Car insurance explained

Cheap car insurance is tempting but, like most important purchases, price should be only one factor worth considering before handing over your hard earned cash.

So here’s a checklist of what to think about when choosing car insurance that could end up saving you both time and money:

• What events are covered by your policy

• Choosing the right policy

• Policy benefits

• How your claim may be settled (including any limits)

• Quality repairs

What events are covered by your policy

You might be wondering what an event is and how it relates to your insurance policy. An event is a sudden, accidental and unforeseen occurrence that causes loss or damage that you do not intend or expect. Your car insurance policy is designed to cover events that meet this definition, such as theft, damage to your car in an accident or damage you cause to someone else's car or property. Different policies can offer different levels of cover in an event, and this can vary from insurer to insurer. Some events may not be covered or may have reduced cover. It’s important to consider this when purchasing a policy, to make sure you won’t have any surprises at claim time.

Choosing the right policy

In New Zealand, there are generally three types of cover to choose from. Your choice will determine what events are covered, how much you pay towards your premium and in return how your claim will be settled, should you make a claim. We offer three different options for car insurance at AA Insurance to allow you to choose the cover that best suits your situation:

Comprehensive Our highest level of cover, it provides full insurance that covers any accidental damage done to your car as well as any damage you have caused to other people’s car(s) or property. This policy also includes cover if your vehicle is stolen or damaged due to fire. At AA Insurance, we have optional benefits available to purchase such as excess-free glass cover or rental cover.

Third Party, Fire & Theft We'll take care of the costs if you accidentally damage other people’s car(s) or property although it won’t cover the damage you cause to your car. Your car is only covered if your claim is for your vehicle being stolen or damaged by fire, and in that instance, we’ll pay up to the agreed value to repair or replace it. At AA Insurance you have the option to purchase excess-free glass cover on this policy.

Third Party This covers the damage you cause to someone else’s car or property in an accident, although it won’t cover the damage you cause to your car. If price is an issue or your car isn’t worth much, then third party insurance which, at around $5 a week is less than a cup of coffee, can be a great option.

Policy benefits

The benefits of your policy largely depend on the cover you choose. Insurance policies often have standard benefits that are automatically included with your policy, and optional benefits which you can choose to add on to provide you with additional cover. One example of a standard benefit included with our Comprehensive Car Insurance Policy is cover for towing, storage and transport. This benefit provides cover to tow your car to the nearest place of safety after an accident, store it there, and get you and your passengers home. There are also optional benefits available on some of our polices that may save you money in the long run, like our excess-free glass cover. This benefit ensures you won’t have to pay an excess if your claim is only for accidental damage to your windscreen or windows. We recommend checking to see what benefits are provided with any cover and that they meet your needs. To compare the benefits on our vehicle insurance policies, check our comparison page. Having multiple insurance policies with the one provider may save you time as you'll only need to talk to one company at claim time. It can also save you money as some insurers offer a benefit that means you'll only need to pay one excess - the highest applicable - for loss or damage caused by one event. Find out more about the benefit on our website.

It’s also worth checking for any discounts. For example, if you’re an AA Member, you can get exclusive discounts on your insurance policies with us by providing your personal AA Membership number when taking out or renewing eligible policies. Our Discount Terms and Conditions page offers more information on the discounts available to our customers, as well as information on what you need to do to receive these discounts.

How your claim may be settled (including any limits)

If you need to make a claim, how much you receive can vary depending on your chosen policy. It’s important to understand what will happen at claim time when purchasing a policy, so you can have peace of mind and be satisfied with the outcome. If your car is not repairable, there are two options insurers mainly use to settle your claim– market value and agreed value. Market value looks at the current value of your car at the time of loss. This means you won’t have any certainty on what your settlement may be, and it could be less than you expect. At AA Insurance, we offer agreed value settlement. Your agreed value is the amount we agree to insure your car for when your policy begins and at each renewal. This ensures that you don’t receive any surprises at claim time. Other policy benefits may also have limits. For example, our temporary accommodation benefit has a limit of $500. If needed, we will pay up to $500 for the reasonable costs of temporary accommodation for you and your passengers, if you are unable to return to the place you are currently living or staying. It always pays to check your policy thoroughly to make sure that you have adequate cover.

Quality repairs

Our claims data shows that most car accidents involve repairs rather than full replacement, so it’s worth checking with your insurer the quality and process of the repair work that’s undertaken should you need to make a claim. In Auckland and Hamilton, we provide a Customer Service Centre (CSC) that’s a one-stop-shop to help you get back on the road as quickly as possible. At our CSCs we take care of the assessment, quotes, repairs and quality checks so you only need to worry about picking up your car when it’s repaired and ready to be back on the road. Regardless of location, we also have our Quality Repairer Network of repairers all over New Zealand, with all work receiving our Lifetime Repair Guarantee. Our Lifetime Repair Guarantee ensures that we guarantee the quality of workmanship, parts and materials used for your claim. This guarantee will remain in place while your vehicle is registered for road use in New Zealand, even if you sell your vehicle.