Understanding Collision Damage Excess (CDE) is a must for anyone with car insurance in New Zealand. It’s basically the amount of money you need to pay out of your own pocket when you make a claim for damage to your car. Each insurance policy has its own rules about this, so it pays to know what you’re getting into. This article will give you some easy tips to understand CDE better, so you can make smarter choices about your car insurance.
What is Collision Damage Excess?
Collision Damage Excess, or CDE, is the amount of money you have to pay when you make an insurance claim for damage to your car caused by an accident. Think of it as your contribution to the repair bill. In New Zealand, the amount of your excess can change depending on a few things, like the type of car you drive, how old you are, your driving record, and the specific insurance policy you choose.
For example, let’s say your CDE is set at $1,000. If you get into an accident and the total repair costs for your car are $4,000, you’ll need to pay the first $1,000 yourself. Then, your insurance company will cover the remaining $3,000. It’s pretty straightforward once you get the hang of it.
Understanding Your Policy
Before you sign up for any insurance policy, it’s super important to read the fine print. I know it can be boring, but it’s worth it! Insurance companies in New Zealand offer different types of car insurance, like comprehensive, third party, and third party fire and theft. Each one has its own rules about Collision Damage Excess.
Here are a few things you should ask about:
How much is the CDE? Make sure you know the exact amount you’ll need to pay if you make a claim.
Can I reduce or waive the CDE? Some policies, known as excess-free options, might let you reduce your CDE if you get your car repaired at a specific garage they recommend.
Knowing these details upfront can save you a lot of headaches later on.
Factors Affecting Your CDE
Several things can affect how your CDE is set. Here are some of the most important ones:
Vehicle Type: The type of car you drive makes a big difference. If you have a sports car or a fancy luxury vehicle, expect to pay a higher excess. That’s because these cars are usually more expensive to repair.
Age and Driving Experience: If you’re a young or inexperienced driver, you’ll probably have to pay a higher excess. Statistically, younger drivers are more likely to get into accidents, so insurance companies see them as higher risk.
Driving Record: If you have a history of accidents or traffic violations, your excess will likely be higher. Insurers see you as a greater risk, so they charge you more to cover potential claims.
Policy Type: The type of insurance policy you choose also affects your CDE. Comprehensive policies often have lower excesses than third party policies, but they also come with higher premiums.
Evaluating Your Risk
It’s really important to think about your own driving habits and how much risk you’re willing to take. Do you drive in busy city areas a lot? Are you always squeezing into tight parking spots? If so, you might be more likely to need to make a claim.
Think about tailoring your insurance policy to match your specific risks. For example, if you don’t drive your car very often, you might want to choose a policy with a higher excess. This can lower your overall insurance costs, since you’re taking on more of the risk yourself.
Paying Your Excess
It’s a good idea to think about how you’ll pay your Collision Damage Excess if you ever need to. It’s smart to have some emergency savings set aside for unexpected costs, like insurance claims.
Try to keep at least the amount of your CDE in a savings account. That way, you’ll be prepared if something happens and you need to make a claim. Being financially prepared can really reduce stress when you’re dealing with accidents or damage to your car. It lets you focus on getting your car fixed instead of worrying about where the money will come from.
Negotiating Your CDE
Believe it or not, you might be able to negotiate your Collision Damage Excess with your insurance company, especially if you have a good driving record. Insurance companies love customers who are low-risk, so they might be willing to lower your excess if you ask.
It never hurts to shop around and talk to different insurance companies. They all have their own ways of deciding how much excess to charge, so you might find a better deal somewhere else. Getting a few quotes and comparing them can save you a lot of money in the long run.
Considering an Excess Waiver
Some insurance companies offer something called an excess waiver. This means you can pay a bit more for your insurance each month, and in return, you won’t have to pay the Collision Damage Excess if you make a claim.
This can be a good option if you want peace of mind knowing you won’t have to pay a big chunk of money after an accident. But it’s important to weigh the costs and benefits. Think about how often you drive, what your risk factors are, and how much the excess waiver will add to your overall insurance costs.
Using Dashcams to Lower Risk
Getting a dashcam for your car can be a smart move for a few reasons. First, it can provide solid evidence if you get into an accident. This can be really helpful in proving who was at fault.
Second, some insurance companies in New Zealand offer discounts if you install a dashcam in your car. They see it as a sign that you’re serious about safe driving. Having a dashcam can help settle disputes about accidents, reduce the number of claims you make, and potentially lower your CDE in the future.
Keeping Track of Claims
Making insurance claims can affect how much you pay for insurance in the future. In New Zealand, if you make a lot of claims, insurance companies will probably charge you a higher excess. They see you as a higher risk because of your claims history.
Keep an eye on how many claims you’re making. If you make too many, insurers might think you’re a risky customer. On the other hand, if you have a good history with only a few claims, you might be able to negotiate a lower excess. This can make your car insurance package even better overall.
Case Studies: Real-Life Scenarios
Let’s look at a couple of examples to see how CDE works in real life:
Jane’s Story: Jane is 29 years old and drives a fairly new compact car. She has a clean driving record. When she first got her insurance, her Collision Damage Excess was set at $1,200. But she talked to her insurance company and, because of her good driving record, she managed to get it reduced to $800. That saved her $400!
Mark’s Story: Mark drives a sports car and has made a few insurance claims in the past. His excess was set at $2,000. After a minor accident, he realized he needed to be more careful and think about getting extra coverage. He decided to get an excess waiver, which meant paying a bit more for his insurance each month, but he wouldn’t have to pay that $2,000 if he had another accident.
Choosing the Right Insurer
Choosing the right insurance company is a big deal. You want to find a company that’s reliable and has good customer service, especially when it comes to handling claims.
Here are some things to look for:
Reputation: Look for companies with a good reputation. You can check online reviews to see what other customers have to say about their experiences.
Customer Feedback: Pay attention to what people say about how the company handles claims. You want a company that’s easy to work with and pays claims fairly and quickly.
Support System: Make sure the company has a good support system in place. You should be able to contact them easily if you have questions or need to make a claim.
Comparison Websites: Websites like Canstar can be super helpful. They give you detailed comparisons of different car insurance companies in New Zealand.
By doing your research, you can find an insurance company that’s right for you and your needs.
FAQ
What happens if I don’t pay my collision damage excess?
If you don’t pay your Collision Damage Excess, the insurance company won’t pay out on your claim. It’s really important to be prepared to pay the excess if you need to make a claim. Otherwise, you’ll be stuck paying for the repairs yourself.
Can I change my Collision Damage Excess?
Yes, you can usually change your Collision Damage Excess when you renew your insurance policy or switch to a new insurance company. Talk to your insurance provider about your options and see if you can find a policy that better fits your needs.
What is the average Collision Damage Excess in New Zealand?
The average Collision Damage Excess in New Zealand is usually between $500 and $2,500. But it can vary depending on your car, your driving history, and the type of policy you choose.
Is it mandatory to have Collision Damage Excess?
Most comprehensive car insurance policies include Collision Damage Excess, but it’s not actually required by law. However, if you want to make sure you’re covered for damage to your car in an accident, you’ll need a policy that includes CDE.
How does my driving history affect my Collision Damage Excess?
If you have a clean driving history, you’ll usually get a lower excess. But if you’ve had accidents or traffic violations in the past, insurance companies might charge you a higher excess because they see you as a bigger risk.
Get Started with Insurance Today!
Now that you know all about Collision Damage Excess and how it works, it’s time to take action! Start by looking at your current insurance policy and make sure you understand your CDE. Then, compare options from different insurance companies to see if you can find a better deal. Talk to your insurance provider about any adjustments you might want to make to your policy.
Whether you’re a new driver or you’ve been driving for years, finding the right balance between coverage and excess can save you money and give you peace of mind on the road. So don’t wait – take the next step in getting the best car insurance for your needs!
References
AA Insurance, ‘What is Car Insurance?’
Canstar NZ, ‘Car Insurance Comparison’
Insurance and Financial Services Ombudsman Scheme (IFSO)
NZ Transport Agency, ‘Vehicle Insurance Statistics’
