Cheap car insurance

Is buying cheap car insurance in NZ worth the savings? How can you get cheaper car insurance?

Car insurance in New Zealand varies in price between insurers, so should you simply choose the cheapest car insurance you can find? There are a number of factors you should weigh up before deciding whether buying the cheapest policy you can find is the right choice for you.

As with most insurance products, the price you pay will be dictated by your own personal circumstances. In the case of car insurance, the price insurers charge is a combination of factors, including your age, location, make and model of the vehicle, and a range of other variables.

Your monthly premium also depends on the excess you choose to pay.

cheap car insurance

As you increase your excess, your monthly premium falls.

What influences your car insurance premium?

Let’s take a quick look at what insurers look at when calculating your car insurance premium. This will help guide you when you’re working out how you can make changes to your personal circumstances to get cheaper car insurance.

Age – Drivers of different ages have a different likelihood of being involved in an accident. Some insurers will take this into account when pricing their car insurance policies.

Location – Due to a number of reasons, car insurance is cheaper in some areas of New Zealand, and more expensive in other areas. Some postcodes have higher density traffic, or narrower streets, which can lead to more accidents, whereas other areas may be more prone to burglaries and malicious damage.

Parking – Some insurers ask during their online quoting process where you park your car when it is not in use. Parking your car on the street may incur a slight premium over customers to park their car safely in their garage.

Type of Vehicle – Certain vehicles are going to cost more than other vehicles. Insurers have large amounts of data showing how often each type of vehicle is involved in an incident, and the typical repair costs for each vehicle. It makes sense that repairing an expensive late-model Mercedes-Benz is going to cost more than repairing an older Toyota. In addition to the cost of repairs, some cars are known to get stolen more often than other cars, which can also play a role in the cost of insurance.

Further, there are a number of extra benefits that some car insurance policies provide, that others policies don’t. Examples of these extra benefits include:

Rental Cover – Rental cover can be an optional extra, which ensures that if you’re without a car as a result of a claim, you’ll have a rental car organised to keep you on the road while your own car is being repaired.

Temporary Accommodation – If you are in an accident and your vehicle is damaged so you can’t drive it and you can’t get home, this policy feature ensures you receive a payment to organise temporary accommodation.

Excess Free Glass Cover – Typically an optional extra, Excess-Free Glass Cover means that if your claim is only for accidental damage to your vehicle windscreen or windows, you won’t have to pay any excess.

Roadside assist – If your car breaks down, some insurers will pay to have your car towed home or to a mechanic. This can also cover some roadside assistance like jump-starting a flat battery or giving you a few litres of fuel if you’re out.

How to reduce your premium

Increase your excess – Some of the pricing factors you can influence, such as the type of vehicle you buy, whereas others like age are out of your control. However the one thing anyone can do to get cheaper car insurance to to adjust their excess.

Your excess is the amount you pay only when you need to make a claim.

By opting to pay more in the event of a claim, you can reduce your monthly premium payments. Your excess is typically set when you first take out your policy, however you should be able to adjust your excess at any time with most insurers in New Zealand.

Check your car is correctly valued  – One of the main factors that determines what your premiums are is the value of your car. When you buy car insurance, you will need to state what you feel the replacement value of your vehicle is. The good news is that most insurers will give you an average range for the value of your vehicle, based on its make, model, and age.

However it pays to check this value closely to ensure you are not overestimating the value of your vehicle, and therefore having to pay extra in premiums. If your car has lots of wear and tear, or poor panel work, it is likely to be valued lower than the average vehicle of that make, model, and age.

If you amend your vehicle’s value downwards to account for this, your monthly insurance premiums will likely decrease slightly as well.

Keep in mind however that you should always value your vehicle as accurately as possible. If you want to save money by understating your car’s value, you will not be paid as much should you need to replace your vehicle through an insurance claim.

Should you buy the cheapest car insurance?

The simple answer is you should buy the car insurance policy that suits your personal needs the best. This means not immediately buying the cheapest car insurance you can find, but taking into account the extra benefits you may need, and buying the car insurance policy that most closely aligns with these.

The content presented on this page is provided for informational purposes only. Cove Limited makes no representations or warranties as to the accuracy, completeness or timeliness of the information. Each person should consult a qualified advisor for advice specific to their circumstances. Cove Limited assumes no liability for actions taken in reliance upon the information contained herein.

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