Unlike some other countries, car insurance isn’t mandatory in New Zealand. While this can make car ownership cheaper in the short term, the undeniable benefit of having car insurance is that it’s there when you need it most.
Some of us learn the hard way, often when we’re younger and don’t really think about the benefit of spending that little bit extra each month to cover the cost of insurance. According to the 2020 AA Insurance Lifestyle Survey, just under two-thirds of NZers have been involved in a car accident.
How does car insurance work?
Some policies can protect your car if it gets stolen or if you require a windscreen replacement; some even include extras like towing, free of charge. You also get legal liability cover, meaning if you are liable for an accident the insurer will cover the costs (up to a limit).
If you’re involved in a crash with an uninsured vehicle, depending on the type of policy you have you may still be covered (although some companies have a reduced claim limit). It’s always worth checking, particularly if you have a third party policy, because if the crash was your fault, your insurance will only pay out for the damage attributed to the other party’s property.
If the crash was the other driver’s fault and you only have third party insurance, it’s unlikely that insurance can help you. The other driver would need to admit liability and pass you their insurance details (if they have any).
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Remember that policies can differ between insurers, so always check to see exactly what the terms of your agreement are.
What are the benefits of getting car insurance?
Crashing when you’re uninsured can lump you with a large, unwanted expense and can even leave you financially unable to get your car back on the road again.
If you have comprehensive insurance and are caught up in a crash, your insurance provider will often do a lot of the legwork. They will arrange for an assessor to check on the scale of the damage and organise for the repairs to be made. If applicable, they’ll also liaise with any other insurers involved.
What types of cover are available?
There are various types of cover available for drivers such as third party, third party fire & theft, and comprehensive. No matter which you choose, make sure you're selecting the insurance policy that’s right for you and your car. Speak to your insurer or check out policy options online.
A final note
At the AA, we actively encourage our members to take out a third party policy at the very least.
If you’re in a crash and it’s your fault, then you’re responsible for all damage caused. If you’re not insured, these costs will come out of your pocket and it could seriously impact you financially, especially if you’re unfortunate enough to have an incident with something high-end; replacing a small body panel on a supercar could cost more than your entire vehicle.
It’s entirely your decision whether you take out an insurance policy, but if you are able to work it into your monthly budget it’s absolutely worth it for the peace of mind alone.