Cheap car insurance

Want to cut costs but not corners? Learn how to save on your car insurance and access discounts for 2020.

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Car insurance is an essential investment for every driver, offering crucial financial protection in the event of accidents, fire, theft and more. It can seem pricey, but it’s still usually more affordable than paying out of your pocket for damage if an accident happens.

Depending on what you’re looking for, there is an option that is cheapest for you. Whether you want bare-bones cover for less, or comprehensive insurance at a higher price, there is something out there for everyone. Compare deals on basic cover below or keep reading to learn how to save more on your policy.

What’s the difference between comprehensive, TPPD and F&T?

When you’re hunting around for the lowest price car insurance, you will see many options with a considerable difference in price. These are:

  • Third party property damage (TPPD): Third party car insurance covers the damage your vehicle causes to other cars and property and is the bare minimum of insurance coverage. Learn more about TPPD here.
  • Third party fire and theft (TPPD F&T): This car insurance typically costs more than TPPD, but covers your vehicle from damage, specifically, damage or loss from fire and theft, two of the most common vehicle hazards. Although it costs more than TPPD alone, it is less than comprehensive car insurance and offers a balanced level of cover.
  • Comprehensive: Comprehensive car insurance is the highest level of protection. It includes all the benefits of third party insurance and also offers excellent protection for your vehicle against fire, theft, floods, storms and anything else the policy mentions. Each company usually has a slightly different comprehensive insurance policy. It costs the most but may be money well spent if you have to make a claim.

TPPD is typically the least expensive option for bare-bones car insurance essentials; comprehensive is generally the most costly, but you receive the most protection, and TPPD F&T falls between the two.

How to get the cheapest* car insurance

You can save money on your car insurance by making smart decisions. Each of these tips might affect your premium.

  • Choose the right policy for you. While comprehensive car insurance offers the highest level of cover, people may not need it if their vehicle is a little older or of little value, so if this sounds like you, look carefully at TPPD or TPPD F&T policies. Choose TPPD for the lowest prices, or TPPD F&T if you’re willing to pay higher premiums in case your car is stolen or destroyed by fire.
  • Look at all your options. For the best* prices, always play the market and request new quotes from your current insurer. Some companies in New Zealand give better deals to new customers to lure them away from competitors. Take advantage of this by switching car insurance provider instead of renewing, or ask for a new customer price from your current insurer. Always look for a better deal.
  • Try a higher excess. Are you a safe driver? If so, consider raising your excess, which is the amount you usually have to pay when making a claim, and can be anywhere from several hundred to several thousand dollars. Most insurers offer much lower premiums if you have a higher excess. If you’re not a safe driver or you anticipate claiming at some point, it might be better to keep the excess lower.
  • Look for a no claims bonus. For each year you don’t claim on your policy, insurers often offer an extra discount on the cost of cover. You may be able to take this discount with you if you switch companies.
  • Nominate your drivers. If you have the chance to nominate drivers on your policy, it can be worth doing. Nominate fewer drivers and, if possible, only drivers aged over 25 and with good driving records to keep the cost of your premiums down.
  • Ensure your car has an alarm in place. The more secure your car is, the less expensive it may be to insure. Alarm systems and immobilisers deter thieves, which reduces the chance of you making a claim, which in turn can reduce your car insurance premiums.
  • Be a safe driver. You can take a defensive driving course to possibly get a safe driver discount and learn new skills, which is especially worth considering for younger drivers.
  • Keep a clean driving history. This isn’t always possible, of course, but keeping your claims history and traffic infringements to a minimum will help keep your premiums lower.
  • Park in a garage overnight. Cars that are kept in a locked garage overnight are far less expensive to insure than those that are left on the street.
  • Look for more discounts. It always pays to keep an eye out for discounts. For example, buying car insurance online may get you up to 20% off with some providers, while purchasing another policy (such as home and contents) from the same insurer might get you a 10% discount on both. These add up and can make a difference to finding the cheapest* car insurance.
  • Shop around and compare quotes. Don’t just sign up for the first policy you come across. Compare the features and benefits of several policies before obtaining multiple quotes. Then see how each policy stacks up against the competition in price and quality.

What are the cheapest cars to insure?

You can potentially save a lot of money by opting for a specific car over another. Usually, newer model cars are less expensive to insure because they have inexpensive and widely available spare parts. Also, the least expensive vehicles to insure, particularly for young drivers, are typically the safer, less expensive and less powerful ones.

  • What factors affect the cost of insurance? Lower value, lower performance and smaller engine cars are usually cheaper to insure.
  • How safe is your car? Vehicles with high Australasian New Car Assessment Program (ANCAP) safety ratings are typically cheaper to insure. Examples of these cars include the Toyota Corolla, Mazda 6 and Nissan Pathfinder.
  • How is your car’s fuel economy? Vehicles that aren’t too thirsty are great for the environment, and some insurers make them cheaper to insure.
  • Does your car have a higher incidence of being involved in an accident? Insurance companies look at crash statistics and consider the level of risk before they insure any car. Vehicles like station wagons and family sedans don’t tend to be involved in as many crashes.
  • Is your car likely to be stolen? Specific models are less likely to be stolen than others, meaning they pose less of a claims risk to the insurer and enjoy a lower premium.
  • Is your car a commonplace brand? Readily available brands like Holden, Ford and Toyota tend to be cheaper to insure because they have extensive dealership networks across New Zealand and parts are usually easy to find.

On the other hand, some cars consistently cost more to insure.

  • Do you drive an expensive car? If you’re driving a Ferrari, Lamborghini, Rolls Royce or another costly high-end car, you will pay a higher premium.
  • Does your car have a lot of grunt? Vehicles with greater horsepower go faster and therefore face a higher risk of being more severely damaged. These cars yield a higher premium.
  • Is your car more likely to be stolen? Particular makes and models are more popular targets for thieves.
  • Do you cruise around with the top down? Vehicles with soft tops are easier to break into than conventional cars.
  • Is your car rare or extensively modified? Parts for these cars are usually more expensive to find, so cost more to insure.
  • Is your car safe? Cars with low safety ratings are more expensive to repair and include vehicles like the Chery J11 and the Ford Mondeo.
  • How old is your car? Spare parts may be harder to track down for older cars.
  • Is your car diesel? Diesel cars often cost more to repair than petrol vehicles.

How much cover do I need?

You do not want to be under insured, particularly if you depend on your car and can’t afford to repair it yourself. The cheapest* car insurance is not always the right one for your needs, even if saving money is your number one priority. Consider how you will manage financially if you are involved in an accident, or if your car is stolen and you need to pay out of pocket to replace it.

The car insurance you should get depends on a few factors:

  • Is your car your pride and joy? Is it an expensive asset that needs the highest level of protection? Consider comprehensive insurance with as many discounts as you can find. Alternatively, if it’s an inexpensive, utilitarian vehicle that gets you from point A to B, you might be more interested in more basic third-party, or third-party fire and theft insurance policies.
  • How much can you spend? Are you willing to spend $1,000 or more per year on a comprehensive policy, or is your car just not worth it? Work out how much you’re willing to pay for your premium and how much you can pay for repairs or replacements, and get a policy that balances the two needs.
  • Do you know what type of cover you need? Look at what’s covered under each policy and decide which one is right for you. You can receive a lower premium by only paying for the cover you’re likely to need and not adding optional extras. Unless you decide they’re additions you really want.

What’s the cheapest car insurance for drivers under 25?

If you’re a driver under the age of 25, or on a restricted licence, and you’re looking for a bargain in car insurance, unfortunately, you might not find it. Younger and less experienced drivers usually pay more for car insurance than older drivers. They are disproportionately over-represented in car accidents in New Zealand, meaning if you’re under 25 or on a restricted licence, insurers see you as more of a risk and therefore increase the price of your cover.

However, there are ways that young drivers looking for inexpensive car insurance can save money.

  • Choose your car wisely. High-powered, luxury and expensive vehicles cost more to insure, so stay away from them if you want to save money. A cheaper car not only saves you money at the point of purchase but will continue to cost less for its entire life.
  • Build a safe driving record. The better your record, the cheaper your insurance. Consider not claiming for minor accidents if you can cover the cost yourself, as a no claims history can keep future premiums down.
  • Take a driving course. A defensive driving course may help convince insurers that you’re responsible on the roads.
  • Beware paying in instalments. If the annual cost of your car insurance is too much to pay all at once, many insurers let you pay your premium in instalments throughout the year. While it may save you from spending a lump sum, it typically costs more overall.

Cheap car insurance traps

For lower premiums, it’s worth keeping an eye out for some car insurance traps. You might watch out for:

  • Automatically renewed cover. This might be easy, but it’s not cheap. Insurers often offer better deals to new customers than they do to existing ones, so don’t just blindly renew your policy each year. Always check quotes from multiple providers, including your current one. If your insurer quotes a lower new customer price than you currently pay, try asking for a discount. Premiums always change, so getting the cheapest car insurance means looking at other options.
  • Not knowing how your cover works. Check the fine print on your policy before signing up, and ask yourself if you know exactly what is and isn’t covered, and what’s an optional extra.
  • Making too many claims. Before you make a claim, remember your claims history influences the future cost of your premiums, and you may have a high excess to pay. If the accident wasn’t too severe, the excess alone might cost more than the damage, and it might not be worth being hit with an increased premium. Don’t claim on everything you can without considering it first.
  • Is it too good to be true? Price is a hugely important factor when shopping for cheap car insurance, but don’t choose a policy based on price alone. Compare the features, benefits and limits of several policies on the market. If you find much cheaper car insurance from one insurer, look for the catch.
  • A too high excess. You can save money by selecting a higher excess in return for a cheaper premium, but if it is too high, it can be too expensive to lodge a claim. A good excess is high but affordable.
  • Letting others drive your car. If you have a policy that enables you to nominate specific drivers or drivers above a certain age, don’t let an excluded driver take the wheel. They are usually not covered in the event of an incident.
  • Not shopping around. You never know what cover is available until you get out there and look. Compare as many car insurance policies as you can, to find one that covers everything you need at the lowest price.

* Disclaimer: The offers compared on this page are chosen from a range of products finder has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms ‘Cheap’, ‘Best’ and ‘Top’ are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.

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