Motor vehicle insurance can cover against accidental loss of, or damage to, a motor vehicle, up to either its:
- Market Value - what the vehicle is worth just before the damage occurs; or
- Agreed Value - what the insured and their insurance company agree the vehicle is worth at the beginning of the contract (and at each renewal). Motor vehicle insurance also covers against damage caused to another person's car or property. Motor vehicle insurance will only cover people up to the limit specified in their policy, and their contract will oblige them to take reasonable care to avoid accidents and theft.
There are three typical covers available:
- Third Party Property Damage
Under this policy, the insured will be covered against damage caused to someone else's vehicle and/or property. It is the least expensive type of car insurance.
- Third Party, Fire and Theft
Under this policy, the insured will be covered against damage caused by fire and theft to their vehicle, as well as Third Party Property Damage.
Under this policy, the insured will be covered against accidental loss of, or damage to, their motor vehicle. They will also be covered for damage to other people's vehicles or property and for other costs such as salvaging the car from the accident scene and towing it to a repairer.
As well as these standard policies, companies will offer a wide variety of extended options and benefits. Generally, the more extensive the cover, the more expensive the policy will be.
Uninsured Motorist Extension
New Zealand motor insurers generally include an uninsured motorist extension, or innocent party protection, in their policies. Under the terms of this extension, the insurer will waive the policyholder's excess and maintain their no claims discount if the vehicle is damaged by an uninsured driver, provided the uninsured driver can be identified and they acknowledge their involvement in the accident.
It is important to check with your insurance company about what terms and conditions your Motor Vehicle insurance contains. Some policies are only valid when you are driving your car yourself, and some can cover other licensed drivers too.
Sometimes policies will cover anyone who drives the car, as long as they are over 25 years old.
You are also expected to try your hardest to protect your car, and drive sensibly. For instance, imagine you left your car parked outside the supermarket and it got stolen. If you had left your car unlocked, your insurance could be voided.
Motor Vehicle insurance may also cost more if you are still on a learners or restricted license - it's important to tell your insurance company what type of license you are on. If you lose your license, your insurance will most likely be voided.
Lots of motor vehicle insurance lets you pick and choose various extras too. You can choose extra cover for windscreen chips, trailers or caravans etc.
Remember to keep in mind whether you want Replacement insurance, or Indemnity insurance. For motor vehicles, they might sometimes call these 'Vehicle agreed value' (like replacement) or 'Vehicle Market Value' (like Indemnity).