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How to Get Cheaper Car Insurance

Are your car insurance costs increasing? Our list of twenty must-know tips that could help lower your policy costs.
Updated 30 January 2023
​Car insurance can be considerably cheaper if you shop around but make sure you insure for the right amount. We have listed a few ways to price bust your premium and get complete protection at the same time. ​

Do you have a tip that we've not covered that will help New Zealanders save on car insurance costs? Please contact our research team.

Know this first: Some cars will always be cheaper to insure than others.
  • Our guide to the cheapest cars to insure lists models which predominantly are compact in size, have small engines and are Japanese-made.
  • The value of these cars (and the low risk nature of their drivers) makes them more attractive to insurers and therefore cheaper to insure.
  • Before buying any car insurance policy, make sure you know what it covers - price is important, but sufficient cover is essential. Our video below explains what a 'good' insurance policy should have and optional add-on features you may want to consider:

Our Tips to Finding Cheaper Car Insurance:

​Park off the road (although the true cost depends on your address).

  • Cars that park off the road are less risk for damage and theft. If you can use your driveway or garage, your policy cost will be less. Insurers favour car owners who have locked garage - the risk of theft is significantly reduced, and your car is also better protected from the elements. When getting quotes, tick the garage box if it applies, and you'll get a lower quote.
  • A significant factor in your car insurance quote comes down to where you live. In areas of New Zealand which are relatively 'car free', you'll pay less. Live in an area with a twisty road? You'll probably pay more.
  • Our research found the cheapest car insurance is available in relatively less populated places like Invercargill, Gore and New Plymouth. In contrast, residents in Piha and Mangere pay the most.
  • There's nothing you can do to change your location - insurance companies will likely deny any claim where the policyholder has lied about their place of residence. 

​Third-party cover is worth considering as it's much cheaper than comprehensive policies.

In almost all cases, the general rule is that the same driver with the same vehicle will pay less for third party cover compared to comprehensive cover. This is because the insurer doesn't have to pay to repair or replace your car if you cause an accident. Our guide to third party car insurance compares comprehensive vs third party policies.

In general, third-party policies are most suitable for anyone who:
  • Owns a car worth less than $5,000
  • Is aged under 25

Comprehensive policies are more suitable if your car is worth over $5,000 - but the cost of annual comprehensive insurance may be triple what a third party policy costs. Deciding what is right for you will come down to evaluating if you would have the money to replace your car if it's written off in an accident. If you would have the money, a third party may be the right choice. 

MoneyHub User Alice (Auckland) writes:
I caused a minor accident on the southern motorway when I pranged another car. I had third party insurance, so it took care of the other car easily enough, but I was faced with writing off my car as the repairs weren't going to be cost-effective. I lost about $7,000 in 10 seconds. I've since replaced my car and taken out a comprehensive policy as the difference in price for me is about $400 for a similar car to my old one. After declaring my involvement in an accident, that price means I probably pay more than the average accident-free person.

Compare prices before buying car insurance.

It sounds obvious, but many people don't bother and instead overpay on their insurance. Our research team's guide to car insurance is a good starting point to find the best prices from many car insurers. If you don't compare, you risk overpaying in year one and every year after. ​

​The better your driving history, the lower the premium.

If you've had a few accidents and have been at fault, you'll need to declare this to your insurer. The cleaner your driving history, the lower your premiums will be. It's as simple as that - do not neglect to mention any accident as insurers can challenge any claim if they believe you lied on your original car insurance application. ​

Don't OVER insure your car when it comes to market value.

​Hundreds of thousands of drivers overpay on their insurance, unaware that they won't be paid the insured market value if they make a claim. Let's explain with an example:
  • Steve insurers his 2011 Toyota Corolla for $12,000, its market value in 2021. Over the next ten years, the value of the Corolla falls gradually to $2,500 by 2031.
  • However, Steve continues to pay insurance on the value of the car being $12,000. If he has an accident, the insurer will only pay the current market value, not the $12,000 market value he originally insured it for.
  • For this reason, you could expect (with all other things being equal) your car insurance policy to drop in price every year as your car becomes less valuable. Unfortunately, this isn't the case.
  • When it comes to obtaining or renewing your insurance, a good approach is to get quotes from at least three other insurers for your car.
  • You can then contact your preferred insurer, tell them about the quotes from insurers (if they are cheaper) and ask them to match it.

If you have a financed car, shop around for the best insurance quote

Know this: Whether you car is financed or not can affect how much your car insurance costs.

Some insurers ask whether the car you're insuring is owned outright or financed. If it's financed, you may find the insurance premium increases. Some insurers make a distinction, while others don't, so comparing quotes is essential to get the best deal. 

​A lender will, in almost all cases, require fully comprehensive insurance on a financed car. After all, if you have an accident, they will want their investment protected by insurance. Ask your lender if you can pick your car insurance rather than use their 'recommended' policy which may not be the best deal - our best car insurance policies guide is a good starting point.​

Know This: Your name, race or job description do NOT affect your quote.Other countries use some of these factors to deliver quotes, but for now, this is not the case in New Zealand. Any broker, colleague or 'expert' who tells you otherwise is incorrect. It is rare that insurers even ask for any of these details when providing a quote. 

Pay annually (not monthly)

​If you select to pay monthly, you'll be not only paying more, but you're likely to see it lodged on your credit report. Any late payment could adversely affect your credit score. In our car insurance comparison research, we found vehicle owners could save around 15% if they paid a year in advance.

​​Refrain from auto-renewing – shop around and ask for a better deal

Car insurers love to attract new customers with low prices. Are you renewing at $900/year? You may be able to get a new policy with the same company for $600. Insurers more often than not increase the price every year, knowing with confidence that most customers don't switch, despite the value of your car decreasing.

But it's important to note that what you will pay in future years depends on statistics of claims for the year before and whether you've made a claim as well. Some insurers also have loyalty discounts to ensure that premiums don't increase or aren't more than an equivalent new customer's policy.

Getting the best renewal premium
  • We suggest making a note of your renewal date and spend 10 minutes getting some quotes for new policies with other insurers.
  • You may find something much better, and if so, you can call your existing insurer and ask them to match it. They won't want to lose you, so they should be able to negotiate.

Don't buy add-on extras if you don't need them.

Insurers like to make extra money from extra services, many of which can be overpriced for what they deliver depending on your road history. Examples include windscreen protection and breakdown cover. Each 'extra' cost can be up to $100 each per year, so evaluate what you need and what you can do without.
​
MoneyHub user John (Auckland) writes:
Windscreen protection is beneficial and is included in my policy without being an extra. Over the years, I have had quite a few claims for damaged windscreens usually caused by loose stones. There has never been any hassle in getting the repairs done promptly, and there is no change to no claims bonuses. We have also changed from AA roadside assistance to State Roadside Rescue, costing $30 per year because this covers the car, whereas the former only applies if the driver is an AA member.

Pick the right excess to balance value with protection.

​Ask yourself, what could I afford to pay for my car to be repaired? That should be your excess. For example, if you pick an excess of $1,000 and struggle to come up with that money overnight, it's better to have a lower excess. The lower the excess, the higher the premium, but it's not significant.

​As part of our research, we saw that dropping the excess from $1,000 to $500 increased the number of premiums between ~$50 and ~$100 per year. Our car insurance excess guide outlines this in detail. 

Consider getting a multi-insurance package to save up to 35%

​Most insurers get excited if you use them for all of your insurance needs, i.e. home, life and/or car. And they will offer decent discounts to incentivise you to pick them. A popular way to get the best cover at the lowest price is to look at our best buys within car insurance, home insurance and life insurance, contact 2-3 insurers and haggle for a price reduction. You have nothing to lose and only money to save by doing this.

Improve your car’s security - if you have an approved alarm or immobiliser, it can drop your policy costs

Many insurers ask you to confirm if your car has some form of alarm - tick yes if this applies.  Popular stolen car models cost more to insure. Own a Toyota Hilux, Subaru Impreza or Subaru Legacy, and you could pay a lot more for car insurance than less 'in demand' models by thieves. 

Per this Stuff.co.nz article, MoneyHub obtained stolen car data from the New Zealand Police to reveal the 25 most stolen cars and which areas of New Zealand are prone to theft. If you own a car on any of the list per the article, be aware that you may more than you realise. Subaru Legacy and Subaru Impreza models are often more extensive to insure than other similar models as a result of the theft risk.

​Using a car for 'work purposes' will bump the price of your quote by around 50%

If you're using your vehicle for your job, you'll pay a higher premium for the main reason you'll be using your car more than a standard driver. But if you commute to and from work, as most drivers do, that doesn't count as 'business'. 
 
And if you are using your car for Uber, even part-time, your standard car insurance is probably invalid.

​A 'modified' car may not be fully covered

If your car has had work done, the modifications may not be covered. Many insurers won't cover your car for specialist work such as engine modifications, after-market petrol turbocharging, gearbox upgrades and door modifications. If you have 'pimped' your ride, you may need to seek specialist car insurance covering what you've done. You'll be asked at the quote stage about the status and extent of your modifications. 

​List ALL drivers under 25 to protect yourself from excesses.

​Some insurers specifically charge a higher excess if a person under 25 who isn't on your insurance is involved in an accident. Protect yourself by naming everyone you can expect to drive the car under 25, and keep in mind that if a young driver wishes to borrow the car, your excess may be higher. Check your policy to be sure what the cost will be.

Some insurers also charge an 'inexperienced driver excess' above your standard excess. This applies when a driver over 25 years of age has held a New Zealand driving licence for less than a set number of years. It doesn't matter if they're listed or not listed; the excess will still apply.

Establish and grow a no claims bonus

By driving carefully, avoiding the risk damage and generally keeping your car safe, you'll be able to build up your no claims bonus. This can save significantly on future policy renewals as you're  established as a safe driver. If you do have a minor accident (i.e. car park prang or similar), it can be cheaper to pay for any repairs yourself rather than make a claim. However, when you do, you'll need to notify your car insurance provider of the incident. Our no claims bonus guide has more details.

Video Explainer
MoneyHub Founder Christopher Walsh explains what a no claims bonus is, what insurers offer it, how you retain (and lose) it, and how it can lower your car insurance renewal.

Warning - no-claims bonuses don't mean your car insurance costs will decrease when you renew. We suggest always comparing quotes just before your renewal date to help you save money and avoid a 'loyalty tax' from your insurer
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