Do I need car insurance in New Zealand?

Third party car insurance is a must in New Zealand. But does that mean you should skip all other cover?

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Everyone should have some kind of car insurance, but do you need to have it? Well, not legally. But it’s definitely a good idea to have at least third party damage cover. This would save you from forking out your own cash if you crash into a pricey Mercedes.

If you can afford it, comprehensive car insurance is always the better option, especially if you can’t afford to pay for a new car straight up or you’ve spent a bit of cash on your car already.

Is car insurance compulsory in New Zealand?

In New Zealand car insurance isn’t compulsory because we have the Accident Compensation Corporation (ACC). This is a form of compulsory ‘insurance’ that covers injuries caused by a car accident.

Taking out insurance to cover the costs of damage to your own vehicle or another person’s vehicle or property is optional.

Do I need any additional insurance in New Zealand?

If you’re without insurance and cause a three-car pile-up, you’ll have to cover thousands of dollars for repairs from your own pocket. Find that someone has damaged your car and you’re not at fault? You’ll still have a really hard time getting your money back.

Even though car insurance isn’t compulsory, if you want to stop yourself from being in some crazy money troubles, it just makes sense to get at least third party car insurance. Here’s why:

  • Damaging someone’s property can be expensive. Causing an accident can be expensive. Even if you forget about the damages to your car, you’ll still be responsible for damaging other people’s cars plus any other property you can think of, like road signs, bus stops, homes, lawns, shopfronts and animals.
  • There’s often no one else responsible when your car is damaged. If replacing your car would hurt your wallet, consider these situations where third party won’t pay for your car: you cause the accident; an uninsured driver hits you; someone hits you and drives off; someone steals or vandalises your car or there’s a natural disaster like a flood or hailstorm.
  • Your bank may require it. If you borrowed money for your car, your lender might insist that you take up comprehensive car insurance cover to protect the loan.

What are my car insurance choices?

Generally speaking, you can choose between three types of car insurance in New Zealand. These are:

  • Third party property damage (TPPD). This covers any damage you cause to anyone’s property but your own, including cars, homes, land, pets and personal items.
  • Third party fire and theft (TPFT). This covers everything TPPD does plus two specific events that cause damage to your car: when it catches fire or when someone steals it. It doesn’t cover your car when you cause a crash or when it’s damaged by any other type of natural disaster besides fire.
  • Comprehensive. This covers you for everything TPPD and TPFT does, plus all other ways your car can get damaged: storms, natural disasters, vandalism, uninsured drivers, hit-and-runs and even crashes you cause.

What car insurance should I consider for my car?

Here are some questions you can ask yourself to determine which level of cover is right for you:

  • Do you owe money on your car? If you’re still paying for your car, there’s a good chance your lender will require you to have comprehensive car insurance because that’s the only level that fully covers your car. Even if not, you should strongly consider comprehensive cover so you don’t need to take out a second loan to replace the vehicle.
  • How much is your car worth? If replacing your car wouldn’t break the bank, you can get away with third party property cover. It won’t cover your car, but will help you avoid massive bills if you crash into someone else’s.
  • Do you drive often or rely on your car? If you’re on the road a lot, comprehensive car insurance can swoop in to help if an accident leaves your car undriveable. For example, it can provide you with a hire car while yours is in the shop and put you up in a hotel if you’re stranded far from home.
  • Where do you live? If you live in an area that’s prone to natural disasters, you should get a level of insurance that will cover those specific risks. Third party fire and theft will help out if you live in a bushfire-prone area. If you live in a flood zone or somewhere that experiences cyclones, you’ll need comprehensive cover.

Do I need comprehensive car insurance on an old car?

Everyone should have some level of car insurance, including those who drive old cars. An old car can cause just as much damage to a BMW as any other car on the road, maybe even more so, since older cars tend to be heavier.

That’s why you should definitely consider getting at least third party property protection.

You should also consider whether or not you’d be in the financial position to replace your car if it was damaged. If replacing your old car would be too much of a burden, getting third party fire and theft or comprehensive cover will take away some of that burden.

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