What is car insurance?
Car insurance gives drivers some protection from financial loss if their car is involved in an accident, is stolen, is damaged in a weather event or another risk included on your policy. If your car is damaged or written off, or you damage someone else’s vehicle in an accident, the cost to you could be significant, and a car insurance policy is designed to cover the majority of that cost.
Comprehensive car insurance is the highest level of car insurance coverage. It provides a level of financial cover for damage to other people’s cars and property in an accident, damage to your own vehicle caused by fire or theft, and accidental damage to your own vehicle, regardless of who caused the damage. It may also provide additional types of cover, such as damage to your car from storms or vandalism, depending on the insurer and policy you choose.
A comprehensive car insurance policy may also let you choose between market value and agreed value for your policy, meaning you could get a say in how much you’ll be paid in the event that your car is stolen or written off, depending on the policy. However, your choice may affect your premiums.
Choosing the policy that’s right for you could depend in part on what you can comfortably afford, so it may be worth considering the type of cover that suits your needs and your budget. For example, would you prefer the high level cover generally offered by a comprehensive policy, or would a lower level of cover be enough?
What does car insurance cover?
Car insurance covers policyholders for damage caused or costs incurred by unforeseen accidents or events involving the car they insure. The exact risks that are covered will depend on the level of cover that you have.
For example, third party cover generally only covers costs if you damage someone else’s property in an accident, whereas comprehensive car insurance provides protection for a more extensive range of risks. Depending on the insurer and policy you choose, comprehensive car insurance could cover:
- Accidental damage
- Theft/vandalism
- Storm/flood
- Fire damage
- Earthquake
- Towing costs
- Transport from an accident
- Hire car costs following theft
- Hire car costs following a no-fault accident
What's not covered by car insurance?
Even comprehensive car insurance policies won’t cover you for all eventualities. Common car insurance exclusions include:
Of course, an insurance policy isn’t going to cover you if you’re drunk or under the influence of drugs while driving, or breaking the law, including speeding.
But policies also exclude reckless actions, such as driving offroad (including on beaches), or into a flood, leaving your car unlocked, or using it for business activities not covered by your private cover, such as ride-sharing or food delivery.
Overloading your car with too many passengers, or too large a load, can also invalidate your car insurance.
Even if the car has a current WoF, a claim can be denied if the vehicle is unroadworthy at the time of an accident. Unremedied pre-existing problems, such as a manufacturer’s recall, can also void cover.
If you make any changes to your car’s standard factory specifications, such as lowering its suspension, you must discuss them with your insurer, as they will void your cover.
Most comprehensive policies will provide limited cover for personal items in a vehicle. However, tools and other business items are a common exclusion.
Insurers usually have 72-hour stand-down periods for major natural events, such as storms, floods and landslides, from the start of new policies.
This means if you hear news of an impending storm and only then decide to take out a policy, you’ll not be covered for natural disaster-related events for the first 72 hours of your policy.
What types of car insurance are available in New Zealand?
Although policies offered by different car insurers will vary, the types of car insurance can be boiled down to three levels of cover.
Third party insurance
The most basic type of insurance, it covers all or part of your legal liability if you harm another person or damage their property. You will not be covered for damage to your own vehicle.
Third party, fire & theft cover
This is the same kind of insurance as standard third party, with additional cover for fire damage and theft. Some insurance companies will have policies that also cover damage caused by natural disasters.
Comprehensive insurance
This is the highest level of car insurance, covering you for almost anything that could happen on the road, or by the side of it. If you damage yours or another person’s property, you won’t be required to pay the full amount for repairs – only the pre-agreed excess amount.
Do I need car insurance?
Personal car insurance in New Zealand is not compulsory, as it is in many overseas countries.
But if you drive on the roads, some level of cover for your vehicle is advisable for your financial wellbeing should the unexpected happen.
If you’re at-fault in a collision, you could face huge bills covering the costs of repairing or replacing not only your vehicle, but also those of the other affected parties.
Is comprehensive car insurance worth it?
Canstar's Car Insurance Awards and Ratings focus on comprehensive car insurance. Comprehensive is the highest level of car insurance and covers your own vehicle, as well as other drivers’ cars, if you cause an accident.
However, comprehensive policies do come with much higher premiums than third party, and third party, fire & theft policies.
To work out whether it’s worth paying extra for a comprehensive policy, ask yourself the following two questions:
- Could you afford to replace your car?
Could you easily afford to replace, or repair, your car if it was damaged in an accident. If the answer is no, then a comprehensive policy could be worth the extra cost. - Do you have a car loan?
Some car-loan lenders require borrowers to purchase comprehensive car insurance as part of the loan agreement.
Why compare car insurance?
Comprehensive car insurance policies are not standard across the industry. Levels of cover and costs vary. So, comparing car insurance policies can help you:
- Discover the range of extra benefits available, such as complementary roadside assistance.
- Find a policy that better meets your driving needs.
- Get a clearer understanding of the different costs across providers.
- Review the various levels of cover on offer.
- Stop you falling into the set-and-forget trap of sticking with your current car insurer and missing out on policies offering better value.
How to compare car insurance
Canstar's Star Ratings are one factor you could use to help you compare comprehensive car insurance policies before getting a quote online. Our Ratings use a sophisticated and unique methodology that compares both price and features across products on our database. You can compare policies based on their Star Ratings using our above tables.
In addition, these are some of the other factors you may want to take into account when comparing car insurance policies:
Cover levels
It’s important to know the full extent of your cover for the total loss of your car, should it have to be replaced.
A policy will either insure a car for an agreed value or its market value:
Agreed amount: a fixed amount agreed on by the insurer and the policyholder. If the car is written-off, the owner receives the agreed sum as compensation.
Market value: the car is insured for its value on the second-hand car market, or the cost to replace it with a similar vehicle, at the time of a claim.
Agreed sum policies tend to be more expensive than market value, as most cars are constantly depreciating in price, which can be matched by a reduction in premiums.
Sub-limits
Aside from the main value of the vehicle, most comprehensive policies have sub-limits for other claims, such as for lost keys, child car seats, and rental cars.
It's important to check that the sub-limits on offer under a policy match your possible needs, so you’re not caught out in the event of a claim.
Premium vs excess
By setting a higher excess (the amount you pay in the event of claim) it’s possible to reduce your premiums.
However, you need to balance any possible savings with your ability to pay the extra excess – both need to be affordable.
Optional extras & add-ons
Comprehensive insurance policies usually come with add-ons and optional extras. These can include excess-free windscreen repair, roadside assistance and access to a rental car if your vehicle is being repaired.
The claims experience
Before signing up to a new insurer, it's worth checking out their customer service experience. Newer digital-only providers might not offer the same levels of support offered by more established brands with their own service networks.
Canstar's Most Satisfied Customer Awards are based on feedback from thousands of Kiwi motorists and cover the whole car insurance experience, from Customer Service and Communications to the claim procedure.
Discounts & bundling options
Most of the major car insurers no longer offer multi-policy discounts, but some smaller brands still do, or offer discounts across other products and services. Although be aware that while upfront discounts can be appealing, choosing the right policy for your long-term needs and budget is more important.
While insurance companies offer overviews of their policies on their websites, they're also required to provide Product Disclosure Statements (PDSs) for their car insurance policies.
While not light bedtime reading, a PDS is usually pretty easy to follow, and provides full and clear details of a policy's full coverage, which is a great when comparing different car insurance products.
What is the best car insurance in New Zealand?
There's no one best car insurance policy, rather only the best for your needs and budget.
If you're comparing car insurance, our car insurance awards recognise the providers that offer outstanding value and customer service to Kiwi motorists.
Our 2026 Car Insurance awards winners are:
- Provider of the Year Award: State
- Outstanding Value Awards: AA Insurance, AMI, State, Tower
- Most Satisfied Customers Awards: FMG, MAS, State
For full details of our award winners click here!
What's the best car insurance for me?
The best car insurance policy for you will depend on your circumstances and the level of cover you are looking for. When assessing policies, you may like to ask yourself questions such as:
- Do you want to keep premium costs down, or are you willing to pay more for a higher degree of cover?
- How often do you think you’ll need to claim on the policy? Opting for a higher car insurance excess could save you money on premiums, in exchange for leaving you with higher out-of-pocket costs should you have to make a claim.
- How often do you drive your car? If you rely heavily on your car, you might want to prioritise a higher level of cover so you won’t be off the road for too long if your car is damaged.
- Are there any particular risks that you want cover for? For example, is your area prone to flooding or car thefts?
- Would it be better for your budget to pay your premiums monthly or annually, and would you be prepared to pay more overall for the convenience of monthly payments?
- If you're looking for comprehensive cover, how have Canstar’s expert researchers rated the policies you are considering? This can give you an idea of which policies offer the best value for money overall, based on the factors considered.
How much car insurance cover do I need?
It's important to choose a car insurance policy that provides enough cover for your needs.
As we mention above, a policy will either insure a car for an agreed value or its market value:
- Agreed amount: a fixed amount agreed on by the insurer and the policyholder.
- Market value: the value of the car on the second-hand car market, or the cost to replace it with a similar vehicle, at the time of a claim.
Some policies offer new-car replacement: in the event of your new car being written off within the first couple of years of purchase, the insurer will replace it with a new vehicle of the same make and model.
Given cars depreciate steeply within their first years on the road, a policy offering such cover could be a good option if you're insuring a new car.
Overall, if your car is worth a considerable sum, purchasing comprehensive car insurance is a crucial consideration, because it can cover you for a range of risks, including accidental damage regardless of who is at fault.Â
But if your car is of little value, and replacing it out of your own pocket doesn't concern you, then you may prefer to purchase a third-party policy, to cover you from having to pay for damage you could cause to other people's property.
What is underinsurance?
Underinsurance is when your car insurance policy doesn't provide enough cover to replace or repair your vehicle if it's written-off or damaged.
If something happens to your vehicle and you're underinsured, you could face hefty bills that you’ll have to cover out of your own pocket.
However, there are steps you can take to avoid underinsurance:
- Ensure the market value, or agreed value, of your car is up-to-date and reflects the cost of replacement.
- Check your policy to ensure it offers the correct cover for your motoring needs.
- If you’ve made any modifications to your car, or added any expensive accessories, such as roof cargo box, you’ll need to arrange additional cover with your insurer.
- If you took out a personal loan to pay for your car, it’s important to ensure that your amount insured is always enough to cover your outstanding debt. For if something happens to your car, you could be left with debt, even after your insurance payout.
How are car insurance premiums calculated?
Car insurance companies use a wide range of data points to calculate your premiums, based on your vehicle’s value and your personal risk levels. Key considerations include:
- Your age, gender, and driving experience.
- Your car's age, make and model, and whether it has any non-standard features or modifications.
- Where you garage your car overnight, and where it's parked during the day.
- Your car usage: how often you drive and how far.
- Your car insurance claims and driving histories.
- The size of your chosen excess.
- Any optional policy benefits you choose.
What is car insurance excess?
An excess is the sum you agree to contribute towards any car claim. You pay the excess amount, and your insurer covers the rest of the costs to repair or replace your car.
Most insurers offer a range of excess amounts, and by choosing a higher excess, you can reduce the cost of your insurance.
However, if you opt for a high excess to reduce your premiums, it's essential to ensure that you can afford the higher amount, should you need to make a claim.
A policy may feature several additional excess cover points:
- Extra excess for young, inexperienced drivers
- Extra excess for drivers holding an international driver licence from certain countries
- Excess-free key replacement
- Excess-free window and windscreen glass replacement
- Pay only one excess per claim
How do you renew your car insurance?
If you have car insurance, your provider will automatically renew your cover each year.
Before the renew date, you’ll receive a new policy from your insurer noting any changes to your premiums. If you do nothing, when your old policy lapses, the new one will kick in, and if you’ve set up a direct-debit to pay your premiums, they will continue at the new rate.
However, it's important to not just set and forget your car insurance policy, and to take time each year to check that you're still getting a good deal.
Also, if you don't review your insurance at least each time it's up for renewal, you could find yourself either over- or underinsured.
Insurers also usually reserve their best deals for new customers, so even if you like your insurer and want to stick with them, by reviewing your insurance and comparing it with other products in the market, you might be able to negotiate yourself a better deal.
When should you get car insurance?
Don't leave arranging your car insurance until after you've taken ownership of the vehicle you're buying, as accidents can and do happen at any time, and you don't want to find yourself without adequate cover.
If you have the details of the car you're buying, you can arrange your insurance ahead of time and have it start on the day of purchase.
If you're using a personal loan to buy the vehicle, most lenders will require you to have your insurance in place before you sign the deal, and won't release your funding without it.
Why is car insurance more expensive for younger drivers?
Car insurance providers determine the cost of premiums based on their perceptions of risk: the higher the risk of a driver being involved in an accident, the higher their premiums.
For this reason younger drivers, who have less road experience, are more expensive to insure than older ones.
However, older drivers over the age of 70 can also face higher premiums, due to factors such as declining health, vision and reaction times.
Insider tip: save money by not including younger drivers on your policy
Many insurers offer lower premiums if you exclude young drivers (usually under the age of 25) from your policy.
However, it's worth noting that this can have an adverse affect on your claim if you do then permit a young person to drive your car and they have an accident.
Looking for the cheapest car insurance?
When you’re shopping around for cover, you may simply want to get the cheapest car insurance policy you can find. But it's important to also keep in mind the level of protection you’re getting for your money.
For example, with optional forms of cover, third party property may be the cheapest car insurance in most situations, but it won't cover you if your car is damaged in an accident or stolen.
Even if you decide on a higher level of cover, like comprehensive, there may be ways to keep the cost down. Some insurers offer discounts if you pay your premium annually or take out the policy online as opposed to over the phone, or you could opt to pay a higher excess if you need to make a claim.
It can also help to shop around and compare quotes online from a number of insurers. These techniques may help you get value for your money, while still getting a high level of cover.Â
10 tips to save on car insurance
- Shop around: always shop around and compare quotes. You won't know if you're able to secure a better deal unless you do a little research, and Canstar's Star Ratings and Price Guides are a great place to start. Â
- Shop online: some insurance companies offer discounts to customers who purchase their insurance online.
- Increase your excess: generally, a higher excess means lower premiums. But be aware that you'll face larger out-of-pocket costs in the event of a claim.
- Ensure your car's valuation: cars depreciate quickly, so check that your level of cover is in line with your car's true market value and that you're not overinsured.
- Pay your premiums annually: many insurance companies charge a premium to pay in monthly instalments. So if your budget allows, you could save money by paying your annual premium upfront.
- Maintain your no-claim bonus: by paying for small car repairs out of your own pocket, and not claiming on your car insurance, you might be able to build a no-claims-bonus discount, plus prevent claim-related premium hikes.
- Limit your named drivers: insurers generally charge higher premiums if you have young or inexperienced drivers named on your policy. If you can limit your named drivers to motorists 25+, you could reduce your premium costs.
- Securely garage your car: insurers will perceive your car to be at a lower risk of theft of vandalism if it's stored in an off-street, secure, locked garage.
- Can you benefit from a multi-policy discount: AA Insurance, AMI, State and Tower no longer offer multi-policy discounts, but some insurance brands do still offer multi-deal benefits.
- What's on offer to new customers? check out what deals and offers are available. See below for a round-up of what's currently on offer.
Switching car insurance policies
It's usually a quick and easy process to switch car insurers. But before you make the move, it can help to think about the following points:
Check how much you're paying for your current policy and the levels of cover it offers, so you can accurately compare products.
Since you last revised your policy, have your motoring needs changed? For example, have you a young learner driver in your home; what is the current value of your car – has it depreciated greatly in value; and are you now taking public transport to work, rather than driving?
If you don't ask, you won't get. Before switching to a new car insurer, it's worth contacting your current provider to see if they're willing to offer you a better deal, rather than losing your custom.
Our car insurance comparison tool is a quick and easy way to narrow down the best-value car insurance products in the market. Narrow down your options by filtering your search.
Remember to cancel your old policy once your new car insurance is in place. You could be in line for a refund of your premiums, depending on your old policy's Ts&Cs.
What's happening in car insurance news and deals in October 2026?
Car insurance news
- There's a new player in the NZ car insurance market, MightyApe Car Insurance. The online retailer, which is part of the Australian Kogan.com group, has partnered with Cove to deliver car insurance through its website.
- Tower has removed its multi-policy discounts. New customers have stopped receiving the discounts, and they won't be offered to existing customers renewing their policies. The move brings Tower in line with other major car insurers, including AA Insurance, AMI and State, which no longer provide multi-policy discounts.
Car insurance deals
- Buy a new State Comprehensive car insurance policy online today and get a $100 digital Visa card. Offer ends 28 February, 2027. Visit state.co.nz to quote and buy. See State website for Ts&Cs.
- Cove is offering all Canstar visitors one month free on new car insurance policies, worth up to $100. Visit Cove's website to get a quick online quote. Ts&Cs apply.
- AMI is on your side with a $100 digital Visa card when you take out a new Comprehensive Car Insurance policy online before 28 February, 2027. Visit ami.co.nz to quote, buy. See the AMI website for full Ts&Cs.
- Mighty Ape Insurance is offering one month free (worth up to $100) on new car insurance policies. Visit the Mighty Ape Insurance website for more details. Ts&Cs apply.
- Tower is offering a $100 discount when you take out a new comprehensive policy before 30 January, 2027, if you use the promo code EASYSAVE. Ts&Cs apply.
Compare car insurance options to suit your needs
- Best Car Insurance for Learner and Young Drivers
- Best Car Insurance for Families with Young Drivers
- Best Car Insurance for Drivers Aged 25-29
- Best Car Insurance for Drivers Aged 30-49
- Best Car Insurance for Older Drivers
Best-selling cars in New Zealand
Below are lists of the best-selling cars in New Zealand for 2025, and so far this year, to the end of September. For the full details of the latest car sales, check out our article about the country's top-selling cars.
Top Selling Cars 2025
- Toyota RAV4: 11,295
- Mitsubishi ASX: 4970
- Mitsubishi Outlander: 4309
- Ford Everest: 3323
- Kia Seltos: 3189
- Toyota Yaris Cross: 2018
- MG ZS: 1971
- Toyota Corolla: 1953
- Hyundai Tucson: 1841
- Suzuki Swift: 1825
Top Selling Cars 2026
- Toyota RAV4: 5602
- Toyota Corolla Cross: 3446
- Mitsubishi ASX: 3140
- Mitsubishi Outlander: 3073
- Tesla Model Y: 2979
- Ford Everest: 2128
- Kia Sportage: 2102
- GWM Haval H6: 1929
- MG ZS 1679
- Toyota Corolla 1571
Source: NZTA – 2026 sales to 31/09/26
