It's not always simple, understanding the technical jargon in your NZ car insurance policy. To help you unravel what your vehicle insurance policy is trying to say, we've created this brief guide explaining some of the more important terminology you'll encounter.
The three types of car insurance in NZ
Insurance companies generally offer three different types of policies in NZ.
Third party – Any damage your vehicle does to another person's car or property is covered in this policy. The cheapest vehicle insurance available, individuals generally choose it when their car isn't worth much.
Third party, fire and theft – The extra addition here increases your coverage to include any damage to your car via fire, or if it's stolen.
Comprehensive – This type of car insurance policy generally covers accidental damage to, or loss of, your vehicle, as well as damage to another person's vehicle or property whether or not you are to blame. It also can cover items, such as salvage costs if your vehicle needs moving from the scene of an accident to a repairer.
The technical jargon for car insurance policies in NZ
Agreed vs market value and insured value – Insurers will often give you the choice of insuring your vehicle at an agreed value, rather than the market value which is defined by current selling prices. Given a range based on the market value of your car you choose what you want it insured for. The benefit of an agreed value is that you know what you'll receive in the event of a total loss, rather than being subjected to valuations.
Insurance Excess – This amount is what you'll pay towards costs each time you make a claim. For example, if you have an excess of $200 and repairs from an accident are $800, your insurer will pay $600 when you claim.
No-claims bonus – If you don't make any claims on your policy year after year of being with the same insurance company, many will reduce the premium you pay as a reward.
Full disclosure – When applying for insurance or making a claim, honesty is essential. For example, if they ask whether you've had an accident in the last few years, even if you didn't claim for an incident or it wasn't your fault, let them know. Should they discover further down the line that you did, they may refuse you coverage.
Limit – Including GST, this amount is the most you can claim for any one incident.
Exclusion – Insurance companies don't have to pay out for events or circumstances if they're excluded. For example, if you're driving without a valid licence.
Modifications – Changes made to your car after it's left the factory, such as lowering the suspension. Insurance companies need to know about any adjustments you make before they're confirmed under your policy.
If you're worried about getting the right insurance coverage for your vehicle, Money Empire can help. We're here to figure out what you need and ensure you get it.