New Zealand motorists are considering cheaper third-party insurance options as comprehensive policy costs continue to surge, according to new data from insurance comparison website Quashed.
Car insurance premiums have jumped 7% compared to last year and 40% over two years, with Auckland motorists facing the highest rates nationwide. The website reports a nearly 50% increase in queries about third-party insurance from its 50,000 users.
Insurance Council of NZ chief executive Kris Faafoi attributed the rising costs to multiple factors, including a 20% increase in vehicle repair costs year-over-year, as reported by Stats NZ.
"Modern cars contain more electronic gadgetry and sensors, making repairs more expensive," he said. "Global reinsurance costs have also increased."
Third-party insurance, which covers damage to other people's vehicles and property but not the policyholder's vehicle, offers a more affordable alternative to comprehensive coverage. However, Faafoi urged caution: "We want to ensure there's a buyer beware message about whether people have appropriate cover."
Premium costs vary based on multiple factors, including vehicle type, driver age, driving history, and location – particularly in areas with high car theft rates. "When people contact their insurance company, questions about parking arrangements and garage facilities all impact the final premium," Faafoi said.
While there's no data on how many people are completely dropping car insurance, Faafoi acknowledged that economic pressures are causing some to reconsider their coverage options. He encouraged motorists to discuss options with their insurers and shop around for better rates.
Quashed recommends reviewing three key factors when seeking to reduce insurance costs: the vehicle's insured value, the excess amount, and the type of coverage selected.
Insurers are working with parts and service suppliers to manage costs and keep premiums affordable, but the trend toward higher premiums appears likely to continue as repair and reinsurance costs rise.
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