It’s easy to get confused with all the car insurance myths floating around. Some believe "cheapest is best," while others think, "I don’t need insurance; I’m a great driver." Let's clear things up. In this blog, we’ll debunk some of the most common car insurance myths so you can make smarter decisions.
1. What does car insurance actually cover?
Fiction: “Car insurance only covers damage to my car.”
Fact: Car insurance covers much more, as discussed in our guide. 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. According to the Quashed Index, the average cost of comprehensive car insurance has increased by 18.1% over the past year, so it’s essential to know exactly what you’re paying for.
What you need to know: Not all policies are the same. With Quashed, you can easily compare policies and see if 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. What’s the best car insurance?
Fiction: “All car insurance is the same—just pick the cheapest one.”
Fact: The best car insurance depends on your needs. Do you only need basic third-party cover, or do you want full windscreen replacement and rental car cover? There’s no one-size-fits-all. If you drive a newer car, comprehensive cover might be your best bet to avoid costly repairs. Our Motor Insurance NZ guide provides a detailed look into finding the right cover.
What you need to know: Don’t just choose based on price. Consider what kind of protection is important to you. A cheaper policy might save you money now but leave you exposed later. To avoid costly mistakes, check out our blog on the Ten Insurance Mistakes That Cost You Money.
3. Why is car insurance important?
Fiction: “I don’t need insurance; I’m a safe driver.”
Fact: Even if you’re a safe driver, accidents happen. More importantly, liability cover is essential in New Zealand. 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. The type of vehicle you drive can impact your insurance needs, especially with newer models like electric vehicles.
What you need to know: Liability cover is a must-have, as it protects you from the financial consequences of accidents. Always ensure your policy includes liability protection to safeguard against unexpected legal or repair costs.
4. Is car insurance too complicated to understand?
Fiction: “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. That’s where Quashed comes in handy—it helps you compare policies easily, so you know exactly what you’re paying for and what’s covered.
What you need to know: The basics are straightforward—just make sure you understand the policy terms, your excess, and what’s included in the cover. Tools like Quashed make this comparison much easier.
5. Which car insurance is cheapest?
Fiction: “Always go for the cheapest policy.”
Fact: The cheapest option isn’t always the best one. While it’s tempting to save a few bucks upfront, a cheaper policy may leave you exposed when it’s time to make a claim. Cover is key—saving now might cost you later if your policy doesn’t include features like theft protection or roadside assistance.
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 cover ensures you’re not caught out when the unexpected happens.
6. How are car insurance premiums calculated?
Fiction: “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. According to the Quashed Index, comprehensive car insurance for drivers aged 18-24 costs $1,711 annually on average.
What you need to know: Your car’s value and your location also play a big role. If you drive a high-value car or live in a high-risk area (think Auckland storms), expect your premiums to be higher.
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7. Why is car insurance so expensive?
Fiction: “Insurance companies are just out to get me.”
Fact: Premiums are rising, but for good reasons. According to the Quashed Index, comprehensive car insurance premiums have increased by 18.1% in the last year, driven by factors such as inflation, higher repair costs, and environmental events like flooding. For younger drivers (aged 18-24), premiums have skyrocketed by 58% in two years, making it even more important to shop smart.
What you need to know: While costs are up, that doesn’t mean you should settle for an overpriced policy. Take a look at our guide on Smart Ways to Slash Your Car Insurance to see how you might manage costs.
8. What car insurance should I get?
Fiction: “I’m a great driver, I don’t need much insurance.”
Fact: Even the best drivers can end up in accidents, and sometimes it’s not even your fault. The type of insurance you need depends on your driving habits. Comprehensive car insurance covers damage to your car and others', while third-party insurance might be enough if you drive an older car and only want to cover damage to other vehicles.
What you need to know: Assess your car’s value, how often you drive, and your risk tolerance. Comprehensive car insurance offers peace of mind, but third-party might be all you need if your car is older and low-value.
9. Can you cancel car insurance anytime?
Fiction: “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.
10. Do comprehensive car insurance policies cover everything?
Fiction: “Comprehensive car insurance means I’m covered for anything and everything.”
Fact: While comprehensive car insurance provides the broadest cover, it doesn’t cover everything. For example, general wear and tear, mechanical breakdowns, and illegal modifications are often 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 car insurance policies can still have exclusions, so don’t assume you’re covered for all scenarios. Use Quashed to compare policies and find out which ones offer the best protection for your specific needs.
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Cutting through the noise
Car insurance doesn’t have to be a mystery. Understanding what’s covered, how premiums are calculated, and the type of cover you need will help you make smarter decisions.
Quashed makes it easy to cut through the noise, providing side-by-side comparisons of policies from leading insurers. Whether you’re after comprehensive cover or basic third-party insurance, Quashed helps you find a policy that fits your needs and budget.
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FAQs
What’s the difference between comprehensive and third-party insurance?
Comprehensive car insurance covers both your car and others’ in case of damage, while third-party insurance typically only covers damages you cause to other vehicles. For more on choosing the right cover check out our guide.
How are car insurance premiums calculated in New Zealand?
Premiums are determined based on several factors, including your age, driving history, the make and model of your car, and your location. Younger drivers, for instance, often pay higher premiums due to increased risk. See our post on The Average Cost of Car Insurance Premiums in New Zealand for more details.
Does cheaper car insurance mean I’m saving money?
Not necessarily. While a lower premium might look attractive, it may lack important covers like theft protection or roadside assistance. Balancing cost and cover ensures you’re protected when the unexpected happens. Learn more in our blog on Comparing Insurance Costs for Top Cars in NZ.
Is it true that car insurance doesn’t cover modifications?
Yes, certain modifications, especially performance enhancements like turbochargers, can make your car uninsurable or raise your premiums. Check your policy’s terms to know which modifications are covered.
Can I cancel my car insurance policy anytime?
Yes, most NZ insurers allow cancellations anytime, though some may charge a cancellation fee. Always check your policy terms or reach out to your insurer if you’re considering a change.
Got more questions about car insurance? You’ll find all the answers right here.
