One of the most distinctive things about New Zealand is its stunning, picturesque scenery. If you want to see our beautiful country at your own pace and choose your destinations, rather than having to go where the tour bus takes you, driving is the way to do it.
Car insurance is not compulsory in New Zealand. However, whether you rent a car, borrow a friend’s or buy one cheaply, it is advisable to have some form of car insurance, so you are not faced with substantial costs if you do have an accident.
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There are a number of insurance types of which to be aware:
Property liability and damage insurance: Car insurance policies in New Zealand include cover for property damage liability costs, typically around $1 million or more. It is not mandatory, but it is strongly recommended. There are three types of car insurance to choose from:
- Third-party property only: Cheap car insurance for third-party property damage liability only.
- Third party fire and theft: Damage liability, as well as cover for car theft and fire damage. It does not include protection for collision or accident damage, so if you only have this and an uninsured driver hits you, it is up to you to cover all costs.
- Comprehensive car insurance: The highest level of protection available that covers damage liability, collision, fire, theft, hail, flooding, vandalism and more. It frequently includes extra benefits, such as free roadside assistance, cover for towing costs and emergency accommodation cover.
- If you are borrowing a car: You will need to check with the owner of the vehicle to see if it has insurance. If it does, you will need to be added to the policy for the period you will be driving the car. Please be aware an additional excess may apply. If there is no insurance, it is advisable to take out at least third-party insurance.
- If you are renting a car: The car rental company must offer you insurance. You can take out insurance with a provider of your choice, but it must be equivalent to that provided by the rental company.
- If you are buying a car: You can choose your form of cover. Remember, you are only covered for collision and accident damage to your car if you take out a comprehensive policy.
The car insurance market in New Zealand might be a lot smaller than you’re used to overseas. With fewer insurers competing for business, you might be surprised at the discounts they are prepared to offer. Get multiple quotes, ask if they’re willing to price match and look for deals.
With the balance of cost and cover and the number of options available, comprehensive car insurance for overseas visitors is one of the more popular choices. Many discounts and short-term car insurance policies, are only available with comprehensive cover.
Is comprehensive car insurance worth the cost?
You might not need a comprehensive policy if you are only going to drive short distances. However, for overseas visitors driving on isolated roads, or otherwise travelling long distances around New Zealand, comprehensive car insurance is a matter of safety.
- Comprehensive car insurance is the only policy type with collision cover.
- Without comprehensive car insurance, there is a genuine chance of being stranded in a remote location after an accident.
- Insurance providers tailor many comprehensive car insurance extras for long-distance travel, including emergency accommodation cover.
Some of the specific things you can usually only get with comprehensive car insurance include:
- Flood, hail or storm damage
- Malicious acts or vandalism
- Accident or collision
- Possession cover, for your belongings inside the car
- Windscreen and glass claims, with options for excess-free claims
How do I compare cover?
When deciding between policies, there are specific features of which to be aware. Make sure you appreciate how a policy deals with each of the following, so you understand the coverage and costs.
- What does the policy cover? Two policies of the same type may still carry different kinds of cover. Look at the core policy benefits, optional inclusions and exclusions. You might broadly be covered for all vehicle damage, but it needs to be damage that results from something covered by your policy.
- How much are you covered for? The sum insured in your policy is what is payable in the event of a total loss. Depending on the policy, this might be the market value of the car, including depreciation at typical market rates, or an agreed sum that should be enough to cover the full cost of the vehicle.
- Repair and replacement details. It is worth paying specific attention to the terms of repair and replacement laid out in your policy. For example, one insurer might replace a car that’s less than three years old with an “as new” equivalent, while another may only offer this for a limited time, or have other requirements around the type of vehicle.
To compare the costs, you need to look at:
- The premium. This is your ongoing monthly, (fortnightly or annual) expense.
- The excess. The amount you need to pay when making a claim. Sometimes the excess is different depending on the policy and the nature of the claim. For example, a comprehensive policy might let you make one excess-free claim for broken glass per year. Often there is more than one excess when you claim, such as a base excess and an additional cost if the driver was under 25. All applicable excesses will be laid out in your product disclosure statement.
What do I need to apply for a new policy?
To take out a policy, you need to meet all the eligibility requirements. Usually, as long as you have a driver’s licence or international equivalent equal to at least a restricted licence (not a learner one) you can take out a policy. However, you need to provide appropriate details, which may include:
- A mailing address in New Zealand
- A contact phone number or email address
- Vehicle registration details
- A Warrant of Fitness (WoF), which proves the vehicle is roadworthy
When you rent a car, the rental company often has car insurance that covers you to drive, which means you don’t have to take out car insurance. However, in the event of a crash, or even minor damage to the car, you may be liable for a pricey excess.
Primarily, you are charged a fee, usually thousands of dollars, if you damage a rental car. Sometimes the excess is higher than the cost of damage. For this reason, it can be a good idea to get a relatively cheap rental car excess insurance policy.
As the name suggests, this insurance covers the rental excess if you find yourself on the hook if the vehicle sustains damage. Policies can start from a few dollars a day, and include thousands of dollars of excess cost.
Should I take out insurance with the rental company?
Car rental companies often give you an “excess waiver” option, which means you aren’t liable for the excess, but you will pay more to rent the car. They may even offer to sell you a rental car excess insurance policy, or another type of car insurance for overseas visitors.
Depending on how much the rental company charges for this option, it may be significantly cheaper to get your own rental car excess insurance. This type of cover is available whether you’re renting a car, van, a full motorhome or campervan.
If the rental company offers a policy or excess waiver option on the spot, it may be reasonable to assume you can find more value for money elsewhere. Especially, if your travel insurance already covers it, or your credit card offers complimentary cover for hire car insurance.
Licence requirements for visitors to New Zealand
What you need to know about driving in New Zealand with an international driver’s licence:
- Conditions that apply to your current licence (eg, cars only) also apply when you drive in New Zealand.
- Your international driver’s licence must be current and valid.
- You will need a certified English translation, or International Driving Permit (IDP) if your licence is in a language other than English
- If your overseas licence expires during your visit, you should apply for a local licence, if your visa allows this.
For a smoother trip, there are a few things you might want to bear in mind.
- Stay left. New Zealand is one of few countries to drive on the left-hand side of the road. On long empty stretches of road, without other traffic to remind you, it’s all too easy to fall into old habits. Every year in New Zealand tourists are severely injured or worse because they stray to the right when driving.
- Overtake on the right. The right lane is the overtaking lane (if the conditions are safe). While driving, you may be fined for overtaking on the left.
- Use metric. Speedometers, street signs, etc are measured using the metric system. The higher numbers of the metric system (100 kilometres is equal to 62 miles) give you the psychological edge of feeling like you’re going faster.
- Speed cameras are common in towns and cities. It’s an easy way to enforce speed limits. If you speed, you might receive a fine in the mail.
- Know how to use roundabouts. These might not be common in your country. Give way to anything coming from the right and go when it’s clear.
- You can’t always pay tolls with cash. You can also pay tolls online by credit or debit card, Internet banking or direct debit.
- Be careful when driving in isolated areas. Tourists may try to travel in remote areas without proper planning, and this can be a potentially fatal mistake.
- Take advantage of service stations. If you see a sign saying “last service station for 150km” and you need to fill up, do so. It’s not just a marketing gimmick!
- Drive carefully on rural bends. You may get speed limits of 100km/h, coupled with plenty of blind turns and narrow roads. Drive to the conditions and don’t feel obligated to maintain the speed limit.
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