Car Insurance in NZ

While car insurance is not legally required in New Zealand, driving without it is a significant financial risk. If you cause an accident that damages another vehicle or property, you are personally liable for the full cost of repairs. With even minor accidents easily running into thousands of dollars, having appropriate insurance is one of the smartest decisions you can make as a car owner.

Types of Car Insurance

Third-Party Insurance

Third-party insurance is the most basic level of cover. It pays for damage you cause to other people's vehicles and property, but does not cover damage to your own car. This is the most affordable option, typically costing $300 to $500 per year, and is suitable for older, lower-value vehicles where the cost of comprehensive cover outweighs the car's worth.

Third-Party, Fire and Theft

This mid-level option covers damage to other people's property plus your own vehicle in the event of fire or theft. It does not cover accidental damage to your own car from a crash. Premiums are slightly higher than basic third-party, usually around $400 to $650 per year.

Comprehensive Insurance

Comprehensive cover is the most complete option. It covers damage to other people's property, your own vehicle (including accidental damage, theft, fire, weather events, and vandalism), and often includes extras such as windscreen cover, rental car while yours is being repaired, and roadside assistance. Premiums range from $600 to $1,500+ per year depending on your vehicle and circumstances.

What Affects Your Premium?

• Vehicle value and type — more expensive and higher-performance cars cost more to insure.
• Your age and driving history — younger drivers and those with previous claims or convictions pay higher premiums.
• Location — living in areas with higher theft or accident rates (such as parts of Auckland) increases premiums.
• Annual kilometres driven — the more you drive, the higher your risk and premium.
• Security features — immobilisers, alarms, and garaged parking can reduce your premium.
• Excess amount — choosing a higher excess reduces your premium but means you pay more out of pocket when making a claim.

Agreed Value vs Market Value

When taking out comprehensive insurance, you will typically choose between agreed value and market value. With agreed value, you and the insurer agree on the car's worth upfront — this is what you receive if the car is written off. With market value, the insurer pays what the car was worth at the time of the loss, which may be less than you expect. Agreed value gives you certainty but generally costs a little more in premiums.

Main NZ Car Insurers

New Zealand has a competitive car insurance market. The major providers include:

• AA Insurance — popular with AA members, offers multi-policy discounts.
• State Insurance — one of NZ's oldest insurers with a wide range of cover options.
• AMI — well-known for competitive pricing and straightforward policies.
• Tower Insurance — offers online-focused policies with flexible excess options.
• Vero — commonly sold through brokers, strong on commercial and specialist vehicles.
• Cove Insurance — a newer digital-first insurer offering competitive monthly premiums.

Tips to Save on Car Insurance

• Compare quotes from at least three providers — prices vary significantly for the same vehicle and driver.
• Increase your excess to lower your premium, but make sure you can afford the excess if you need to claim.
• Bundle policies (car, contents, house) with one insurer for multi-policy discounts.
• Install an approved immobiliser or alarm — some insurers offer discounts for better vehicle security.
• Pay annually instead of monthly — monthly payments often include an interest charge.
• Maintain a clean driving record — no-claims bonuses can significantly reduce your premium over time.

Insurance is one of the larger ongoing costs of car ownership. For a full picture of what it costs to run a vehicle, visit our cost of owning a car guide, or browse all topics in the ownership hub.