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How Car Insurance Works in New Zealand

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Understand Your New Zealand car insurance.

In New Zealand, although it is no mandatory to have car insurance, a lot of backpackers do purchase some kind of cover so that they are able to afford the expensive costs of being in a road accident.

On the other hand, purchasing the car insurance in the first place can usually feel pretty expensive, so you should go into buying your car insurance understanding how car insurance works, thus making sure you are not spending too much or too little on your car insurance.

To help you make an informed decision, we’ll go through the different types of vehicle insurance in this article, as well as explaining who is insured, the usual conditions of car insurance in New Zealand, and more!

6 Things to do before getting car insurance

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What is the difference between comprehensive and third party car insurance?

Comprehensive car insurance covers the cost of damage to your own vehicle, as well as other people’s cars and property. This might also include any accidental injuries and/or deaths both in your car and any other vehicles involved in the accident.

Third party car insurance covers the damage to other people’s cars and property and sometimes injuries and/or deaths in the other vehicles. However, it does not cover the cost of any damages to your own car. For this reason, third party insurance is more affordable.

Third party car insurance usually has an option to add fire and theft, which means your vehicle is covered if your car is stolen or damaged by fire.

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Who is insured?

Car insurance will either cover the driver or the vehicle. Who or what is insured should be pretty obvious in your car insurance policy.

When the insurance covers the driver, this means the driver is insured on any vehicle, whether it’s your own, your mates’, your WWOOFing hosts’, etc.

When the car insurance covers the vehicle, this means that just your own vehicle is covered. Nevertheless, that usually means anyone driving your vehicle is also covered. So, if you are on a lengthy road trip, then you can switch drivers with your mates and the car will still be insured. Just make sure that all drivers have a valid driver licence.

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Insurance conditions

Make sure that you read the conditions of your insurance carefully, as there are some situations where your insurance may not be valid. It is pointless and a waste of money to buy car insurance, if you or your car are breaching the conditions of the insurance policy. For just a few obvious examples, your car insurance is only valid when:

  • The driver has a valid driver licence. Find out what licence is valid in How to Drive in New Zealand.
  • The car is used in a safe and roadworthy condition.
  • The driver is not under the influence of alcohol or drugs.
  • Your vehicle is only used for personal use, rather than commercial or business purposes.
  • You have been truthful about your car condition, driving history and who is driving the car.

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What is excess?

On the wording and policy of your car insurance, you’ll see the word ‘excess’. In insurance terms, excess is the how much of the damages you pay for when making a claim. For example, if you have an excess of NZ$500 and the damages bill is NZ$5000, then you will pay NZ$500 and the insurance company will pay NZ$4500.

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What to do if you have an accident

The first thing any insurance company would say is: “Do not claim liability.” In other words, don’t say the accident was your fault. Before all that, call 111 in an emergency situation.

If you are involved in a vehicle accident, write down all the details about the accident, including name and contact details of the other driver and registration licence number of the vehicles involved. Also, get the names and contact details of any witnesses.

Then contact your insurance company – the insurance company will have likely given you a phone number to make a claim.

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Do you really need car insurance in New Zealand?

This question can crop up when you are looking at where to cut costs for your New Zealand road trip. Because it is not mandatory, car insurance might seem tempting to ignore. However, there is always a risk factor involved, as about one third of car insurance customers in New Zealand make a claim each year. Cutting a couple of hundred dollars, then an extra few hundred dollars of excess if you do need to claim, out of your road trip budget for car insurance might just cost you hugely in the unfortunate event of a road accident.

On the other hand, if you don’t purchase car insurance and you and your car are not involved in a road accident, then, for sure you will have saved a substantial amount of money. In the case that you are involved in a road accident and it is your fault, you will have to come to an arrangement to pay the damages yourself. Failure to do this often results getting settled in the Disputes Tribunal or District Court.

All in all, whether it is worth getting car insurance in New Zealand is a personal decision. You will save some money if you don’t get insurance and have road accident-free time here. However, getting car insurance is sure to give more peace of mind for if the worst should happen.

More about driving in New Zealand

Need more tips on driving in New Zealand? Then check out these articles!

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