June 2023

How Does Car Insurance Work?

How Does Car Insurance Work?

Car insurance can be confusing, but it is essential when owning and driving a car in New Zealand. We look closer at how car insurance works, from the types of coverage available to the factors that affect premiums. Whether you’re a new driver looking to get your first policy on a second-hand car or a seasoned motorist hoping to understand your existing coverage, this post will help. We provide a comprehensive overview of the different types of car insurance and what they cover, plus we share tips on finding the best policy for your vehicle.
Image Alt Text How Does Car Insurance Work – Man on the Phone After Car Accident

Types of Car Insurance

Regardless of the type of coverage, insurance can help you avoid a significant financial burden in the event of an accident.

Third-Party Car Insurance

Third-party insurance covers the cost of damage to other cars or property when you are at fault in an accident. It is best suited for car owners with older or less valuable cars that they can afford to replace if they are involved in an accident. Many insurers recommend that all drivers have at least third-party cover to avoid costly consequences if they are at fault in an accident.

Third-Party, Fire, and Theft Car Insurance

Third-party, fire, and theft coverage expands upon the basic Third-Party insurance policy, covering a stolen or fire-damaged car. This policy is ideal for car owners with more valuable cars who want additional protection against these factors.

Comprehensive Car Insurance

A comprehensive car insurance policy covers damage to your vehicle and other people’s vehicles or property if you are at fault in an accident. It is best suited for car owners with newer or more valuable cars that would be costly to repair or replace.

Optional Extras

You can have additional coverage options added to your plan. These extras include windscreen cover, roadside assistance, and no-claims bonuses. Always review the terms and conditions of each extra to ensure they provide value for money and are necessary for your needs.

Legal Requirements for Car Insurance in New Zealand

Though there are no strict legal requirements, it’s recommended for motor vehicles in New Zealand have a minimum level of Third-Party Car Insurance. Driving without third-party cover can result in serious financial consequences. If you cause an accident, you will be held liable for any damage or injuries.

If you drive without third-party cover and crash into a brand-new, expensive vehicle, you’re responsible for covering the damage. In addition, car insurance premiums in New Zealand include a portion to cover damage caused by uninsured drivers, meaning that driving without insurance can increase the cost premiums for everyone. Don’t put yourself and others at risk; get adequate car insurance coverage before hitting the road.

Factors That Affect Car Insurance Rates

Insurers tend to consider a driver’s details when offering insurance rates to assess their risk level. These details include factors such as:
• Age
• Type of car
• Location
• Driving record
• Usage of the car
• Claims history
• Location and security

Knowing how car insurance works can help ensure you hit favourable conditions, such as being an older driver or storing your vehicle safely to boost your rates considerably. We recommend shopping around and comparing rates from multiple insurance companies to find the best coverage for your circumstances.

How to Save Money on Car Insurance

One way to reduce car insurance premiums is by increasing the excess amount, which means drivers take on more responsibility for their insurance claims. Paying annually instead of monthly can lead to savings, as many insurance providers offer discounts for annual payments. Bundling insurance policies, such as car and home insurance, can also lead to discounts from the insurance company. Moreover, safe driving habits and avoiding claims can improve your driving record, decrease your risk factor for insurers, and help reduce the cost of car insurance.

Stay Protected in Any Scenario

At Alexander Motors, not only do we provide financing options for your car. We also help you choose an appropriate insurance plan to accompany your new vehicle. The right insurance policy will help you stay protected in an unforeseen event.

Our dedication to customer service has made us one of the top providers of second-hand cars in the market, and we are always ready to listen to your specific car needs. Our team is committed to ensuring the financing and purchasing process is as smooth and effortless as possible. Take the first step and contact us to learn more about how car insurance works, or visit our Takanini car yard today!

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