How does car insurance work in New Zealand?
General information, not advice on your situation. Buying through Tower's online quote is direct, without advice. QuoteHub is a Tower partner and Smiths Insurance & KiwiSaver may receive a commission from Tower.
Car insurance isn't a legal requirement in New Zealand, and it comes at three levels: third party, third party fire and theft, and comprehensive (Drive). The level of cover is the biggest single factor in what a policy pays, because only comprehensive pays to fix your own car after a crash you cause. The drivers, the car and the excess you accept then set the price. This QuoteHub guide covers what each level pays for, how to pick one, what moves the price and what a policy leaves out.
What each level of car insurance covers
In general, the broader the cover, the more it costs (ICNZ). The table shows how the three levels usually respond to everyday events. Your insurer's wording settles the detail.
| What happens | Third party | Third party, fire and theft | Comprehensive |
|---|---|---|---|
| You reverse into someone's parked car (their car) | Covered | Covered | Covered |
| You reverse into someone's parked car (your own car) | Not covered | Not covered | Covered |
| Your car is stolen or catches fire | Not covered | Covered | Covered |
| A storm or flood damages your car | Not covered | Not covered | Covered |
| Usual price order | Lowest | Middle | Highest |
Other insurers' wordings differ, so treat Tower's as one example. All three of Tower's levels carry liability cover for your legal responsibility to others, up to $25 million in total during the period of insurance (Tower wording). Tower's comprehensive level also pays for natural disaster damage (Tower), and its comprehensive and third party, fire and theft levels automatically cover windscreen and window glass (Tower).
"Full cover" is a loose label. Every policy has exclusions, such as wear and tear and mechanical breakdown (ICNZ). The guides on comprehensive car insurance and third party car insurance, which includes third party, fire and theft, cover each level in full.
Which level suits your car and your drivers
Three questions do most of the work. They are prompts, not a recommendation, and an insurer's wording can change the answer.
| Question | Why it matters | How it shapes the choice |
|---|---|---|
| Could you replace the car yourself? | The two lower levels pay nothing towards your own car after a crash you cause. | Comprehensive matters most when a car is expensive or costly to repair, while some owners of older, lower-value cars choose a third party level (Tower, Consumer Protection). |
| Do you own it outright? | A loan can come with its own insurance conditions. | If the car is under finance, comprehensive cover may be a loan condition, so check the agreement (Tower). |
| Who else drives it? | A claim can fail if a driver breaks licence conditions (IFSO). | List every regular driver, including anyone who uses it at least once a month (Tower). Drivers under 25 or without a full licence tend to cost more (Consumer Protection). |
Under-25s, learners and restricted licence holders raise the price and can bring extra conditions, which car insurance for young drivers explains.
What decides the price of car insurance
Insurers price from the details you give them, so no average fits your car, and this page gives no prices. These are the main levers.
- Drivers. A clean licence and no claims make the biggest difference, and drivers under 25 or without a full licence cost more (Consumer Protection).
- The car. Make and model affect how often a car is claimed on or stolen and what it costs to repair (Tower).
- Where you live and park. Location can reflect crime-related claims and natural hazard data (Tower).
- Levies. Premiums can include a Fire and Emergency New Zealand levy, which Tower says the government can change (Tower).
- Value basis. Tower says agreed value costs more than market value (Tower).
- Excess. A higher excess, the part of a claim you pay yourself, means you share more of the risk and can lower the price, so the figure is worth checking against what you could pay in a claim (Consumer Protection).
- Extras and security. Consumer Protection says to take only the extra cover you really need, and to tell the insurer about a locked garage or an alarm (Consumer Protection).
For the detail, see how much car insurance costs and ways to pay less for car insurance.
What car insurance often doesn't cover
Most surprises at claim time come from a few ordinary situations. These examples use Tower's wording, and other insurers' wordings can differ.
- A modified car. Tower doesn't cover a car with modifications that differ from the manufacturer's standard, such as modified suspension, unless you have chosen and Tower has agreed to insure them (Tower wording). Tell any insurer about modifications whether or not a question asks (ICNZ). Insuring a modified car explains what counts as a modification.
- Rideshare and delivery driving. Tower says neither its private nor its commercial policy covers rideshare and carshare services such as Uber (Tower). Insurance for rideshare and delivery drivers has more.
- Things left in the car. Personal effects and business tools left in the car need cover elsewhere, such as a contents policy (Tower wording). Child car seats are different, and Tower pays up to $750 a seat after a covered loss to the car (Tower wording).
- A breakdown. Tower's policies don't cover a car that stops working from mechanical failure, though roadside assistance can be added (Tower); what Tower's roadside assistance includes covers that add-on.
- A storm in the first three days. Tower excludes storms, floods and landslides in the first 72 hours of a new policy, and cyclones named before the start date, unless the policy follows straight on from one that covered them or starts when you buy the car (Tower wording). The stand-down matters most to anyone switching insurers while a storm is forecast.
- Drink or drug driving and unroadworthy cars. These are common exclusions (ICNZ).
What to check in the wording, and how claims work
Before you compare policies
Consumer Protection says not to go on price alone, and to look at what each policy covers and excludes (Consumer Protection). Check these on any insurer's wording, Tower's included.
- Value basis. Agreed value is a figure you and the insurer set at the start and at each renewal, and market value is what the car was worth just before the damage (ICNZ). IFSO notes that most policies pay a total loss at market value, which is often less than the sum insured (IFSO).
- Excess. An accepted claim usually carries an excess whoever caused the damage (IFSO). Tower waives it when you identify the other driver and it is satisfied they were more than 50% at fault, and adds extra excesses for inexperienced drivers and some overseas licences (Tower wording).
- Who may drive. Tower covers anyone driving with your permission unless you choose its under-25 exclusion (Tower wording). If a policy names drivers, an unnamed driver at the wheel can get a claim refused (Consumer Protection).
- How you use the car. Tower's private cover includes getting to and from work but not deliveries, trade use, hire or fare-paying passengers (Tower wording), and ICNZ says anyone driving paying passengers or using the car commercially will likely need a commercial policy (ICNZ).
- The cooling-off window. Tower lets you cancel within 15 days of the start date for a refund if you haven't claimed (Tower). Ask any insurer what its window is.
- The insurer. Look up the financial strength rating of any insurer you consider; Tower publishes its own (Tower).
How claims are paid, reduced or declined
After a crash, note the other driver's name, address, phone number, registration and insurer, and photograph the damage (Consumer Protection). Tell your insurer promptly and get its permission before you arrange repairs (Tower wording).
A car is generally treated as a write-off when repairs would cost more than it is worth, though each insurer applies its own test, and the payout follows the value basis on your policy (IFSO). Under Tower's wording a write-off ends the policy, and instalment payers owe the rest of the year's premium before it is settled (Tower wording).
Very few claims are turned down, the Insurance Council says, but an insurer can question or refuse a claim involving an unroadworthy car, drinking before the crash, a licence breach, an unnamed driver, undeclared business use, undisclosed convictions or modifications, or a failure to take reasonable care (Consumer Protection).
If you disagree with a decision, start with the insurer's complaints team, then its dispute resolution scheme (Consumer Protection). Tower is a member of the IFSO Scheme (Tower), and its steps are in how to make a Tower insurance claim. For the general process with any insurer, see how a car insurance claim works in NZ.
Where car insurance meets your other cover
- Your house: damage to your own fence or wall from reversing is a matter for your house insurance, not car liability cover (IFSO).
- Your belongings: items left in the car need a separate contents insurance policy (Tower wording).
- A trailer boat: boat insurance is separate, because Tower's trailer benefit leaves out boat trailers (Tower wording).
- Tower's cover: the Tower Insurance overview, Tower car insurance and getting a Tower quote online.
- Car insurance guides: how a car claim works (what to do after a crash and how insurers decide), whether car insurance is compulsory (what the law does and doesn't require), insuring a modified car (what to declare and what can go wrong) and Tower's roadside assistance (what the breakdown add-on includes).
- Your wider cover: a regular insurance review is a good time to recheck the car.
Getting a quote from Tower online
Have the car's registration number, where it is parked, each regular driver's licence and any claims in the last three years, and any modifications to hand. QuoteHub's link opens Tower's online quote, where you choose a level of cover and any optional extras. Other insurers sell car cover too, so read the policy wording of any policy you are considering before you buy.
Questions people ask
Is car insurance compulsory in NZ?
No. Car insurance isn't compulsory in New Zealand, although Drive.govt.nz calls it a good idea (Drive). Without it you pay for damage you cause to other people's cars and property yourself, and Tower says any repair or liability costs you owe the other driver would come out of your own pocket (Tower).
How much does car insurance cost in NZ?
It depends on the car, the drivers, where the car is kept, the level of cover, the value basis and the excess, so no figure here would fit your car (Tower). A quote on your own details gives a real figure for your situation, and how much car insurance costs explains each factor.
How do I compare car insurance quotes fairly?
Enter the same details every time, then line up four things: the level of cover, agreed or market value, the excess and the drivers covered. Consumer Protection says to look at what each policy covers and excludes, not just the price (Consumer Protection).
Who is covered to drive my car?
It depends on the policy. Tower covers anyone driving with your permission unless you choose its under-25 exclusion (Tower wording), and covers learner and restricted licence holders while they stay within their licence conditions (Tower). Some policies cover named drivers only (Consumer Protection), so check before you lend the car; the under-25 rules are in car insurance for young drivers.
What if an uninsured driver hits my car?
ICNZ says New Zealand motor insurers generally include an uninsured motorist extension, which waives your excess and keeps your no claims discount if the uninsured driver can be identified and acknowledges involvement (ICNZ). In Tower's wording, comprehensive repairs the car, while the two lower levels pay up to $4,000 if you identify the driver and they were more than 50% at fault (Tower wording, Tower wording).
Does car insurance cover Uber or delivery driving?
Not by default. Tower says neither its private nor its commercial policy covers rideshare and carshare services such as Uber (Tower), and ICNZ says anyone driving paying passengers or using the car commercially will likely need a commercial policy (ICNZ). Cover for this kind of driving is something to confirm with the insurer in writing before you start.
Adviser's view
QuoteHub's read: only comprehensive cover pays for your own car after a crash you cause, so the level of cover is the first thing to settle.
Get a Tower quote online
Tower’s own quote opens in a new tab. House, contents, landlord, car and boat cover can be quoted together in one go.
Tower Easy Save: save $400*
- $200 off house or landlord
- $100 off comprehensive car
- $100 off contents
*$400 is made up of individual policy discounts, each available separately. New, eligible policies only with promo code EASYSAVE. Excl. contract works. Ends 30 Jan 2027. Ts&Cs apply. Tower’s Easy Save terms, checked 6 October 2026.
QuoteHub is a Tower partner. If you buy through this link, Smiths Insurance & KiwiSaver may receive a commission from Tower. Buying online is not financial advice.
Cite this page QuoteHub NZ (2026). Car Insurance NZ: Comprehensive, Third Party and Cost. www.quotehub.co.nz/car-insurance. Updated 2026-10-07.
References
- Car ownership and insurance, Drive
- Car insurance, Consumer Protection
- Motor insurance: what you need to know, ICNZ
- What home, contents and car insurance don't cover, ICNZ
- Vehicle insurance, IFSO Scheme
- Car insurance legal liability cover, IFSO Scheme
- Tower comprehensive car insurance wording (09-24)
- Tower third party, fire and theft wording (09-24)
- Tower third party only wording (09-24)
- Car insurance, Tower
- What is comprehensive car insurance?, Tower
- What affects car insurance costs in NZ?, Tower
- Understanding your car insurance premium, Tower
- Car insurance: market value vs agreed value, Tower
- Comprehensive or third party car insurance?, Tower
- Can I drive an uninsured car?, Tower
- What you need before insuring your car, Tower
- Publicly available disclosure, Tower
- Financial strength rating, Tower
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