Vehicle insurance

The IFSO Scheme receives over 1,000 complaint enquiries a year about vehicle insurance. If you own a vehicle, it’s wise to have insurance. To make it more likely you’ll have insurance cover if you need it, start by checking your policy.

Our Information Sheets in our Document Library have quick guides to common issues. Consumer tips and case examples are included.

Our Glossary explains the meaning of technical terms used in tips and cases.

  1. Check your policy

    Car insurance policies can be third party, third party fire and theft, or comprehensive. All have different levels of cover. Check your policy for exclusions and limitations. Note that, in most cases, if a claim is accepted, an excess must be paid, regardless of who caused the damage.

  2. Discuss the amount you are insuring your car for

    Comprehensive policies fall into 2 broad categories: agreed and market value. Discuss the type of cover you have and the amount you are insuring your vehicle for with your insurer. If you disagree with the amount, consider getting an independent valuation.

  3. Check your car, warrant, tyres

    Make sure your car has a warrant and regularly check its general safety and roadworthiness, including the tyres. Claims can be declined after an accident if your car is considered unsafe or un-roadworthy, even if it has a current warrant.

  4. Drive carefully and safely, and comply with your licence conditions

    Drive carefully, don’t speed, be aware of alcohol limits, and stay within your licence conditions or you won’t have cover. Learner or restricted licence holders (or, in some cases, their parents) will have to pay for the damage not only to their own car, but to another car or property, if they are in breach of their licence conditions when the accident occurs.

  5. Tell all, and tell the truth

    When you apply for insurance, renew your policy, or make a claim, answer all questions accurately and truthfully. Update your insurer about modifications, e.g. new sound systems, mag wheels or larger engines. Claims can be are declined, and policies cancelled, because of non-disclosure, or incorrect or false statements. This can affect future insurance.

    Check out the Insurance Council of New Zealand (ICNZ) Fair Insurance Code that explains the information you may have to provide insurers for vehicle insurance, and what insurers do at claim time and what they expect you to do when you make a vehicle insurance claim.

Complaint insurer misunderstood the term “off-roading” image
A man complained his insurer had an incorrect understanding of the term “off-roading”.
He told the IFSO Scheme his claim was declined after his 4-wheel drive stopped in the middle of a river.
See the case summary
Payout brings more pain image
Cover confusion causes more pain for severely injured man
In a recent complaint to the IFSO Scheme, Sai* was seriously injured in a car accident, and suffered...
See the case summary
Son crashes car, no cover image
Check your policy for exclusions. Insurers must act with reasonable care and skill.
Cora's car insurance claim was declined because her son was excluded as a driver. But Cora said he was covered.
See the case summary
Car written-off, pay out less than expected image
Check your policy for how much you will be paid out if your car is a write-off. It may be less than you expect.
Katie thought she would get $10,500 for her written-off car, but the insurer offered the market value of $7,500.
See the case summary
Paying excess when it’s not your fault image
You will have to pay an excess, even if you're not at fault. Some policies have limited exceptions.
Mia’s car was stolen and then found, but damaged. She wanted the excess to be refunded as she wasn’t at fault.
See the case summary
No tyre tread, no cover image
Check your car is roadworthy, including the tyre tread, even if it has a warrant.
Jeremy wrote off his car in wet weather. His claim was declined because of a "smooth tyre".
See the case summary
No cover for learner driver with passengers image
Don’t expect to be covered if an accident occurs when you’re in breach of licence.
When Karl, with a learner driver’s licence, crashed on the Rimutaka ranges, he had 3 passengers. His claim was declined.
See the case summary
Teenage son flips parents’ car image
It’s unlikely you’ll have cover if an accident occurs when you’re in breach of licence.
Simon, on a restricted licence, flipped his parents’ car while his sister was in the passenger seat.
See the case summary
A car bumped into me - no it didn’t image
False statements can’t be retracted, and all policy holders are implicated.
Mr Green tried to withdraw a claim as he had told a “bit of a lie”. But it was too late.
See the case summary
The van, the can and the boom image
Don’t tell tall tales – your claim will be checked.
Jean Paul claimed his van caught fire because a petrol can was knocked over during “sort of a romantic meeting”.
See the case summary
Stolen car, no cover image
Disclose past criminal convictions when you apply for insurance.
Tim's claim, for his stolen car, was declined because he hadn’t mentioned his criminal convictions. Tim said he wasn’t asked.
See the case summary

What are the different types of vehicle insurance cover?

Third party provides cover for damage you cause to other cars or property, but not your own. Third party fire and theft has the addition of cover if your car is stolen or damaged by fire. Comprehensive policies cover all of the above, plus damage to your own car.

In comprehensive policies, what is agreed v market value?

If your car is written off, the insurer will pay the agreed or market value of the car, depending on the type of policy. When you apply for insurance, you will be asked to indicate what you think your vehicle is worth (the sum insured). This value is used to work out how much the insurer will charge you for your premiums. Agreed value policies provide more certainty about the amount you will be paid out in a total loss situation. The market value is the cost of buying a car in similar condition to your car at the time of the accident or loss (an insurer will get one or more PAVs – pre-accident valuations – to work out what the car would have sold for immediately prior to the accident or loss). A specialist vehicle valuer will work out the market value, taking into consideration the car’s pre-accident condition and any modifications.

What does “written-off” mean?

Your car is a write-off if the cost of repairing it is more than the what the car is worth (the market value). It does not mean the car cannot be repaired.

Why has my insurer said my car is a write-off, but they are not going to pay the amount I insured it for?

Most car policies provide for total loss claims to be paid out based on the car’s market value. This amount is often less than the sum insured stated in the policy. Your insurer is likely to base this market value on the average of two valuations. If you disagree with this amount (and the valuations obtained by the insurer), get an independent valuation at your own cost.

Why do I have to pay a full year’s insurance when the vehicle was a write-off?

Regardless of when you suffer a loss during the period of cover, you must still pay the full annual premium. When you arrange insurance, you agree to pay the full premium in return for the insurance cover, irrespective of whether you pay in monthly instalments or annually.

Why won’t the insurer pay just because the driver broke the rules of their learner or restricted licence?

Common breaches include: driving without a supervisor on a learner driver’s licence, or driving between 10pm and 5am on restricted driver’s licence, without a supervisor.

What do I have to tell my insurer when I take out insurance?

You need to tell your insurer all the information it requires to decide whether to insure you. This means fully and accurately answering all questions on the application. If you don’t tell your insurer all the information it requires, even if this is a mistake or you forget, it could mean your claim will not be paid and your policy will be treated as if it never existed.

Do I have to tell my insurer my son/daughter usually drives the car?

Yes. Information about the age, gender and experience of the driver may affect the insurance. If you do not tell your insurer and you later make a claim, it could mean the claim is not paid and your policy is not valid.

Why has my insurer only raised this issue about lack of information when I have made a claim?

When you make a claim, your insurer will ask you more questions or check your history. This can lead to your insurer finding out information which it required when you applied for insurance.

Can my insurer decline my claim if I gave them information which wasn't true?

Yes, most insurance policies state that claims can be declined, and, in some cases, policies cancelled, if the information you provide is incorrect or false. This can also affect any future insurance applications. If you don't know the correct answer, tell your insurer you will find out and get back to them with the right information.

Can my claim be declined because I included extra vehicle features?

Yes. You need to let your insurer know if your vehicle has been modified in a way that affects its value.

How do I make a complaint about someone else’s insurer?

If you have insurance, your insurer will deal with the other insurer on your behalf. If you do not have insurance and you disagree with the other driver’s insurer then you will need to deal with the insurer yourself. The IFSO Scheme can only look into complaints about your insurer.

Is my insurer subject to a standard of care or code of conduct?

Most general insurers are members of the Insurance Council of New Zealand (ICNZ) and subscribe to the Fair Insurance Code - a code* developed by the ICNZ, which sets out "the standard of service member companies must provide to their customers. These obligations are in addition to those imposed by the law". (*The code describes how your relationship with your insurer should work, including what you need to tell them and how they need to respond.)