or underinsured), whether you’re paying for extras you no longer need (such as rental car cover if you have a second vehicle), and whether a different insurer now offers better value for your profile. Your renewal notice is a prompt to compare—not to accept. For a step-by-step walkthrough, read our Sorting Out Your Car Insurance Renewal guide.

Can I cancel my car insurance and switch to another provider?

Yes. Most NZ car insurance policies can be cancelled at any time—you’re not locked in for the full year. If you cancel partway through your policy, you’ll typically receive a pro-rata refund for the unused portion of your premium, although some insurers charge a small cancellation or administration fee (usually $20–$50). The process is straightforward: find a better deal, purchase the new policy, then contact your current insurer to cancel. Make sure there’s no gap in cover between the old policy ending and the new one starting. For tips on managing this process, see our Sorting Out Your Car Insurance Renewal guide and our Cheap Car Insurance NZ 2026 guide for switching tips.

This article provides general information only and does not constitute insurance or financial advice. Insurance policies vary between providers, and you should check with your insurer or a licensed adviser for guidance specific to your situation. For full details, refer to Quashed’s terms and conditions.