Car Insurance FAQ — NZ
Common questions about how NZ motor insurance works.
Is car insurance compulsory in New Zealand?
No. New Zealand does not have compulsory motor insurance. ACC covers personal injury regardless of fault. However, drivers remain personally liable for damage they cause to other vehicles or property — third-party insurance is the standard way to manage that risk.
What are the cover tiers?
NZ motor insurance is typically sold in three tiers: Comprehensive (your car + others), Third Party Fire & Theft (others + fire/theft of your car), and Third Party (others only).
How are premiums priced?
On a combination of vehicle (make, model, year, value, security), driver (age, licence, claims history), cover tier, excess level, garaging address, no-claims bonus and annual mileage. Each insurer weights these differently.
What is an excess?
The amount you pay when you make a claim. Higher excess usually lowers your premium. Many policies have additional excesses for at-fault claims, young drivers, theft, or claims at specific locations.
What is a no-claims bonus?
A discount on your premium for claim-free years. The discount typically increases each year you don't make an at-fault claim. Most insurers offer no-claims-bonus protection — for an extra premium, your bonus survives one at-fault claim.
Agreed value vs market value?
Agreed value: the insurer agrees a payout amount upfront, regardless of market value at claim time. Market value: payout is based on the vehicle's value at the time of total loss. Agreed value usually costs more in premium but removes total-loss uncertainty.
Are learner / restricted drivers covered?
Usually yes, if you declare them. Most insurers require the learner to be a listed driver on the policy, and most apply an additional excess for drivers under 25. Always declare every driver — undisclosed drivers can void cover.
What if my claim is declined?
Ask the insurer for a written explanation, use their internal complaints process, then escalate to the insurer's external disputes resolution scheme (FSCL or IFSO). Disputes resolution is free to consumers.
Do I need a separate policy for a work or trade ute?
If you use the ute for business (trade, delivery, farm), declare the use. Most consumer motor policies exclude or limit business use — you may need a commercial vehicle policy instead.
Are modified vehicles covered?
Declare any non-factory modifications when applying. Undeclared modifications can void cover. Some insurers specialise in modified vehicles (Initio, Star Insure).