We Kiwis love our cars, but when it comes to car insurance, a lot of us aren’t as interested. Sure, you might think you’re all sorted, but what happens when a supermarket trolley dings your door or a rogue branch lands on your bonnet—are you really covered?
In this post, we’re breaking down the different types of car insurance policies you might need in New Zealand, with some real-life examples where you might just wish you’d known a little more about them.
For a deeper dive into car insurance options and requirements in New Zealand, check out our Motor Insurance Guide.
The basics of car insurance
Car insurance in New Zealand comes in three main types: comprehensive, third-party, and third-party, fire, and theft. Each offers different levels of cover, so let’s break it down, myth-buster style:
Comprehensive car insurance: This is the big one. If your car were a rockstar, this would be the VIP package. It’s got you covered for damage to your own car (even if it’s your fault) and any damage to other people’s cars or property. It also covers theft, vandalism, and some natural disasters (good news for those parking under shaky pōhutukawa trees). For more on comparing the top options, check out our Motor Insurance Guide.
Third-Party insurance: This one’s a bit lighter on coverage. If you cause an accident, it covers damage to other vehicles or property, but not your own car. It’s perfect for older cars or if you only drive occasionally. To see if this option saves you money, have a look at Smart Ways to Slash Your Car Insurance.
Third-Party, Fire, and Theft: The middle child of car insurance. It covers you for damage to other people’s property and protects you if your car is stolen or catches fire. It’s a solid middle ground for those who want more than the basics without paying for the full VIP experience.
But what are the pros and cons of each policy type? We break them down in the following table.
Policy type | Pros | Cons |
|---|---|---|
Comprehensive car insurance | -Covers damage to your car and other vehicles or property. -Includes protection against theft, vandalism, and natural disasters. -Offers the most peace of mind, especially for new or high-value cars. | - Higher expensive |
Third-Party car Insurance | -Cheaper premiums -Covers damage you cause to others’ property. | -Does not cover your own vehicle. -Leaves you exposed in cases of theft or weather damage. |
Third-Party, Fire, and Theft | -Adds coverage for theft and fire on top of third-party insurance. -A good middle ground between comprehensive and basic third-party | -Still doesn’t cover damage to your own car in accidents. |
How can you pick the right car insurance?
Choosing the best car insurance in NZ comes down to a few factors: the value of your car, your driving habits, and your budget. Comparing premiums can help you weigh up your options. Check out our guide on the average cost of car, house, and contents insurance premiums in New Zealand for a closer look at typical costs to help you decide.
Those unexpected situations: are you covered?
We’ve all heard bizarre car insurance stories. But what does car insurance in New Zealand actually cover in some of these strange scenarios? Here are a few common—and not-so-common—situations that might leave you wondering if you’re covered:
Stolen car: Both comprehensive car insurance and the third-party fire and theft option cover the cost of a stolen car, depending on the policy. Comprehensive also covers any damage if your car is recovered, whether it’s scratched up or has smashed windows.
Wild weather: Got caught in a hailstorm? Comprehensive car insurance has your back, covering natural disasters like storms, floods, and hail. For more info, check out Comparing Insurance Costs for Top Cars in NZ.
Accidents with animals: If a wandering sheep or stray possum crosses your path, comprehensive car insurance will cover the damage to your car.
Supermarket mishaps: The dreaded supermarket car park—where trolley dents and careless door swings lurk. Comprehensive cover can help pay for repairs if someone scratches your car with a trolley or opens their door into your side panel.
What’s not normally covered by car insurance?
While car insurance is there to have your back when unexpected events happen, it’s not a magic shield for everything. Here’s a rundown of the most common exclusions, so you’re clear on what car insurance doesn’t cover in New Zealand.
Wear and tear: Think of wear and tear as the normal “ageing” of your car. Things like rust, worn-out tyres, and faded paint aren’t covered under any policy. If your brakes or tyres wear down over time, that’s on you to fix, not your insurer.
Non-standard use: Planning to take your car off-road or enter a race? Be careful—using your car in ways outside what’s “normal” won’t be covered. Even activities like beach driving or towing more than your car’s rated capacity might void your coverage. Keep it safe and legal to stay protected.
Driving violations: It’s a big no-no to drive under the influence of alcohol or drugs, or without a valid licence, and it’s the quickest way to void your insurance. Similarly, driving in ways that break licence restrictions (like a restricted licence holder driving unsupervised) is another reason insurers won’t pay out. Remember, they only cover accidents when you’re following the rules.
Modifications: Modified your ride without telling your insurer? Even minor upgrades, like a modified exhaust or a new sound system, could impact your policy if they’re not disclosed. Insurers generally want to know about any changes that make the car perform differently, look more valuable, or carry more risk.
Neglect or recklessness: Insurers expect you to take reasonable care of your car. Leaving it unlocked with the keys inside or valuables in plain sight can lead to denied claims if it’s stolen. And, if damage happens because of risky behaviour—think road rage or intentionally causing harm—it won’t be covered.
Gradual damage and pests: Insurance isn’t meant to cover things like rust, mould, or damage from pests (yes, that means mice in your engine!). While resulting damage might sometimes be covered, the primary cause from gradual wear or pests generally isn’t.
Unroadworthy condition: If you’re driving without a Warrant of Fitness (WOF) or your car isn’t roadworthy, insurance likely won’t pay out. Keeping your car in good working condition is essential—not just for coverage but for safety.
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Why wait?
It’s easy to put off car insurance until you find yourself in a frustrating situation. You might be paying for extras you don’t need, or perhaps you’re not covered for something important. Don’t wait—use our insurance comparison tool to check out options like multi-policy bundles and get a better deal that fits your lifestyle.
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FAQs
How does the type of car affect my insurance premium?
The kind of car you drive can make a big difference in your premium. Cars with higher theft risks or pricier repair costs, like luxury and performance models, tend to come with higher insurance rates. But if you’re driving a safer, lower-risk car, you’re likely to see more affordable premiums.
Does comprehensive car insurance include natural disasters?
Yes, comprehensive insurance can cover damage from events like storms, floods, and hail, depending on the provider and policy details.
What does car insurance cover in New Zealand?
In general, car insurance can cover theft, accidents, and damage to other vehicles or property, depending on the level of coverage chosen.
Got more questions about car insurance? You’ll find all the answers right here.
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