Car insurance can feel confusing, and with so much conflicting advice online, it’s easy to believe things that simply aren’t true. In New Zealand, where insurance is not legally required but strongly recommended, understanding the facts is essential to protect yourself financially.
Let’s break down five of the most common car insurance myths—and the reality behind them.
Myth 1: “Car insurance isn’t necessary in New Zealand”
The reality:
While it’s true that car insurance isn’t legally required in New Zealand, going without it can be a major financial risk.
If you cause an accident, in addition to paying the costs associated with the repair of your own vehicle, you could be personally liable for:
- Repairs to other vehicles
- Damage to property
- Medical or compensation costs in some cases
Even a minor accident can cost thousands. Without insurance, you would need to cover this out of pocket.
What to do instead:
Many customers choose third-party insurance as a starting point, as it covers damage you cause to other people’s property and is typically more affordable.
Myth 2: “Comprehensive car insurance is always the most expensive option”
The reality:
While comprehensive cover often has a higher upfront premium versus third-party insurance, it can actually offer better value overall.
Comprehensive policies typically cover:
- Damage to your own car (even if you’re at fault)
- Theft or attempted theft
- Fire and natural disasters
- Damage caused by uninsured drivers (in some cases)
By contrast, cheaper policies may leave you exposed to costly repairs to your own vehicle.
What to do instead:
Compare policies based on:
- Coverage limits
- Excess amounts
- Real-world scenarios (not just price)
Depending on the situation, a slightly higher premium can help reduce out of pocket costs if something goes wrong.
Myth 3: “My insurance covers anyone who drives my car”
The reality:
Not all policies allow unrestricted drivers. In New Zealand, most insurers have specific rules about who is covered, such as:
- Named drivers only
- Age restrictions (e.g. under 25)
- Higher excesses for unlisted drivers
If someone not covered by your policy drives your car and has an accident, your claim may be reduced—or declined entirely.
What to do instead:
- Check whether your policy is named-driver or open-driver
- Understand any additional excess for other drivers
- Add regular drivers (like family members) to your policy, where appropriate and permitted under your policy terms
Myth 4: “Minor details don't matter when setting up your policy”
The reality:
Providing inaccurate or incomplete information—even unintentionally—can invalidate your insurance.
Important details include:
- Where your car is usually parked
- How many kilometres you drive annually
- Modifications to your vehicle
- Your driving history
If your insurer finds discrepancies when you make a claim, they may:
- Reduce your payout
- Decline the claim altogether
- Cancel your policy
What to do instead:
Be transparent and keep your details updated. It’s far better to pay the correct premium than risk having no cover when you need it.
Myth 5: “Older cars are always cheaper to insure”
The reality:
While older cars may have lower market value, they are not always cheaper to insure, as pricing varies based on insurer risk models and multiple factors.
Factors that can increase the cost include:
- Lack of modern safety features
- Higher risk of breakdown or mechanical failure
- Greater likelihood of theft (for certain models)
- Availability and cost of parts
In some cases, newer cars with safety technology (like collision avoidance systems) can actually be cheaper to insure.
What to do instead:
When buying a car, consider:
- Insurance costs alongside purchase price
- Safety ratings
- Repair and replacement costs
Getting an insurance quote before buying a car can help you avoid surprises.
Why these myths persist
Car insurance myths often come from:
- Outdated advice passed between drivers
- Assumptions based on partial information
- Simplified comparisons that ignore policy details
The insurance industry also evolves — pricing models, risk factors, and technology all change over time.
Key takeaways
- Insurance may not be mandatory in NZ—but it’s essential for financial protection
- Cheapest isn’t always best—look at overall cover, not just price
- Always understand who is covered under your policy
- Accurate information is critical to ensure valid claims
- Insurance costs depend on multiple factors, not just vehicle age
Final thoughts
Car insurance is there to protect you when the unexpected happens—but only if you truly understand your cover. Taking the time to review your policy and challenge common myths could save you thousands in the long run.
Next step
Take 2 minutes to review your current policy:
- Are your details up to date?
- Do you know exactly what’s covered?
- Are you protected in the scenarios that matter most?
If not, it might be time for a quick policy check or comparison.
Note that this a general guide designed to assist you to avoid some of the common misconceptions – in all cases the actual terms of your policy prevail. If you have any questions and want further advice, please don't hesitate to contact Assurant on email ([email protected]) or phone (0800 776 832).
