Comprehensive vs Third Party Car Insurance: Which is Right for You?
Choosing between comprehensive and third party car insurance is one of the most important decisions you'll make as a vehicle owner in New Zealand. This comprehensive guide explores the key differences, costs, benefits, and scenarios to help you make an informed choice that protects your financial interests.
Table of Contents
Understanding NZ Car Insurance Types
New Zealand offers three main types of car insurance, each providing different levels of protection. Understanding these options is crucial for making a financially sound decision that aligns with your needs and risk tolerance.
The Three Main Types
- Comprehensive Insurance: Full coverage for your vehicle and damage to others
- Third Party, Fire & Theft: Covers others' property plus fire/theft damage to your vehicle
- Third Party Only: Covers damage to others' property only (basic legal requirement)
While comprehensive insurance offers the most protection, it's also the most expensive. Third party insurance is cheaper but provides minimal coverage for your own vehicle. The key is finding the right balance between cost and protection based on your specific circumstances.
In this guide, we'll focus primarily on comparing comprehensive insurance with third party options to help you determine which provides the best value for your situation.
Side-by-Side Comparison
Here's a detailed comparison of what each insurance type covers, helping you understand exactly what you're paying for:
| Coverage Type | Comprehensive | Third Party Fire & Theft | Third Party Only |
|---|---|---|---|
| Damage to other vehicles/property | ✓ | ✓ | ✓ |
| Injury to other people | ✓ | ✓ | ✓ |
| Collision damage to your vehicle | ✓ | ✗ | ✗ |
| Weather/natural disaster damage | ✓ | ✗ | ✗ |
| Fire damage to your vehicle | ✓ | ✓ | ✗ |
| Theft of your vehicle | ✓ | ✓ | ✗ |
| Vandalism to your vehicle | ✓ | ✗ | ✗ |
| Windscreen/glass damage | ✓ | ✗ | ✗ |
| Rental car while yours is repaired | ✓ | ✗ | ✗ |
| Uninsured driver protection | ✓ | ✗ | ✗ |
| Average Annual Cost | $1,200 - $1,800 | $600 - $900 | $300 - $500 |
Want to see actual quotes for your situation? Get personalized quotes from multiple insurers and compare prices for different coverage levels.
Comprehensive Insurance: Complete Protection
Comprehensive car insurance provides the highest level of protection available in New Zealand. It covers damage to your vehicle from virtually any cause, plus all third-party liabilities. This "all-risk" coverage means you're protected in almost every scenario, whether it's a collision, theft, fire, weather damage, or vandalism.
What Comprehensive Insurance Covers
Damage to Your Vehicle From:
- ✓ Accidents and collisions (at-fault and not-at-fault)
- ✓ Theft or attempted theft
- ✓ Fire and explosion
- ✓ Weather events (storms, flooding, hail)
- ✓ Vandalism and malicious damage
- ✓ Falling objects (trees, rocks, etc.)
- ✓ Animal strikes
- ✓ Earthquakes (subject to policy terms)
Additional Benefits Typically Include:
- • Rental vehicle: Replacement car (usually up to $75-100 per day) while yours is being repaired
- • Windscreen cover: Glass repair/replacement with no excess or reduced excess (typically $0-150)
- • New car replacement: Brand new replacement if your car is written off within 1-2 years of purchase
- • Personal belongings: Cover for items stolen from your vehicle (usually $500-1,000 limit)
- • Emergency accommodation: Hotel costs if your car breaks down far from home
- • Towing and recovery: Transport to nearest repairer after an accident or breakdown
- • Keys and locks: Replacement if keys are lost or stolen
- • Uninsured driver protection: Full coverage even if the at-fault party has no insurance
When Comprehensive Insurance Makes Sense
Comprehensive insurance is strongly recommended if:
- Your vehicle is worth more than $10,000
- You have a loan or finance on your vehicle (often mandatory)
- You couldn't afford to replace your vehicle out of pocket
- Your vehicle is less than 10 years old
- You live in a high-risk area for theft or weather events
- You drive frequently or cover high annual mileage
- You want peace of mind and maximum protection
- Your vehicle has modifications or high repair costs
Learn more about comprehensive car insurance options in New Zealand.
Typical Costs and Excess
Comprehensive insurance premiums in NZ range from $800 to $2,500 per year, with an average of around $1,200-1,800. Your excess (the amount you pay when making a claim) typically consists of:
- Basic excess: $400-600 (chosen by you)
- Young driver excess: $200-800 (for drivers under 25)
- Inexperienced driver excess: $200-400 (less than 2 years licensed)
Read our guide on understanding car insurance excess to learn how to choose the right amount.
Third Party Insurance: Budget-Friendly Options
Third party insurance offers basic protection at a lower cost. In New Zealand, you have two third-party options: Third Party Only, and Third Party Fire and Theft. Both cover your legal liability to others but differ in coverage for your own vehicle.
Third Party Only Insurance
This is the most basic level of car insurance available. It covers damage you cause to other people's property and injury to other people, but provides no coverage for your own vehicle under any circumstances.
What Third Party Only Covers:
- ✓ Damage to other people's vehicles and property (usually up to $20 million)
- ✓ Injury to other people (covered by ACC in NZ, but insurance covers additional costs)
- ✓ Legal costs associated with defending claims
What It Doesn't Cover:
- ✗ Any damage to your own vehicle from accidents
- ✗ Theft of your vehicle
- ✗ Fire or weather damage to your vehicle
- ✗ Vandalism or malicious damage
- ✗ Rental vehicle while yours is off the road
Average cost: $200-600 per year
Best for: Older vehicles worth under $3,000, drivers with significant emergency savings
Third Party, Fire and Theft Insurance
This middle-ground option adds fire and theft protection for your vehicle while maintaining the lower cost of third-party insurance. It's a popular choice for owners of moderately-valued older vehicles.
Additional Coverage Beyond Third Party Only:
- ✓ Fire damage to your vehicle
- ✓ Theft of your entire vehicle
- ✓ Attempted theft damage
Still Not Covered:
- ✗ Collision or accident damage to your vehicle
- ✗ Weather or natural disaster damage
- ✗ Vandalism
- ✗ Windscreen damage
- ✗ Rental vehicle
Average cost: $400-1,200 per year
Best for: Vehicles worth $3,000-10,000, where collision damage risk is acceptable
Pros and Cons: Making the Right Choice
Let's examine the advantages and disadvantages of each insurance type to help you weigh your options:
Comprehensive Insurance
✓ Advantages
- Complete peace of mind with full protection
- Your vehicle is covered in virtually all scenarios
- Rental car provided while yours is repaired
- No out-of-pocket costs for repairs (except excess)
- Protection against uninsured drivers
- May include new car replacement guarantee
- Windscreen damage covered separately
- Valuable for financed or newer vehicles
✗ Disadvantages
- Significantly higher premiums (2-5x more expensive)
- May not be cost-effective for older vehicles
- Premiums increase after claims, even not-at-fault
- Excess payments can be substantial ($600-1,500+)
- Annual premium may exceed vehicle value over time
- Young driver loadings can be prohibitively expensive
- Some exclusions still apply (wear and tear, etc.)
Third Party Insurance
✓ Advantages
- Much lower premiums (50-75% cheaper)
- Meets legal requirements for driving
- Protects against potentially huge third-party claims
- More affordable for young or high-risk drivers
- Good value for older, low-value vehicles
- Fire & Theft option adds valuable protection affordably
- Easier to self-insure vehicle value
- Lower excess amounts (typically $250-400)
✗ Disadvantages
- No protection for your own vehicle in accidents
- Must pay all repair costs yourself
- Risk of total vehicle loss from accidents
- No rental car provided
- Vulnerable to uninsured driver incidents
- No weather or natural disaster coverage
- Single accident could cost more than years of premiums
- Financial stress if your car is written off
Real-World Scenarios: Which Insurance Would Cover This?
Let's examine real situations to understand how different insurance types perform in practice:
Scenario 1: At-Fault Collision
Sarah backs into another vehicle in a supermarket car park, causing $3,500 damage to the other car and $2,800 damage to her own vehicle.
Comprehensive:
Pays for both vehicles. Sarah pays only her $500 excess. Total cost: $500
Third Party F&T:
Covers other vehicle but not Sarah's. Total cost: $2,800 (her repairs)
Third Party Only:
Covers other vehicle but not Sarah's. Total cost: $2,800 (her repairs)
Scenario 2: Vehicle Stolen
Mike's Toyota Hilux (worth $35,000) is stolen from his driveway overnight and never recovered.
Comprehensive:
Full replacement value paid out. Total cost: $500 (excess)
Third Party F&T:
Theft covered. Replacement value paid. Total cost: $400 (excess)
Third Party Only:
No coverage. Mike loses entire vehicle. Total cost: $35,000
Scenario 3: Storm Damage
A severe storm causes a tree branch to fall on Lisa's car, causing $4,200 in damage to the roof and windscreen.
Comprehensive:
Fully covered. Rental car provided. Total cost: $500 (excess)
Third Party F&T:
Not covered. Lisa pays full repair cost. Total cost: $4,200
Third Party Only:
Not covered. Lisa pays full repair cost. Total cost: $4,200
Scenario 4: Not-At-Fault Hit and Run
James' parked car is hit by an unidentified driver who fled the scene. Damage: $6,500. No witnesses or other driver identified.
Comprehensive:
Fully covered. No claim on record (not-at-fault). Total cost: $500 (excess)
Third Party F&T:
Not covered (not theft/fire). Total cost: $6,500
Third Party Only:
Not covered. James pays everything. Total cost: $6,500
Scenario 5: Multi-Vehicle At-Fault Accident
Emma runs a red light and causes a three-car collision. Damage to other vehicles: $45,000. Damage to her car: $12,000.
Comprehensive:
Covers everything (other vehicles + hers). Total cost: $500 (excess)
Third Party F&T:
Covers other vehicles but not hers. Total cost: $12,000
Third Party Only:
Covers other vehicles but not hers. Total cost: $12,000
These scenarios show that while comprehensive insurance costs more upfront, it can save you thousands in a single incident. Third party insurance protects others but leaves you vulnerable to significant out-of-pocket costs.
How to Choose the Right Coverage for You
Making the right choice depends on several personal factors. Here's a decision framework to guide you:
Choose Comprehensive Insurance If:
- ✓ Your vehicle is worth more than $10,000
- ✓ You have a loan or finance agreement on your vehicle (often mandatory)
- ✓ You cannot afford to replace your vehicle if it's written off or stolen
- ✓ Your vehicle is less than 10 years old
- ✓ You drive frequently or cover high annual mileage
- ✓ You live in a high-risk area for theft, flooding, or storms
- ✓ You want peace of mind and maximum protection
- ✓ You value the convenience of rental cars and no-hassle claims
- ✓ The annual premium is less than 15% of your vehicle's value
Consider Third Party Fire & Theft If:
- • Your vehicle is worth between $3,000 and $10,000
- • You have emergency savings to cover potential collision repairs
- • You're a very experienced driver with an excellent driving record
- • Your vehicle is 10-15 years old but still in good condition
- • You live in an area with moderate theft risk
- • You want some protection but comprehensive seems too expensive
- • The premium difference between third party F&T and comprehensive is very large ($800+)
Consider Third Party Only If:
- • Your vehicle is worth less than $3,000
- • You can easily afford to replace your vehicle out of pocket
- • Your vehicle is over 15 years old
- • You drive very infrequently (under 5,000km per year)
- • You live in a low-risk area with secure parking
- • The annual comprehensive premium exceeds 25% of vehicle value
- • You're comfortable with the financial risk
The 10/20 Rule of Thumb
A useful guideline many insurance experts recommend:
- If annual comprehensive premium is under 10% of vehicle value: Comprehensive is usually worthwhile
- If premium is 10-20% of vehicle value: Compare both options carefully based on your circumstances
- If premium exceeds 20% of vehicle value: Third party insurance often makes more financial sense
Example: Vehicle worth $8,000
- Premium under $800 (10%): Choose comprehensive
- Premium $800-1,600 (10-20%): Evaluate your personal situation
- Premium over $1,600 (20%): Consider third party options
Still Unsure? Get Actual Quotes
The best way to decide is to compare quotes for both comprehensive and third party insurance. You might be surprised by how affordable comprehensive coverage can be, or how much you can save with third party options.
You can also use our car insurance calculator to estimate costs for different coverage levels.
Frequently Asked Questions
Can I switch from third party to comprehensive insurance anytime?
Yes, you can upgrade your insurance at any time. Most insurers will pro-rata your existing premium and charge the difference for the remaining policy period. However, you cannot add comprehensive cover to claim for existing damage.
What happens if I cause an accident with only third party insurance?
Your insurance covers damage to the other party's vehicle and property, but you must pay for all repairs to your own vehicle out of pocket. If your car is written off, you receive nothing from insurance and lose the vehicle entirely.
Is comprehensive insurance really worth the extra cost?
For vehicles worth over $10,000, yes. A single accident causing $8,000 damage would cost more than 5-7 years of the premium difference between comprehensive and third party. Comprehensive insurance is essentially prepaid repairs at a discount, plus peace of mind.
Does third party insurance cover me if the other driver is uninsured?
No. Third party insurance only covers damage you cause to others. If an uninsured driver hits you, your third party policy provides no coverage. You would need to pursue the other driver directly through legal channels. Comprehensive insurance includes uninsured driver protection.
What if my vehicle is financed - can I choose third party insurance?
Most finance companies require comprehensive insurance as part of the loan agreement. This protects their asset (your vehicle) which serves as security for the loan. Check your finance contract, as choosing third party insurance may breach the agreement.
How much can I save by choosing third party instead of comprehensive?
Typically $400-1,500 per year. Third party only insurance averages 50-75% cheaper than comprehensive, while third party fire and theft is about 35-50% cheaper. However, savings vary significantly based on your vehicle, age, and location.
Can I have comprehensive insurance on one car and third party on another?
Yes, absolutely. Many people insure their newer, higher-value vehicle comprehensively while choosing third party insurance for an older second vehicle. Some insurers offer multi-car discounts even when the policies have different coverage levels.
Have more questions about insurance coverage? Visit our comprehensive FAQ page or contact us for personalized advice.
Compare Both Options and Save
Get quotes for comprehensive and third party insurance side-by-side. See the exact cost difference and make an informed decision for your situation.