Car Insurance Costs Covered & Exclusions
Understanding What Your Car Insurance Policy Will Pay For in New Zealand
Car Insurance Costs Covered & Exclusions
Understanding What Your Car Insurance Policy Will Pay For in New Zealand
Car insurance protects you financially from accidents, theft, or damage to your vehicle. However, not all costs are automatically covered, and policies often include specific exclusions. Understanding your policy can save you from surprise bills and ensure you make the most of your insurance.
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This guide covers:
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Costs typically included in car insurance
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Common exclusions you should know about
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How excess and coverage levels affect what’s paid
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Tips to maximize your protection and lower premiums
What Car Insurance Typically Covers
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Car insurance policies vary, but most in New Zealand cover:
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1. Accidental Damage
Most comprehensive policies pay for repairs if your car is damaged in an accident.
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Example:
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You hit a fence while parking.
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Your insurer will pay for repairs minus your Excess.
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2. Theft and Vandalism
Insurance usually covers:
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Vehicle theft
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Break-ins and stolen items
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Vandalism to your vehicle
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3. Fire and Natural Events
Many policies cover damage from:
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Fire
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Flooding
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Storms or hail
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Falling objects
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4. Liability to Other Vehicles and Property
If you cause an accident, your insurance typically covers:
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Damage to other vehicles
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Damage to property
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Legal liability costs
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5. Optional Add-Ons
Some policies allow you to include extras:
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Roadside assistance
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Replacement vehicle coverage
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Hire car options while your car is being repaired
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Internal Link: Coverage Levels knowing your coverage level helps you understand exactly what will be paid.
Common Exclusions in Car Insurance
Even the best insurance policies have limits.
Common exclusions include:
1. Wear and Tear / Mechanical Breakdown
Insurance does not cover regular maintenance or mechanical failures caused by wear and tear.
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2. Fuel, Tyres, and Consumables
Petrol, diesel, tyres, brake pads, and wiper blades are not included.
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3. Intentional Damage
Any damage you cause deliberately will not be covered.
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4. Uninsured or Illegal Driving
Driving without a valid license, or while under the influence, usually voids coverage.
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5. High-Risk Activities
Some activities like racing, off-road use, or commercial use may be excluded unless specifically covered.
Internal Link: Claim Process – knowing what’s excluded helps when making a claim.
How Excess and Coverage Levels Affect What’s Paid
The amount your insurer will pay depends on:
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Excess – the amount you pay before insurance kicks in
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Coverage Levels – third-party, fire & theft, or comprehensive
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Example:
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Repair cost: $5,000
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Excess: $500
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Insurer pays $4,500
Choosing the right coverage level ensures maximum protection for the risks you care about.
Tips to Maximize Coverage and Lower Costs
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Review your policy carefully to understand exclusions
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Consider optional add-ons if needed
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Keep detailed records and photos for claims
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Compare policies to find the best combination of cost and coverage
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Use tools like our Car Insurance Calculator to estimate premiums
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Learn strategies from How To Lower Premiums
(Q&A) How To Lower Car Insurance Premiums
Q: Does insurance cover accidental damage?
A: Usually, yes, if you have comprehensive coverage. Third-party policies only cover damage to other vehicles.
Q: Are mechanical failures covered?
A: No. Policies exclude wear and tear and mechanical breakdowns.
Q: Is theft of personal items inside the car covered?
A: Some policies cover it, but you must check your policy details.
Q: Can I claim for storm or flood damage?
A:Comprehensive policies typically cover these events. Third-party or fire & theft may not.
Q: How does excess work?
A:You pay a set amount for each claim, and the insurer covers the rest. Situations may exist where the excess is waived.
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