You can insure your car against the 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.
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Types of motor cover
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 (a value you and your insurance company agree on 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 vehicle or property.
- you are only covered up to the limit stated in your policy
- your contract obliges you to take reasonable care to avoid accidents and theft.
Types of policies
There are 3 types of motor policy:
- third party property damage — covers you against the damage you cause to someone else's vehicle and/or property. It is the least expensive type of car insurance.
- third party, fire and theft — covers damage caused by fire and theft to your vehicle as well as Third Party Property Damage.
- comprehensive — covers you against accidental loss of or damage to your motor vehicle, as well as any damage to other people's vehicles or property caused by your vehicle (whether it was your fault or someone else's). It also covers you for other costs such as salvaging your vehicle from an accident scene and towing it to a repairer. As well as a standard comprehensive policy, many insurers offer a variety of options and benefits. Generally, the more extensive the cover, the more expensive the policy.
New Zealand motor insurers generally include an uninsured motorist extension, or innocent party protection, in their policies. Under the terms of this extension, the insurer will waive the policyholder's excess and maintain their no claims discount if the vehicle is damaged by an uninsured driver — provided the uninsured driver can be identified and they acknowledge their involvement in the accident.
The term "young drivers" usually applies to anyone under the age of 25. Young drivers are statistically more likely to be involved in accidents and therefore tend to be subject to higher premiums.
Check with your insurer about what terms and conditions your motor vehicle insurance contains in regard to young drivers.
Accessories are minor attachments designed for use in a motor vehicle but which the vehicle will still operate without. These may include
- CD players
- children's car seats
- tow bars
- roof racks.
If you've been involved in an accident where driving outside the restrictions of your license was a contributing factor, your insurance company may not cover your accident. Talk to your insurer and check your policy to see if a provision like this applies to you.
Occasional business use is use of a private vehicle every now and then for business purposes (such as a nanny transporting a child to a doctor's appointment, for example). Some private motor vehicle insurance policies provide automatic cover for occasional business use as long as there are no fare paying passengers or goods deliveries involved.
We recommend you ask your insurer if there is cover for occasional business use and, if there isn't, talk to your insurer about getting the policy extended to provide occasional business use cover. An additional premium may apply.
It's important to be honest
When insuring your motor vehicle, it is important to disclose all information that may affect the acceptance of the insurance — whether or not a specific question is asked.
Your insurer will probably also want to know
- who is going to drive your vehicle
- whether you or the other drivers have had any accidents or traffic convictions
- whether your vehicle has been modified.
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Some situations will seem unusual to you and you may wonder how your insurance company will treat them or what you should do. We've outlined some of the less unusual ones to help you out.
Remember: If you're unsure what will happen in a certain situation, it's always best to speak to your insurer.
In situations like this, we recommend you contact the other party’s insurer. They can advise you of the likely process and any costs you may be liable for.
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 possible 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, 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.
Most insurance companies have a benefit which means that people with insurance are automatically covered in accidents caused by uninsured people. Talk to your insurer to find out if such a benefit applies to you.
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.
Generally when your vehicle is written off by your insurer, and the value of the vehicle is paid to you, your policy has done its job in protecting you financially. The policy then expires, as there is no longer a vehicle to insure.
Normally pro rata premium refunds are not given for the period of the policy that hasn't expired as the policy is responding to a total loss situation. If you paid monthly, then your insurer may adjust your claims payout for any instalment premiums that would be outstanding through to the natural expiry of the policy.
It is important to note that insurance practices do vary when it comes to instalment premiums following written off vehicles. To find out how your insurer would treat this situation, speak to them or check your policy documentation.
If your car has been involved in an accident and is structurally damaged, your insurance company is going to insist it be deregistered before they settle any claim.
Using a structurally damaged car is very dangerous. Insurers exercise a duty of care by deregistering vehicles that are structurally damaged to minimise the risk of unsafe vehicles getting back on the road.
Deregistered vehicles need to be inspected, repaired and then recertified by an NZTA appointed Repair Certifier or heavy vehicle specialist certifying engineer before they can go back on the road. If the car cannot be economically repaired, it will be disposed of by the insurer.
There a many ways a vehicle can be structurally damaged and, therefore, deemed unsafe to be on the road. Your insurance company may insist on deregistration if
- the vehicle has suffered damage that will compromise the structural integrity of any of the bonded or welded seams or joints installed by the manufacturer
- there has been underbody impact damage as a result of 'grounding' the vehicle. Some scraping of the sill seams is acceptable, but splitting of seam welds or tearing of the metal is not allowed. Distortion of suspension members or mounting points or tearing of metal structures is not allowed.
- there has been denting or creasing of rocker panels (or outer sill) of more than 25mm. If any crease runs across the sill, it must be Repair Certified. No discernable distortion to the inner sill's welded seam is allowed.
- the vehicle has suffered distortion to longitudinal rails affecting the front and rear crush zones and kick up areas or cracking of the unitary body in areas affecting a safety component or system.
- one or more of the vehicle's supplementary restraint systems have been deployed.
"Structural damage" also includes any vehicle where the operation of the safety systems might have been affected by immersion in water, subjected to fire, or where the vehicle is damaged to the extent that it is in the public interest to deregister it.
Some damage is considered so serious that repairs are not to be permitted, including
- any vehicle that has non-repairable structural components and where the components are not available (and no substitutions are allowed)
- if there is significant and extensive corrosion to areas that affect the vehicle's crash energy management structure.
Vehicles that have suffered these types of damage must be deregistered and disposed of.
Tips to reduce your premiums
- The best way to reduce premiums is to have a clean driving record and no previous claims.
- Name the specific drivers to be insured and exclude under 25s.
- Shop around, but don’t just buy on price. Look at the policy benefits and exclusions.
- Before you buy a car, compare insurance costs – cars that have been modified or higher risk of being stolen will cost more.
- Ask for a voluntary higher excess (the voluntary excess increase is only beneficial if you don’t claim).
- Reduce coverage on low value cars to third party or third party fire and theft policy.
- Ask about discounts for multiple policies with the same insurer (i.e. your contents insurance).
- If you park your car in a locked garage, tell your insurer.
- Discounts may apply for a vehicle that has an alarm.
- Be careful which additional benefits you add and if you really need them. Ask yourself if the additional benefit is within your budget, and if it will beneficial in the event of a claim.