Car insurance explained

Cheap car insurance is tempting but, like most important purchases, price should be only one factor you consider when choosing your car insurance policy.

Here’s a checklist of things to think about when selecting the car insurance policy that's right for you and your needs.

What events are covered by my car insurance policy?

In insurance, an event is something unexpected and unintended that happens suddenly and accidentally, causing physical loss or damage. Your car insurance policy is designed to help you recover from such events, helping you get back to the same position you were in before the event. A few examples include 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 read the policy wording carefully, paying particular attention to the inclusions and exclusions listed in the policy document.

How do I choose my car insurance policy?

In New Zealand, most insurers offer a selection of policies to choose from. Your choice will determine what events are covered, how much you pay towards your premium and how your claim will be settled. At AA Insurance, we offer three different options for car 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 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 damage to your car unless it has been stolen or damaged by fire. 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.

What policy benefits should I look out for when choosing my car insurance?

The benefits of your policy largely depend on the cover you choose. There are two types of benefits you may want to consider:

• Standard benefits: standard benefits are automatically included in your policy.

• Optional benefits, or optional extras: you can choose to add these on to provide you with additional cover.

One example of a standard benefit included with our Comprehensive Car Insurance Policy is Towing, storage and transport cover. 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. For AA Insurance customers, you can find information about these benefits under the 'Standard benefits - cover automatically included' section of the policy document. There are often optional extras available you can add onto your insurance policy at an extra cost. For AA Insurance customers, you can choose to add our Excess-free glass cover to your Comprehensive Car Insurance Policy and your Third Party, Fire & Theft Policy. With this benefit, 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.

What else should I consider when choosing my car insurance policy?

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.

You may also want to consider whether you want to have all your insurance policies with one provider. This 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.

How will my car insurance claim be settled?

Once your claim is reviewed and accepted, it can be processed in two ways:

• if your car is a total loss, you will receive your settlement amount, which is the agreed or market value of your vehicle, minus your total applicable excess and any on-road costs that are not fully paid or up to date. You will also need to pay the total premium for the entire period of insurance before the claim is settled in full.

• if your car is repairable, the car will be repaired or you'll receive the value of repairs minus your excess.

When you purchase a policy, it’s helpful to understand what you can expect at claim time. You can find out more information on our blog that details the claims experience for our car insurance customers.

What happens if my car is repairable?

If you're insured with us, your repairs will be undertaken by one of our Quality Repairers, a trusted group of skilled repairers approved by AA Insurance. If your vehicle is repaired as part of a claim by one of our trusted repairers, our Lifetime Repair Guarantee guarantees the quality of workmanship, parts and materials used. This guarantee will remain in place while your vehicle is registered for road use in New Zealand, meaning the guarantee will remain in place even if you sell your vehicle. You can find this information in your policy document, under the heading 'How we will settle your claim'.

Alternatively, if you're in Auckland or Hamilton, you can take your car to one of our Customer Service Centre (CSC), 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.