The Open Road - Understanding Car Insurance

A car can often be one of the most expensive things you own, especially if you haven't bought your first home yet! The freedom of driving on the open road is difficult to match but those open roads are varied in both location and condition. Not everyone has the same level of experience or care on the road. In many cases, it doesn’t matter how good a driver you are, as your chances of getting into an accident are very high. 

But it’s not just car crashes that you need to worry about, with statistics showing that 1 in every 9 cars are reported stolen each year.

So as careful as you are with your pride and joy, there’s always a chance that something will, not could, go wrong – making motor vehicle insurance a must.

Not a one size fits all approach - The different levels of cover

Motor vehicle insurance has different levels of cover and as is the way with most insurance products, the more cover you take, the more it will cost.

Third Party Liability

This type of insurance covers the cost of damage caused to other people’s property and legal costs but not damage to your vehicle. It includes items such as other cars, buildings, fences, lamp posts and traffic signals.

Third Party Fire and Theft

Much like Third Party Property Damage, this type of insurance covers the cost of damage to other people’s property, but will also cover you for damage caused to your vehicle by fire or theft. It does not cover damage to the owner’s car caused in a road accident.


The name pretty much says it all – as this insurance covers you comprehensively. It covers the repair or replacement of your vehicle for events including theft, collision, fire, malicious damage and weather-related damage, such as hail or flooding.

Comprehensive insurance will also cover the cost of repairing and replacing any other vehicles that are damaged by your vehicle in an accident, and damage to property.

In many cases, depending on your policy, it may also cover personal property in the car, death benefits, towing, legal costs and even hire cars needed while repairs are being done. These are usually the main difference between some comprehensive wordings , so make sure you talk to your broker about what is right for you.

Your legal Obligations

Unlike other countries New Zealand has no compulsory insurance for vehicles. However as with many aspects of living, the law has an effect on everybody - insurance is no different. Several legal aspects are discussed below:

Duty of disclosure

You've heard the ad's "we ask you more questions so we get it right" however every insurer asks the same questions? They do so they can decide whether to provide insurance and at what cost. You actually have a legal obligation to disclose all relevant details that may affect the terms of insurance. This includes any modifications made to your vehicle (both before and after the insurance policy is acquired) such as body modifications and sound systems. ‘Hotted up’ cars can be insured, depending on a number of factors, but it is important to disclose all information relating to the modifications. Obviously, this may affect the cost. Some insurers will choose not to insure cars that have been modified, while others tend to specialize in this type of insurance.

Parents and children

Some parents insure the car of a young adult in their own name. This leads to a lower cost, assuming the parent has a reasonably sound driving record. This practice is, in fact, fraudulent as it misleads the insurance company on the level of actual risk and therefore the cost. The trouble with doing so is you wont find out what the true cost is until claim time!  In a worst case scenario an insurer may void the policy and decline the claim leaving your seriously out of pocket.


Under the Privacy Act 1993 there are strict guidelines related to the type of information that private-sector organisations, such as insurance companies, can ask. The laws govern the purpose for which information can be used and the way that information about policyholders is treated.

So how do they figure out what it costs?

The cost of motor vehicle insurance is determined by the level of cover - the more cover taken, the higher the cost will be, and the level of risk. When you get motor vehicle insurance, the following factors are considered:

Your age

How old you are at the time you get your insurance policy will affect the price of your premium. The younger you are the more you pay because statistically drivers under the age of 25 are more likely to have an accident. Once you hit 25 the cost of your insurance can drop quite a lot. However, it will generally rise again when you’re over 65—because statistically, seniors, like younger drivers, have a higher accident rate.

Your gender

Sorry to say guys but studies have been done that show men drive more aggressively than women and are prone to have more accidents, and the prices they are charged for insurance premiums reflect this. Overall, women pay 12% less than males with a similar age, location and driving history.

Your driving record

If you have a spotless driving record with not even the slightest scratch of your car you will most likely pay a lower premium than someone who has had a few incidents. Some car insurance companies even reward safer drivers with ‘safe driver discounts’.

Your car

Cars that cost more to repair cost more to insure and cars that have been modified or ‘pimped out’ cost more again. Cars with extra safety features will normally cost less to insure because the safety features result in less claims and lower claim amounts. So before buying a car you might want to research the average prices for insurance for that make or model to avoid any unpleasant surprises.

Your neighborhood

If you live in a neighborhood that has a statistically high crime rate you will have to pay a higher premium than someone who lives in a safer area with (of the same age, same driving record etc). People who live in and near cities pay more than people who live in rural areas because there is more traffic with a bigger chance of having an accident.

When it comes to choosing your policy it can be hard to figure out what’s a reasonable price to pay. A broker will be able to find the policy that covers your needs at a price that suits you best. It's also important to remember to read the conditions to see what’s covered and what isn’t.

How do I reduce my premium?

Insurance companies generally provide a lot of options for people to reduce the premiums they pay. You can actively do a lot of things to help keep the costs down. These include:

  • Parking your car safely. Securely parking your vehicle (either off street or in a lock-up garage) can reduce the risk of theft, vandalism, flood or storm damage claims.
  • Maintaining a good driving record reduces the risk of you making a claim – many insurers offer sizeable discounts for drivers with good driving records.
  • Buying a car fitted with safety and security devices like alarms or immobilisers to reduce the risk of theft and damage, or have them installed if this is feasible.
  • Limiting the number of drivers you nominate on your policy, especially if they are under 25.
  • Choosing a higher excess. This is a good option if you don’t think you’re going to need to make a claim any time soon. The higher the excess, the lower the premium

As always, contact your broker to check how these may be taken into account.

What to do if you have an accident

When people take out motor vehicle insurance, they hope they never have to use it. Makes total sense. But with so many accidents happening every day, there’s a pretty good chance you will need to make a claim at some point.

Luckily though, most accidents only damage the vehicles rather than the occupants. The question is, do you know what to do if you have an accident?

Firstly, never drive away from the scene of the accident until you’ve completed the following steps.

  1. Don’t panic! As hard as it can be, try to stay calm. Switch off the ignition and check to see if anyone is injured. If so, call 11 to get medical assistance immediately.
  2. Report the accident to police if someone is injured (this includes you) or if there is damage to property whose owner is not in attendance. It’s also a good idea as sometimes your insurance company will want to see a police report. Speaking of which, it’s probably a good idea to call your broker or insurer and let them know.
  3. Try and prevent any further accidents by keeping your hazard lights on. Only move your vehicle if it is safe to do so, and if it’s interfering with traffic.
  4. Make sure you give your name, address, registration number, contact details and insurance information to the other people involved in the accident. Be sure to get the same details from the other driver, and contact details from witnesses if there are any.
  5. At no time should you admit liability for the accident (this is up to your insurer to decide) even if you feel you we're at fault.
  6. When you get a chance, use your camera or phone to take photos of the vehicles if there is visible damage. If you have visible injuries, take photos of them too, and then instagram it. Maybe not, but having a photo record of the accident can be invaluable when it comes to making a claim later on.

Whether you're a petrol head, a collector or just someone who wants to get from A to B we've got a cover to suit you. Get in touch with one of our team today.

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