Car insurance is not one product. There are levels of cover that protect different things, at different prices. New Zealand does not require car insurance by law, but driving uninsured is a big risk, because if you damage someone else's expensive car, you could owe a lot. Knowing the types helps you pick cover that fits your car and budget.
| Type | Covers Your Car? | Covers Others' Property? |
|---|---|---|
| Comprehensive | Yes | Yes |
| Third party, fire and theft | Only for fire and theft | Yes |
| Third party | No | Yes |
The biggest financial risk is not your own car; it is the bill if you crash into a much more expensive one. Third party cover protects you from that potentially huge cost, which is why even owners of cheap cars often hold it.
The widest cover. It pays for damage to your own car from accidents, plus damage you cause to others, and usually theft, fire, and storm. It costs the most, but for a newer or valuable car it is often worth it.
Covers damage you cause to others, plus your car being stolen or catching fire, but not accident damage to your own car. A middle option for cars where you want some protection without full comprehensive cost.
The most basic. It covers damage you cause to other people's property and vehicles, but nothing for your own car. Cheapest, and a sensible floor of protection even on a low-value car.
Separate from the above, this covers the cost of certain mechanical repairs, not crashes. It is sometimes sold with used cars. Read what it actually covers, as exclusions can be significant.
The excess is what you pay towards a claim before the insurer pays the rest. A higher excess lowers your premium but means more out of pocket if you claim. There can also be extra excesses, for example for young drivers.
| Basis | What It Means |
|---|---|
| Agreed value | You and the insurer agree a set payout if the car is a write-off |
| Market value | The insurer pays what the car was worth at the time of loss |
Agreed value gives certainty but can cost more; market value can be cheaper but the payout depends on the car's value when you claim, which falls as the car ages.
Our Car Insurance Calculator gives an indicative premium to compare.
Insurance is not compulsory, but the cost of damaging an expensive vehicle can be ruinous. At least third party is a sensible floor.
If your car is worth very little, paying for comprehensive may not be worth it; third party covers the bigger risk to others.
A low premium with a high excess can sting at claim time. Balance the premium against what you would pay to claim.
Modifications, named-driver limits, and mechanical breakdown exclusions can all affect a claim. Read the policy.
See our Insurance Basics guide. Final word: car insurance ranges from third party, which protects you against the big cost of damaging others' property, to comprehensive, which also covers your own car. Match the level to your car's value, pick a workable excess, and read the exclusions. This is general information, not advice; compare current policies.
Quiz on Car Insurance Types (20 Questions)
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