Is car insurance compulsory 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.
No. Car insurance is not a legal requirement in New Zealand: Drive, the government's car ownership site, says so directly, while calling it a good idea to hold some type of cover. What the law does require is that the car is licensed (the "rego") and has a current warrant of fitness (Consumer Protection). This guide, part of QuoteHub's car insurance section, covers what that means in practice, because "not compulsory" does not mean "no one will send you a bill".
What the law requires and what it leaves out
Tower, an insurer, notes that unlike many other countries, it is not a legal requirement to have car insurance in New Zealand, and that legally there is nothing stopping you driving an uninsured car, provided you hold the appropriate driver licence (Tower's guide to driving uninsured). The things you must keep up to date are separate from insurance:
| Item | Required by law? | What the source says |
|---|---|---|
| Car insurance | No | Not a legal requirement (Drive) |
| Vehicle licence (rego) | Yes | The vehicle must be licensed at all times (Consumer Protection) |
| Warrant of fitness | Yes | You must always have a valid warrant of fitness (Consumer Protection) |
| Road user charges | Yes, for diesel | A diesel vehicle needs a current distance licence with road user charges paid (Consumer Protection) |
One related point: an expired warrant of fitness does not automatically void a policy, but Tower says it may affect how a claim is assessed if poor maintenance contributed to the accident (Tower).
ACC pays for injuries, not for cars
People often assume the no-fault accident scheme makes insurance unnecessary. It covers a different loss. Under section 317 of the Accident Compensation Act 2001, no one may bring proceedings for damages arising out of personal injury covered by the scheme, but the same section confirms that proceedings about damage to property are still allowed.
That is the gap. If you cause a crash, ACC deals with the injuries, and a claim for damage to someone else's property, such as their car, can still be made against you. Car policies tend to leave injury out for the same reason: Tower's third party only wording, for example, excludes personal injury where cover is provided under the Accident Compensation Act. QuoteHub's guides to ACC and private insurance and what ACC does not cover explain where the scheme stops.
Who pays after a crash
The answer depends on who caused it and whether each driver is insured. The table sets out what the sources say.
| Situation | Who pays for the cars | What happens next |
|---|---|---|
| You cause it, you are uninsured | You pay for your own car and the other cars involved (IFSO Scheme) | The other driver's insurer may repair their car, then ask you to pay it back |
| You cause it, you are insured | Your insurer, within the cover you hold | Your policy wording sets the limits and the excess |
| Someone else causes it, they are insured | Their insurer may pay (IFSO Scheme) | You collect their details and the insurer's name |
| Someone else causes it, they are uninsured | The at-fault driver is liable, but you chase it yourself unless your own policy steps in | Your policy may help, depending on the cover level (see below) |
| Two uninsured cars | Each owner pays their own repairs (Tower) | No insurer is involved to mediate |
What happens if you cause a crash with no insurance
Say you reverse out of a driveway into a neighbour's parked car. If you are uninsured, the repair bill for their car is yours. The IFSO Scheme, the dispute resolution service for insurers, says that if you cause an accident while uninsured you are responsible for repairs to your own car and to the other cars involved (IFSO Scheme). If the neighbour is insured, their insurer may fix the car and then ask you to pay it back. You can ask for the supporting photos, assessments and quotes, and provide your own repair estimate to challenge the amount.
If you cannot agree on fault or cost, the Disputes Tribunal hears small claims up to $60,000 and lists damage to a car in an accident among the disputes it deals with (Disputes Tribunal). Having no policy also means no insurer to take over the dispute for you, and IFSO notes you might incur legal costs.
The exposure is not limited to a scratched bumper. A third party policy is built for the large end of this risk. Tower's third party only wording, for example, covers your legal liability for accidental property damage up to $25,000,000 in total during the period of insurance, which includes up to $1,000,000 for liability arising from bodily injury (Tower third party only wording). Limits differ between insurers, so read the wording of whichever policy you are considering.
If someone else hits you and you are not insured
You are not without rights if you are not at fault. IFSO says that if the other driver caused the accident they must pay to repair your car, and if they are insured their insurer may pay (IFSO Scheme). Your job is to collect their details and the insurer's name, and to put your evidence in writing if you disagree with the settlement.
The risks are practical. Without your own cover you handle the claim yourself, and if the other driver is also uninsured, neither side has an insurer paying. Insured drivers sit better here. The Insurance Council of NZ (ICNZ) says insurers generally include an uninsured motorist extension, which waives your excess and protects your no-claims discount if an uninsured driver damages your car, provided that driver can be identified and acknowledges involvement (ICNZ).
The cover level changes how much help you get. Using Tower's published wordings as one example:
| Your cover | If an uninsured driver at fault damages your car |
|---|---|
| Comprehensive | Tower says it will repair your vehicle (Tower car insurance) |
| Third party, fire and theft | Repairs up to $4,000, if you identify the at-fault party and they were more than 50% at fault (Tower wording) |
| Third party only | Repairs up to $4,000 for an uninsured third party accident claim (Tower wording) |
To use the Tower benefit you need the other driver's name, phone number and vehicle registration number, so note these at the scene. Other insurers set their own terms.
When you may still need cover
Even if the law is silent, other people may not be. Common situations include:
- A car loan. Tower notes that comprehensive cover may be a condition of finance, so check your loan agreement (Tower). Consumer Protection also tells buyers to check what insurance a car loan requires (Consumer Protection).
- Driving someone else's car. Your own policy only covers the car named on your certificate, so it won't protect you in a different, uninsured car (Tower). If the owner is insured, you may be covered under their policy, so ask before you borrow it.
- Rental cars. Tower says rental companies are required to provide a standard level of cover for their fleet, included in your rental fee, though you will likely pay an excess after an accident (Tower).
- Theft. Without a policy that covers fire and theft, the cost of replacing a stolen car falls entirely on you (Tower).
Choosing a level of cover if you decide to insure
If you do insure, there are three standard types, and the difference is mostly about your own car. Consumer Protection describes them as follows.
| Cover type | Other people's cars and property | Your own car |
|---|---|---|
| Third party | Covered if you cause the damage | Not covered |
| Third party, fire and theft | Covered if you cause the damage | Covered if stolen or burnt |
| Comprehensive | Covered | Covered for accidents, including ones you cause |
Consumer Protection notes that third party is the least expensive type and comprehensive generally the most expensive. It also suggests choosing third party, or third party, fire and theft, for lower-value cars, and asks buyers to think about insurance costs when deciding what car they can afford. A low-value runabout might suit third party, while a newer car on finance usually points to comprehensive.
QuoteHub's read is that the useful test is whether you could pay for a replacement car, plus a bill for someone else's, from savings. QuoteHub's guides to third party cover and comprehensive cover go through each level, what drives the cost explains the price side, and how car claims work covers what happens once you need to use a policy.
Getting a quote from Tower online
Tower is one insurer that sells car cover, and other insurers sell it too. For a car quote you will need your car's registration number and the driver details the quote form asks for. QuoteHub's link opens Tower's online quote, Tower's own quote tool, which offers three levels of cover. Tower's policy wordings set out the limits and exclusions.
Questions people ask
Is it illegal to drive without insurance in NZ?
No. Drive says car insurance in New Zealand isn't a legal requirement (Drive). The licence (rego) and warrant of fitness are separate obligations that you must keep current (Consumer Protection).
Do I need car insurance in NZ if I only have an old car?
Not legally. The risk is mainly the other person's car, since a low-value car limits what you lose on your own. IFSO says an uninsured driver who causes a crash pays for the other cars involved, and those repairs can be costly if the other cars are expensive (IFSO Scheme). That liability is what third party cover is for.
What if I have a car accident without insurance and it is not my fault?
The driver who caused it should pay for your repairs, either directly or through their insurer (IFSO Scheme). If you dispute the amount, you can provide your own quote or valuation, and then take it to the Disputes Tribunal (Disputes Tribunal). You will be managing that process without an insurer's help.
Is motor insurance compulsory for a rental or borrowed car?
Not by law, but the cover has to come from somewhere. Tower says rental companies are required to provide a standard level of cover, included in the rental fee, and that a borrowed car may be covered if the owner's policy is in place, so check with the owner first (Tower).
Does ACC pay for my car if I crash?
No. ACC deals with covered personal injury, and the Accident Compensation Act leaves claims for property damage open (Accident Compensation Act 2001, section 317). Your car and other people's property are matters for insurance or for the person at fault.
Does finance mean I must have car insurance?
The law does not require it, but your lender might. Tower notes that comprehensive cover may be a condition of finance, and Consumer Protection tells buyers to check what insurance a car loan requires (Tower; Consumer Protection). Read the loan agreement before you sign.
Adviser's view
QuoteHub's read: the law does not make you insure a car, but nothing in the system pays for car damage you cause, so the real question is whether you could cover that bill yourself.
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Cite this page QuoteHub NZ (2026). Is Car Insurance Compulsory in NZ?. www.quotehub.co.nz/car-insurance/is-car-insurance-compulsory-nz. Updated 2026-10-07.
References
- Drive: car ownership and insurance
- Consumer Protection: vehicle registration and licensing
- Consumer Protection: car insurance
- Consumer Protection: getting a loan for your car
- Accident Compensation Act 2001, section 317
- IFSO Scheme: car accidents involving uninsured drivers
- Disputes Tribunal: what the Tribunal can help with
- ICNZ: motor insurance
- Tower: can I drive an uninsured car?
- Tower: car insurance
- Tower: third party only wording
- Tower: third party, fire and theft wording
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