Car insurance in New Zealand is not legally required — but driving without at least third-party cover is a significant financial risk. One at-fault accident causing $50,000 damage to another vehicle could be financially devastating without insurance.
Three tiers of car insurance in NZ: Comprehensive (covers your car + others), Third Party Fire & Theft (covers others + fire/theft of your car), Third Party Only (covers damage you cause to others only). If your car is worth more than $10,000: get comprehensive. If worth less and you can replace it: third party. AA Insurance, AMI, and State are the most popular NZ car insurers.
The Three Types of Car Insurance
Comprehensive
Covers damage to your own vehicle AND damage you cause to others.
Covers:
- Your car damaged in an accident (your fault or not)
- Your car stolen
- Your car damaged by fire, weather, flooding
- Damage you cause to other vehicles and property
- Windscreen replacement (usually)
- Towing after an accident
Doesn’t cover:
- Mechanical breakdown (not insurance — get a warranty)
- Intentional damage
- Driving unlicensed or under the influence
- Depreciation
Third Party Fire & Theft
A mid-tier option: covers damage you cause to others, plus your car if stolen or fire-damaged — but not collision damage to your own vehicle.
Covers:
- Damage you cause to other vehicles and property
- Your car stolen
- Your car damaged by fire
Doesn’t cover:
- Collision damage to your own car
- Weather damage to your own car
Third Party Only
The minimum level of meaningful cover. Protects you from the biggest financial risk — damaging someone else’s car or property.
Covers:
- Damage you cause to other vehicles and property
Doesn’t cover:
- Any damage to your own vehicle
What Does Car Insurance Cost in NZ?
Indicative annual premiums for a 35-year-old, clean driving record, Wellington:
| Car value | Comprehensive | Third Party Fire & Theft | Third Party Only |
|---|---|---|---|
| $8,000 | ~$700–$1,000/year | ~$250–$400/year | ~$150–$250/year |
| $20,000 | ~$900–$1,400/year | ~$300–$450/year | ~$150–$250/year |
| $35,000 | ~$1,200–$1,800/year | ~$350–$500/year | ~$150–$250/year |
| $60,000 | ~$1,800–$2,800/year | ~$400–$600/year | ~$150–$250/year |
Highly variable by driver age, location, car make/model, driving history, and insurer. Young drivers (under 25) pay significantly more.
Factors that affect your premium:
- Driver age: Under-25s pay premium loadings (higher risk)
- Location: Auckland and Wellington typically higher than provincial areas
- Car: High-performance vehicles, imported JDMs, and luxury cars cost more to insure
- Driving history: At-fault claims increase premiums; clean record gets discounts
- Agreed vs market value: Agreed value pays a set amount if written off; market value pays current market price (usually lower)
- Excess: Higher excess = lower premium
Agreed Value vs Market Value
Agreed value: You and the insurer agree upfront on the car’s value. If it’s written off, you receive that agreed amount — no argument about depreciation.
Market value: Insurer pays what your car was worth at the time of the loss (current market value). As cars depreciate, this amount falls each year. Usually results in a lower payout than agreed value for older cars.
Which to choose: Agreed value for cars you’ve spent money maintaining or modifying, or where you want certainty. Market value for older cars where depreciation is less of a concern.
NZ Car Insurance Providers
AA Insurance
- New Zealand’s most recognised car insurance brand
- Part of the AA (Automobile Association) — but AA membership is not required
- Comprehensive cover, strong claims service
- “Choice repair” — you choose the repairer
AMI Insurance (IAG)
- One of NZ’s largest insurers (owned by Insurance Australia Group)
- Competitive pricing, wide coverage
- Also offers State insurance (different brand, similar products — IAG owns both)
State Insurance (IAG)
- Same parent as AMI — IAG
- Different pricing algorithm — worth comparing AMI vs State (you might get a different price for the same situation)
Tower Insurance
- NZ-listed insurer
- Competitive on price, risk-based pricing (uses telematics/data)
- Strong app and digital claims experience
Trade Me Insurance
- Underwritten by a major insurer
- Simple online quote and purchase
- Often competitive for straightforward risk profiles
Youi
- South African-owned insurer, operating in NZ and Australia
- Very personalised pricing (asks many detailed questions)
- Can be significantly cheaper or more expensive than competitors depending on your profile
- Worth getting a quote
How to Choose
- Check your excess: The excess is what you pay when you claim. $500 excess vs $2,500 excess has a meaningful premium difference — balance this against your emergency fund.
- Compare at least 3 quotes: Pricing varies significantly between insurers for the same risk. AA, AMI, and Tower prices can differ by 20–40%.
- Read the excess conditions: Some insurers charge an additional excess for young drivers on the policy, or for at-fault accidents — read the fine print.
- Understand the uninsured driver excess waiver: If a named uninsured driver hits your car, some policies waive your excess. Valuable in NZ where many drivers are uninsured.
- Check what repairs are included: Some policies require you to use approved repairers; others let you choose.
When to Choose Third Party Only
Third party only makes sense when:
- Your car is worth less than $5,000–$8,000 and you could replace it without insurance
- You have savings to cover your own repair or replacement
- The comprehensive premium is disproportionate to the car’s value (e.g., $900/year for a $5,000 car)
Rule of thumb: If the comprehensive premium exceeds 10–15% of your car’s value annually, consider dropping to third party.
Frequently Asked Questions
Is car insurance compulsory in NZ? No — unlike many countries, NZ has no legal requirement to hold car insurance. However, ACC covers bodily injury from accidents. The financial risk without insurance is damage to other people’s property, which can be very large.
Does ACC cover car accident injuries? Yes — ACC covers personal injury from car accidents (medical costs, income replacement up to 80%). Car insurance covers property damage — your car, other vehicles, fences, buildings.
Can I add additional drivers to my policy? Yes — most policies allow you to nominate regular drivers. Adding a young or inexperienced driver typically adds an excess loading for that driver.
What happens if I’m in a not-at-fault accident with an uninsured driver? You can claim on your own comprehensive policy (paying your excess) and the insurer pursues the at-fault party. Some insurers waive the excess if the other driver is identified and uninsured.