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Choosing car insurance

Getting the best price and protection with your car insurance

Page reading time: 4 minutes

When buying car insurance, take time to compare the cost and understand what is (and is not) covered by different policies.

Types of car insurance

When deciding which type of insurance will suit you, think about whether you can live without your car if it's written off or stolen. Also consider if you can afford to pay for the damage to someone else's car if you have an accident.

Third party versus comprehensive insurance

How your car is valued

With comprehensive insurance, you can choose how your car is valued. The value is the amount you'll get if your car is written off or stolen:

If you use the market value, you don't know how much you'll get if you claim, and you can't change the amount. If you use an agreed value, you'll pay a higher premium.

Cost of car insurance

The amount you pay each year for insurance is called a premium. The insurer works out your premium by estimating how likely it is that you'll make a claim.

You may also have to pay an excess when you make a claim. The excess is the amount you agree to contribute towards the cost of a claim.

The premium and excess you pay will depend on your policy and on other factors, such as your age. For example, a driver under 25 may have to pay a higher excess. This is because people under 25 are involved in more accidents.

No claim bonus

Some policies include a no claim bonus. This means you pay a lower premium if you don't make a claim for a certain period of time.

Read the policy to understand what claims affect your bonus and if there are any limits.

Paying for add-on insurance

Some car dealers offer add-on insurance when you buy a new or used car. These products are often not good value for money, for example the insurance extras sold by car dealers.

Getting the best deal on car insurance

To help you get the best deal on car insurance:

Compare car insurance policies

Get quotes from more than one insurer to find the best value for money, and a policy that suits your needs.

Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. See what to keep in mind when using comparison websites.

Compare these features:


  • a lower premium for the same type of cover


  • an option to lower your premium by adjusting your excess or paying no excess


  • an option to pay your premium in monthly instalments at no extra cost


  • any events that aren't covered, for example:
    • mechanical failure, depreciation, rust, or wear and tear
    • intentional damage (for example, vandalism)
    • damage caused by an unlicensed, drunk, or drug-affected driver
    • storm damage

No claim bonus

  • a choice to pay a lower premium for not making a claim for a period of time


  • check the policy to see if things you leave in the car are also covered if they are stolen

Roadside assistance

  • free roadside assistance if you break down

After-accident care

  • free towing, on-the-spot repairs, taxi fare, accommodation and car hire

Renewing you car insurance

Get quotes from a few other insurers to check you're getting the best deal. You may end up paying more by staying with your current insurer.

Man standing looking serious.

Nathan's lack of car insurance gets him into debt

Nathan decided not to get any insurance because his car is very old.

A few months later, he hit a brand-new sports car, which needed $20,000 worth of repairs.

Because he's not insured for damage to other cars, Nathan has to take out a personal loan for $20,000 and work extra hours to pay off the debt over five years.