Third-party insurance is a basic form of car insurance for Kiwi drivers. This type of policy provides cover when your car causes damage to someone else’s vehicle or property and also covers your legal liability up to a specific limit, eg $20 million. These policies sometimes include cover when your car is damaged, in a no-fault accident with an uninsured motorist.
Third party car insurance is available from a wide variety of respected New Zealand insurance providers.
Third-party is defined as car insurance which covers you for damage to other people’s property, for example, their car or home, up to a certain limit, (eg $20 million). Third-party insurance only covers this and nothing else, except for some policies, which partially cover damage to your vehicle as well, even if you are at fault. Cover includes:
Repair or replacement cost, for damage to other people’s property.
Legal costs you incur while defending yourself against liability claims.
Limited damage to your car, if you’re involved in a collision with a vehicle driven by an uninsured driver.
Although third party insurance is a pared down policy, some insurers have other benefits that provide added security, without raising costs to the level of a comprehensive policy. These additional benefits may include:
Loss or damage to your personal items
Cover for modifications and accessories
Temporary replacement vehicle
What’s the difference between third party and other car insurance?
Comprehensive, third party fire & theft and third party are the three levels of car insurance on offer from most insurance providers.
Third party (TP). Third party cover is the most basic form of cover and protects you when you are legally liable for damaging someone else’s vehicle or property.
Third party fire & theft (TP F&T). Third party fire and theft cover offers the same protection, but also covers you if your vehicle catches fire or is stolen. It is a mid-level policy and is more expensive than third party insurance.
Comprehensive. Comprehensive insurance offers the broadest range of car insurance cover. As well as protection from the above, it covers damage to your car from accident, storm, flood, hail and malicious acts. New for old replacement and guaranteed repairs are standard features of a comprehensive policy.
Third Party Fire and Theft
Third Party Only
Immediate Replacement Car
Damage to other people’s property
Emergency Accommodation, Transport and Repairs
Contents Inside the Car
Storm or Flood
Hire car following theft
Is third party insurance right for you?
Could be good for those who:
Have a car that is not worth much money
Can’t afford higher cover at this time
Want more than the bare minimum cover, which only covers injuries to people
Might not be suited to those who:
Own an expensive car
Live in a high crime area, with risk of theft or fire (in which case, considerTPFTinstead)
Want cover for hail, storm or flood (you’d want acomprehensivepolicy)
How much does it cost?
When calculating third party insurance premiums, insurers consider questions like:
How old are the people driving your car?Younger drivers are more inexperienced and also feature heavily in New Zealand road crash statistics, which means they cost more to insure.
Are you a good driver? Drivers with a long, blemish-free driving record cost less to insure than those who have made claims in the past and have multiple traffic infringements to their name.
How much excess do you want to pay? If you want to save money on your premium, you can elect to pay a higher excess on your car insurance policy.
Where do you keep your car at night? Areas with a high theft and accident risk will usually result in higher insurance premiums for car owners.
What type of car do you drive? Inexpensive, low-powered vehicles are typically cheaper to cover than high powered, expensive vehicles. Any modifications or accessories fitted to your car are also taken into account.
How often do you use your car? If your vehicle is used for business purposes, or more frequently than most, you may have to pay a higher premium. Alternatively, if you don’t drive very often, you may be able to opt for “Pay As You Drive” policy.
Tips for receiving lower premiums
Shop around. Don’t sign up for the first policy you see, because you saw a convincing ad on TV. Compare the cover offered by different policies to find a better deal. If you think you’re paying too much, get quotes from other insurers.
Compare quotes. Getting car insurance quotes online is quick and easy. Obtain quotes from multiple insurers and compare them to the level of cover on offer.
Choose a higher excess. Your insurer will offer you a lower premium in return.
Nominate drivers. If you can nominate specific people to drive your car, especially if they are over the age of 25, it will reduce the cost of cover.
Bundle your cover. If you have a separate policy, (eg home insurance) with a provider, they may offer you a discount on your car insurance.
Buy online. Many insurers offer sizeable discounts to their customers for purchasing policies online.
Secure your vehicle. Vehicles with security systems and those that are kept garaged overnight are less expensive to insure than ones parked on the street or without security systems.
What type of car insurance do I need?
How do I choose the right car insurance policy for me? You need to consider a range of factors.
Is your car expensive? If you drive an expensive car, you will most likely want to take out comprehensive cover to give your vehicle, and your wallet, the ultimate protection. If your car is a little less valuable, selecting a lower level of cover like third party or third party fire & theft may be a more suitable option.
Do I need these benefits? You only want to pay for the benefits and options you’re likely to use, so make sure you know what is covered under different policies before you decide on the right one for you.
Would your car be expensive to repair? Consider how likely it is you can afford the repairs if you’re involved in an accident, or how you’ll manage on a day-to-day basis if your car is stolen and you don’t have cover in place. Answering a few hypothetical questions will help you determine the level of protection that suits your needs.
What kind of exclusions are there?
Some general exclusions apply to most third-party policies. These include if your car was:
Being used for driving tuition or demonstrated for sale at the time of the incident
Being driven by an unlicensed driver
Being used in a race, trial or test
Modified from the maker’s specifications or fitted with non-standard accessories
Being operated in an unsafe or un-roadworthy condition
Being used for hire or reward
If the driver was under the influence of alcohol or drugs, or if they refused to submit to drug and alcohol testing
If your claim is for the reduced value of your vehicle after repairs have been adequately performed
If your claim is for personal items stolen from your car
If your claim is for repairs carried out without the insurer’s consent
If your claim is for depreciation, wear and tear, rust or corrosion
If your claim is for mechanical, structural or electrical breakdown
If your claim is for consequential loss
If you have failed to take reasonable steps to prevent any loss or damage
If your claim is for tyre damage caused by braking, punctures bursts and cuts
If the loss or damage was incurred thanks to a deliberate or reckless act by you
If your claim results from the lawful seizure or repossession of your car
If your claim relates to acts of war or terrorism
If your claim is for additional loss suffered when driving your car after it has been involved in an accident
Some final questions you might have
Third-party insurance is about protecting other people, known as third parties, from the damage you might accidentally cause while driving. The more basic third party car insurance only covers this. More thorough third-party car insurance policies, like third party fire & theft, cover this and damage to your car from fire or theft. Comprehensive car insurance includes third-party cover, as well as a complete range of extra protection for your vehicle.
Third party (TP) car insurance does not cover theft. You need third party fire & theft or comprehensive car insurance to protect against this.
Usually not. Most car insurance policies, even comprehensive ones, do not cover windscreen damage, and this is usually clearly mentioned as an exclusion. It is unlikely any third party car insurance policy will cover damage to your windscreen.
The idea is that all car accidents have one party who’s at fault and who need to pay for injuries and property damage with third-party insurance. Ideally, everyone is insured, and all road accident victims have an easy way to receive compensation.
No. Third-party insurance is for your vehicle. Your car is insured to be driven by specific people as described in the insurance policy. You are not automatically covered by your usual third-party insurance when driving other vehicles.
Yes. Third-party insurance is about paying for vehicles and property damaged in accidents. The person found to be responsible for the accident must use their third-party insurance to pay for damage to the other person’s vehicle. If you were not the guilty party in an accident, you might need to prove that the other person was.
You can purchase car insurance by phoning an insurance provider or visiting their website. Bear in mind that you may receive a discount if you buy cover online.
Your insurance cover can begin on whichever date you request. This may be the same day you order cover or at a future time.
Insurers offer no claim bonuses and discounts to reward their customers who are safe drivers. You receive a discount on your premium for each year you do not make a claim on your policy (up to a maximum discount limit).
Third party is the most affordable policy available because it offers the most basic level of cover. Comprehensive insurance provides the highest level of protection and is also the most expensive.
If you’re planning to modify your car in anyway, you need to be aware how it will impact on your insurance. Some insurers will not cover vehicles with custom paint jobs, engine or body modifications.
No. TP policies do not cover for the theft of tools of the trade.
No. TP policies do not cover baby capsules or child seats.
The exact terms and conditions of your TP insurance depend on the details of the policy. The three terms to look out for are agreed value or market value; the amount of excess and whether or not it includes an uninsured motorist extension.
Car insurance policies are offered in either agreed value or market value form. If you take out a market value policy, your car is covered up to its market value at the time of a claim, subject to depreciation. The market value is determined by the make, model, age and condition of your vehicle.
Under an agreed value car insurance policy, you and your insurer agree upon the value of your car and lock in that value until the time comes to renew your cover.
The excess is the amount you need to pay as a contribution to the cost of your claim. As an example, if your excess is $250 and your claim is for $2,000, you will pay the first $250 of your claim and your insurer will cover the remaining $1,750. Insurers charge a basic excess, which is the minimum you need to contribute when you make a claim, as well as a voluntary excess (in return for a lower premium) and an age excess (if your policy features a young or inexperienced driver). Depending on your insurance provider and your circumstances, other excesses may also apply to your cover.
An uninsured motorist extension (UME) is an optional extra available with some third party car insurance. It covers damage to your vehicle up to a set limit (typically around $2,000-$4,000) of cover, in the event it’s damaged by an uninsured driver. You cannot be at fault for the accident, and you need to provide the uninsured driver’s name and address.
Alexandra Koster is Finder's publisher for car, home and pet insurance. She has a Bachelor of Arts in Film and Cultural Studies from the University of Sydney. Her hobbies include reading product disclosure statements and deciphering complicated insurance lingo to help people save on their insurance so that they can spend their money on better things – like dogs.
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