How To Save Money on Your Car Insurance in NZ


The team at Cove has offered to pay for the first month of your car insurance if you decide to switch to them using this link. They’ll cover the first month (Up to $100), and they’ll even offer to help cancel your current car insurance policy. Why switch to Cove? I’ll tell you below.


I had to renew my car insurance recently and I’d wished I had shopped around more. Optimise my insurance every year is part of my 10 steps to financial independence.

When I went to renew my insurance I got a quote from 5 different insurers; AMI, AA, Tower, State and my bank. At the time I didn’t know about Cove.

So how can you save money on car insurance?

There are generally a few ways that you can save on car insurance premiums that I know of. And anyone can use them. There’s shopping around to see what other companies are willing to offer you rather than just renewing your insurance every year. You can increase the excess on your insurance to lower your premiums. And you can pay annually rather than monthly or fortnightly.

1. Shop Around for Insurance in NZ

I’ve always advocated for shopping around for any type of insurance as you can normally find a better deal and save a few dollars. And it’s no different then it comes to car insurance either.

There can be wildly different premiums offered to you from different insurance companies. I have seen quotes for my car be more than 50% higher from one company to another- seemingly at random, at least I can’t figure out why.

2. Increase your Insurance Excess

Car insurance, just like any insurance is there to help you out when something big happens unexpectedly. It’s not there for small things like a small scratch in the paint. You need to be covered if you accidentally crash into some CEO’s Ferrari.

3. Pay annually rather than Monthly

The final tip to save money on your car insurance is to pay annual premiums instead of monthly premiums. I have seen many quotes from insurance providers that charge a 10% premium for paying monthly, rather than annually. Sure it might look cheaper to pay monthly, but it cost more in the long run.

Paying annually rather than monthly might be difficult for some people, but if you already have an emergency fund growing, then you might want to think about using it briefly to pay for you premiums and schedule the monthly payments to pay your emergency fund back- saving you 10% on the cost of you insurance- Just an Idea.

Real-World Examples

To really show you how much you could save on insurance by using these three tricks I thought I would go and get quotes from some of the main insurance providers and show you the difference in premiums.

And because I didn’t just want to use just one car and one driver’s details, I constructed some personas with their own cars (number plates borrowed from TradeMe listings to fool the insurance quote systems 🙂 ).

So, here are the 5 personas that I used to get some real insurance quotes;

  • 30-year-old male drives a 2006 Mercedes Benz
  • 24-year-old male drives a 1999 Toyota Camry
  • 35-year-old female drives a 2007 Holden Commodore
  • 22-year-old female drives a 2002 Honda Civic
  • 32-year-old male drives a 2015 Nissan Nivara

I had to include a ute in there as there are so many of them on our roads these days. They are no longer reserved for rural communities- people think they are city cars now!

Annual premium compared to Monthly Premiums

As I mentioned earlier, you get charged extra for the convenience of paying monthly rather than paying annually. Let’s see how much extra each of my personas would be charged for paying monthly.

 TowerAAAMIStateCove
Mercedes8.8%9.4%9.9%9.6%0.0%
Toyota8.8%9.3%9.8%9.8%0.0%
Holden8.8%9.1%9.8%9.8%0.0%
Honda8.8%9.1%9.8%9.9%0.0%
Nissan8.8%9.6%9.9%9.4%0.0%

So on average- insurance companies charge 10% extra on their premium if you pay monthly rather than annually- with the exception of Cove Insurance. So paying annually will save you 10% on your premiums.

The exception to all this is Cove. They don’t charge extra for choosing to pay monthly instead of annually, and they are generally better priced than the competition- with the exception of the Nissan Ute.

Premiums amongst Insurance Companies

I managed to go get online quotes for each of the personas from different insurance companies. The price range can be quite varied in some cases- especially for the Mercedes. Here’s another tip- avoid European cars.

Cove generally has the cheapest premiums, followed by State and Tower insurance.

But most of the above premiums are all very similar. And that’s because many of the insurance brands in NZ are actually from the same giant Australian insurance companies. State, AMI, and NZI are all brands under the IAG (insurance Australian Group).

The other big Australian company is Suncorp- which owns a large stake in AA Insurance and Vero Insurance. Vero is the insure behind the AMP insurance brand.

Most of the bank insurances will be underwriting by either IAG or Suncorp too. So just like our major banks, a large proportion of the insurance sector is run by the Australian. There are a few exceptions though.

Tower is owned in New Zealand by its shareholders on the NZX, and Cove, a Takapuna-based start-up- up with a mix of technology and simplicity. They are a small team, currently under 20 employees.

Who is Cove?

Cove is a tech company that operates within the insurance industry. That just means that they use modern technology to improve its service. Cove is on a mission to fix insurance and is striving to let Kiwis quote, buy, claim, manage, and cancel their insurance online.

Of course, being a start-up- Cove does need someone to financially back them. Cove’s Insurance is underwritten by underwriters at Lloyd’s of London.

Shop around- Pay Annually and Save!

So next time you need to renew your car insurance shop around. It doesn’t take long to shop around for car insurance quotes. All the reputable companies make it easy for you- just enter your registration and personal details- heck it took me under half an hour to get 25 different quotes for 5 different cars and personas.

To make it even easier for you, here’s a list of links to some insurance companies in NZ.

If you’d like to get the first month of your insurance free, then consider getting a quote with Cove. If you decide to switch to them using my link they’ll give you the first month free (Up to $100) and they’ll even offer to help cancel your current car insurance policy.

Oh, and stay away from YOUI- they don’t always treat their customers well.


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11 thoughts on “How To Save Money on Your Car Insurance in NZ”

  1. Thanks for the review. We’ll definitely check out Cove for our next insurance round.

    I agree that premiums can vary wildly for some reason. I’ve found AA to be the most expensive of all and they try to sucker you in with “loyalty discounts” for staying with them for decades. yeah nah, I’d rather have my discounted prices now. hahaha

    Reply
    • That’s true- The other thing I’ve noticed with state is that it’s cheap the first year- and then on renewal, the premium increases much more than the competitors. They get you in for the first year and then try to increase the premiums the second year hoping that you won’t shop around.

    • They count on your laziness to change providers. Seems like the standard play with utilities as well. So getting the best deal requires some basic maths. 😆

    • I was with AMI all my adult life. I went with Cove and give it 5 stars, I always paid annually but my situation changed and I was finding that hard to manage. I now have my policies with Cove and pay all of them monthly or quarterly and it is so much easier. I have an alert on my phone in order to remember the payment will be made so I can make sure the funds are available. They were cheaper and their policy was easy to understand, all in all I am happy

    • That’s great! I was in the same boat- now I just set aside a portion of my income each year into an “insurance and rates” account so that I can pay the insurance all at once when the renewal comes in.

  2. Hello, you missed out Westpac bank (underwriter IAG). They offer a pretty competitive price. I have compared it with Cove and found Cove to be pricier. I drive a European car, too. By the way, I enjoy reading your blog. Keep writing.

    Reply
    • Yeah there can still be quite a bit of variation- so it always pays to shop around. I did notice that euro cars are more expensive than some others with Cove- AMI was cheaper.

    • Do you mean a zero on the x-axis? The graph code automatically sets the axis and sometimes it’s not at zero. Or do you mean a zero Excess on your insurance? I don’t think you can do that- at least I have never heard of an insurance policy with a zero excess. Hope that helps.

    • I’ve only ever user zero excess on a rental but you can get zero excess on private vehicle insurance.

      When I was getting my car repaired last year for a fender bender, the guy who was there with me had zero excess on his insurance so he didn’t pay anything that day. But you can be sure as heck that his premiums are way, way above that us non-zero excess mortals.

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