You can insure your car against accidental loss or damage to up to its market value or a value agreed with your insurer. Motor vehicle insurance can also cover you against any damage you might cause to someone else's car or property, as well as pay for reparations ordered by the court if you injure someone.
Motor vehicle insurance can cover you against accidental loss of, or damage to, your motor vehicle, up to either its:
Market Value – what your vehicle is worth just before the damage occurs
Agreed Value – where you and your insurance company agree on the value of the car at the beginning of the contract and at each renewal.
Motor vehicle insurance can also cover you against any damage you might cause to someone else's car or property. Also, if a New Zealand court orders you to pay reparations to someone you have injured in an accident, your insurance policy may pay for those reparations.
The two most important things to remember about motor vehicle insurance are:
- You are only covered up to the limit stated in your policy, and
- Your contract obliges you to take reasonable care to avoid accidents and theft.
Types of policies
There are three types of policy:
Third Party Property Damage
- This only covers you against the damage you cause to someone else's vehicle and/or property or if you cause them injury. It is the least expensive type of car insurance.
Third Party, Fire and Theft
- This covers damage caused by fire and theft to your vehicle as well as Third Party Property Damage.
- This covers you against accidental loss of, or damage to, your motor vehicle as well as Third Party Property Damage. It may also cover you for other costs such as salvaging your care from the accident scene and towing it to a repairer.
- As well as the standard policy, companies offer a wide variety of options and benefits. Generally, the more extensive the cover, the more expensive the policy.
Insuring your motor vehicle
When insuring your motor vehicle it is important that you disclose all information that may affect the acceptance of the insurance.
This is regardless of whether or not a specific question is asked.
In addition to disclosing all previous losses and criminal convictions, it is likely your insurer will also want to know who is going to drive your motor vehicle and if you or the other drivers have had any accidents or traffic convictions, and whether your vehicle has been modified.
Some facts that you should disclose about the vehicle when insuring
Tips for insuring your motor vehicle
At the time you insure your car you need to take note of how to stay within the terms of the agreement with your insurance company.
- An agreement to insure will carry conditions and obligations both for you, the car owner, and for your insurer.
Rental Vehicle Hire
The New Zealand Land Transport Rule “Operator Licensing 2007” section 9.4 requires vehicle hire companies to offer motor insurance cover to the hirer but does not prescribe a minimum standard of insurance that will provide reasonable financial protection to the hirer.
Before you sign a rental vehicle hire agreement whether it be for a rental car, campervan or commercial vehicle you need to be certain that the insurance you are offered by the vehicle hire company is going to adequately financially protect you in the event of an accident, theft or damage to the rental vehicle.
The Insurance Council of New Zealand recommends that the rental vehicle hire company motor insurance offer needs to include:
- Cover for liability to third parties for at least $5 million.
- Comprehensive cover for damage to the rental vehicle's full value, including windscreen and window breakage.
- Only fair and reasonable exclusions. Normal exclusions to any motor vehicle insurance cover would be for reckless or deliberate acts, driving whilst under the influence of alcohol or non-prescribed drugs or allowing someone to drive that has not got a full driver’s license. ICNZ has been aware of some contracts that had restricted insurance cover to driving only during daylight hours and no provision of cover if the driver breaches a road rule. This in our view is not viable insurance and is insurance that is not supported by Insurance Council members.
Most insurance covers will have an excess. You may be able to reduce that to a lower limit by paying an additional charge.
It is a legal requirement that Insurance is only provided by a licensed insurer in New Zealand. An Insurer is licensed under section 19 of the Insurance (Prudential Supervision) Act 2010. Check here for licensed insurers.
If you are going to visit New Zealand from overseas, you could purchase comprehensive travel insurance in your home country that may provide cover for your excess.
If you are a resident of New Zealand, you can purchase domestic travel insurance that usually provides cover for your rental vehicle excess.
If you are renting a vehicle and already have a comprehensive motor insurance policy, then you may be able to extend your own motor insurance policy to include the rental vehicle by contacting your insurer. The vehicle hire company would normally need confirmation from your insurer that cover for the rental vehicle is in place.
Uber Taxi Operators Should Check to Make Sure They Have the Correct Insurance
Your private motor insurance policy is not likely to provide coverage for you if you drive for a service like Uber. This is because private type car insurance policies have a number of exclusions. One of those exclusions is likely to be “driving-for-hire.” This would translate into higher risk as you would be driving more kilometers and this increases the chances of an accident.
If you are driving for Uber or any other taxi service, you should check with your insurance company or insurance broker to confirm whether your policy covers driving for hire or commercial driving. If it does not, you will want to consider purchasing commercial motor insurance.
If you did not disclose to your insurer that you were driving-for-hire (e.g. Uber) then it is likely that your claim could be declined and you may be left to pay for repairs to your damaged vehicle and possibly damage to other vehicles or property if you were at fault.
As some Uber drivers may only be using their own private vehicles part time for Uber services then it may be possible for an insurer to provide a specialist hybrid commercial motor coverage that could be more cost effective than a pure commercial taxi coverage that will take into account that the vehicle is only used for limited Uber taxi use.
Deregistration of structurally damaged vehicles
Insurance companies would not wish to risk their reputations and public safety by settling a claim, without deregistering the vehicle if that vehicle has been structurally damaged.
- The insurance company is going to insist that before they settle a claim with an uninsured third party, that the structurally damaged vehicle is deregistered.
- See a guideline about how the vehicle's structural safety is assessed following an accident.
Frequently Asked Questions
When insuring your car you should read your policy carefully and ask questions of your insurer to clarify your cover and obligations.
I have had an accident involving another vehicle where I am ‘at fault’ and I am uninsured. What do I do?
The Insurance Council recommends that, if you are not insured, you contact the other party’s insurer, so that they can advise you what the likely process and costs could be.
It’s important to remember that all repair costs are thoroughly checked and assessed by insurers before repairs are authorised, regardless of whether the costs will be recovered from anyone that is responsible for causing the accident.
If you receive a bill from an insurer and cannot pay, you need to contact that insurer as soon as you can to discuss any options that may be available to you.
Once you have received contact from the insurance company and agreed to pay, it is important you pay the insurance company not the vehicle owner.
Should you believe you were not at fault in the accident, then you must raise this with the other party’s insurer. You may have to appear at the Disputes Tribunal if a dispute over liability arises.
What items are "accessories" in a motor vehicle policy?
Accessories are any minor attachments designed for use in a motor vehicle but which the vehicle will still operate without. These may include (but are not limited to) radios, CD player, child car seat, tow bar, and roof rack.
When could my insurance company use drivers' licensing exclusions?
When it is proven that driving outside your license conditions contributed to your accident.
If someone hits my car and they are not insured, who pays?
Most companies have a benefit which means that people with insurance are automatically covered in accidents caused by uninsured people.
Talk to your insurer.
My car was written off in an accident and my insurance company insists my car be deregistered. Should the refund of the cancelled registration go to the insurance company or to me?
If your insurance company insists that your vehicle registration be cancelled, it is because they are complying with strict regulations. Any registration refund goes to your insurance company if they took over the damaged vehicle as part of the claims settlement. It's just like when you sell your car – you don't get a registration refund then either.
My insurer is going to pay out a total loss for my vehicle that was recently written off in an accident, but my insurer has first asked me to pay the outstanding premium instalments corresponding to the period left on the policy. Should I have to pay this?
Generally when your vehicle is written off by your insurer, and the value of the vehicle is paid to you, the policy then expires, as there is no longer a vehicle to insure. Your policy has effectively done its job in protecting you financially. If your insurer has allowed you to pay off your annual premium in instalments, then you must pay the remainder to receive the benefit of the policy.
It is important to note that insurance practices do vary when it comes to instalment premiums following written off vehicles. The Insurance Council recommends that consumers read their policies.
Occasional Business Use – I work for a 'not for profit' community organisation involved with caregiving, and occasionally need to use my vehicle for visiting and transporting people in the community. Can I assume I am fully covered under my Private Motor Vehicle Policy?
Some Private Vehicle Motor Insurance Policies do provide automatic cover for occasional business use, but generally only so long as there's no fare paying passengers, or goods delivery. But, please be aware that this is not the case for all policies.
The Insurance Council strongly recommends that you ask your insurer if there is cover for occasional business use, and if there's not, talk to your insurer about getting the policy extended to provide occasional business use cover. An additional insurance premium could apply.