Everything You Need To Know About Rental Car Insurance In New Zealand

New Zealand is one of the top destinations for road trips and self-drive holidays. With stunning scenery around every bend, driving is one of the best ways to experience the diversity of the North and South islands.

Renting a car gives you the freedom and flexibility to explore New Zealand at your own pace. However, before hitting the open road, it’s important to understand the country’s rental car insurance requirements.

This comprehensive guide will provide you with everything you need to know about getting insured when renting a car in New Zealand.

Do I Need Rental Car Insurance In New Zealand?

In New Zealand, it is mandatory for rental car companies to include basic vehicle insurance in the daily rental rate. This basic insurance generally includes:

• Collision Damage Waiver (CDW) – Covers damage to the rental vehicle.
• Theft Protection (TP) – Covers theft of the rental vehicle.
• Third Party Liability – Covers damage to another person’s vehicle or property if you are responsible for an accident.

Even with basic insurance, there will likely be an excess fee (deductible) of several thousand dollars that you are responsible for paying if the vehicle is damaged or stolen.

Purchasing additional insurance from the rental company can reduce or eliminate this excess fee. Without this, you risk losing a large sum of money in the event of an incident.

So although basic insurance is mandatory, most travelers find it necessary to take out comprehensive rental car insurance in New Zealand for complete peace of mind.

What’s Included In Basic Rental Car Insurance?

Every rental car company in New Zealand must provide the following basic insurances:

• Collision Damage Waiver (CDW) – This covers damage to the rental vehicle if you are responsible for an accident. It may exclude damage to windows, tires, roof and undercarriage.

• Theft Protection (TP) – This covers loss of the vehicle if it is stolen. It may exclude theft of accessories or contents.

• Third Party Liability – This covers damage to another person’s vehicle or property if you are at fault for an accident.

• Fire and Emergency Roadside Service – This covers costs related to vehicle fires, flat tires, lost keys, running out of fuel etc.

Even with basic insurance, you will be responsible for paying an excess fee (deductible) if you make an insurance claim. This excess can range from $1,000 NZD to over $5,000 NZD depending on the rental company and vehicle type.

Basic insurance also does not cover personal injury. This is instead covered by New Zealand’s no-fault ACC scheme for any accidents occurring within the country.

What’s Not Covered By Basic Rental Car Insurance?

There are many circumstances where you may not be covered by basic rental car insurance. Common exclusions include:

• Driving on unsealed roads or off-road – Only sealed public roads are covered.

• Reckless driving – This includes speeding, running red lights, drink driving etc.

• Incorrect fuel usage – Putting petrol in a diesel vehicle, or vice versa.

• Failure to secure the vehicle – Not locking doors, leaving keys in ignition etc.

• Prohibited usage – Using the vehicle off-road, overladen, unlicensed driver etc.

• Natural disasters – Damage from floods, earthquakes, volcanic eruptions etc.

• Driver exclusion – Additional cover may be needed if under 25 or over 70 years old.

Always read the fine print of your rental agreement so you are aware of all exclusions. Violating the terms of your contract means the rental company can refuse to pay out on any insurance claims.

What Are The Different Insurance Options?

To reduce your financial risk, you can purchase additional insurance products from the rental car company:

• Zero-Excess Insurance – This reduces the excess fee to zero.

• Damage Excess Reduction – This reduces the excess fee to a smaller amount like $300 NZD.

• Tire & Windscreen Insurance – This covers damage to tires, windscreen and other glass.

• Personal Effects Coverage – This covers loss of your personal items from the vehicle.

• Undercarriage Damage – This covers damage to the roof, chassis and underneath of the vehicle.

When comparing rental car quotes, always verify exactly what is included in the base rate and what the additional insurance options will provide coverage for.

Why Purchase Extra Rental Car Insurance?

There are two main reasons to consider purchasing additional insurance cover from the rental company:

1. Reduce or Eliminate the Excess Fee

With basic insurance, you are responsible for paying an initial excess fee before any insurance payouts. This excess can be thousands of dollars depending on the vehicle.

Additional insurance like Zero-Excess reduces this excess to zero, so the rental company covers all costs in the event of a claim. This provides complete peace of mind against potentially huge fees.

2. Remove Use Restrictions

Basic insurance often excludes driving on gravel roads, at night, overseas etc. By purchasing extra cover, these restrictions can be removed so you have the flexibility to travel where you want without violating the rental agreement.

For complete freedom and zero financial risk when driving in New Zealand, purchasing extra insurance is highly recommended.

What Factors Affect the Cost?

The cost of rental car insurance in New Zealand depends on several factors:

• Vehicle Type – More expensive cars have higher insurance costs.

• Rental Company – Each company sets their own rates.

• Rental Period – Longer rentals spread the cost over more days.

• Driver Age – Drivers under 25 or over 70 will pay more.

• Location – Insurance can be more expensive in remote areas.

• Season – Rates are higher during peak seasons.

• Deductible Amount – Lower excess fees increase the insurance cost.

To get the best deal, compare quotes across different rental companies while keeping the above factors in mind. Buying direct from the rental company is usually cheaper than adding insurance later.

Do I Need Personal Insurance Too?

New Zealand’s accident compensation scheme ACC covers all medical costs if you or a third party are injured in an accident within the country.

However, you may want to consider taking out additional personal travel insurance that covers:

• Ongoing medical costs if you are repatriated home after an accident.

• Lost income or additional expenses due to injuries sustained.

• Personal effects lost or stolen from the vehicle.

• Any excess car rental fees or bonds not otherwise covered.

Personal travel insurance provides protection beyond what ACC covers while in New Zealand. For complete peace of mind, both rental car insurance and personal travel insurance are recommended.

What If I Have Insurance With My Credit Card?

Some credit cards provide rental car insurance as an extra benefit when you pay with that card. However, this usually only provides secondary coverage if the main policy is inadequate.

In New Zealand, your contract is with the rental company rather than your credit card provider. This means you may still be liable for paying the standard excess fee to the rental company first in the event of a claim, before seeking reimbursement from your card issuer.

Always contact your credit card company ahead of time to understand precisely what is covered in New Zealand and what duties you hold under the primary rental agreement. Never assume a credit card provides complete protection.

Top Tips For Driving In New Zealand

To ensure you stay safe on New Zealand roads and avoid any nasty insurance surprises, here are some top tips:

• Read rental agreements – Be crystal clear on use limitations, exclusions and liability.

• Get sufficient insurance – Consider zero-excess for complete peace of mind.

• Check travel insurance – Confirm it covers rental car excess fees if needed.

• Watch for loose gravel – Drive slowly on rural and mountain roads.

• Avoid overnight trips – Driving in the dark is often excluded from cover.

• Keep it locked – Don’t leave any valuables visible in the car.

• Check headlights – Turn them on if driving near dawn or dusk.

• Study road rules – Getfamiliar with give way laws, speed limits etc.

• Fill the tank – Don’t risk running out of petrol in remote areas.

• Protect the vehicle – Treat the car as if it were your own.

By understanding the insurance situation, driving carefully and taking sensible precautions, you can have the road trip of a lifetime in New Zealand!

Frequently Asked Questions

Do I have to purchase insurance from the rental company?

Basic insurance must be purchased from the rental company as this is part of the mandatory rental agreement. For additional cover, you may be able to use your credit card insurance, travel insurance or an external provider – however, always check acceptance with the rental company.

What happens if I cause an accident without extra insurance?

You will be liable for paying the full excess fee stated in your