Car Insurance in NZ

Car Insurance

Car insurance is a contract between a driver and the insurance company. The driver pays a premium, and the insurance company agrees to pay the driver’s bills if he gets into an accident. There are a few factors that affect car insurance rates, but driving with car insurance is usually mandatory.

Why Is Car Insurance Mandatory?

Most states require some form of insurance for liability purposes. Traffic statistics state that a certain number of people will have accidents in any given year. States and insurance companies make their rules based on this written data. This is why insurance is required virtually everywhere. It is put in place to financially protect people. For example, an at-fault driver’s insurance company would have to pay a settlement to the victim of a car accident. This settlement helps or fully covers the victim’s medical bills, if any exist, as well as the cost of car repairs or of an entirely new vehicle.

Which Factors Determine Car Insurance Rates?

There are usually three factors that affect the premium that one is charged: age, driving history, and past accidents.

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  • As mentioned above, insurance companies tend to look at statistics when determining insurance rates, and age is one of the main determining factors. Drivers aged 16 to 19 have the highest number of automobile accidents, causing the insurance company to see young people as more of a liability. Whenever risk increases, so does the cost of coverage. Many young people bypass this insurance increase, however, by having their cars on their parents’ insurance plans.
  • Driving history refers to one’s motor vehicle history. If a driver has multiple tickets, insurance companies are likely to give him a high premium or to raise his rate when he joins their company.
  • Lastly, at-fault accidents cause the drivers to be looked at more as liabilities, so if one has had a recent-at fault accident, his premium would be higher than usual. If the driver goes years without causing an accident, however, his insurance rate will decrease.

What Happens If One’s Car Insurance Coverage Lapses?

If a driver doesn’t pay his Car insurance by youi nz, it lapses. This means that he no longer has coverage and should not drive his car until he is again covered. If a cop pulls him over, he may lose his license. If he gets into a car accident, he will have to pay for everything, himself. This can get pretty pricey considering all that he may have to pay:

  • any medical bills for himself or the victim(s) of the accident
  • car repairs or new cars for himself or the victims
  • the victim or himself may have to miss time from work, so he may have to pay a lawyer if he is sued or to help him negotiate with the opposing parties
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