Understanding non-drivable vehicle coverage in New Zealand car insurance is essential because it dictates what happens if your car becomes unusable due to an accident or other covered event. This coverage helps with towing, storage, and potentially even alternative transport, ensuring you’re not stranded with a useless vehicle and unexpected expenses. It’s a crucial aspect often overlooked, but knowing the details can save you significant hassle and money.
Why Non-Drivable Coverage Matters
Imagine this: you’re driving on a winding road outside Queenstown, and suddenly, a rockslide damages your car, rendering it impossible to drive. Or, perhaps a flash flood leaves your vehicle submerged and unusable. In these scenarios, your standard car insurance policy might cover the damage, but what about the immediate aftermath? How do you get your car to a repair shop? Where do you store it until it’s assessed? And how do you get home? This is where non-drivable vehicle coverage steps in.
Non-drivable vehicle coverage, often an integral part of comprehensive car insurance, addresses these very issues. While specific details vary between insurers, the core purpose remains the same: to alleviate the burden of dealing with a disabled vehicle after a covered incident.
Comprehensive vs. Third-Party Insurance and Non-Drivable Coverage
It is crucial to understand that not all levels of car insurance offer the same protection. In New Zealand, the most common types are Comprehensive, Third Party Fire & Theft, and Third Party Only. Comprehensive is the most inclusive, typically offering coverage for accidental damage to your vehicle, regardless of fault, as well as damage to other people’s property. Third Party Fire & Theft covers damage to other people’s property and also offers protection if your car is stolen or damaged by fire. Third Party Only, the most basic, solely covers damage you cause to other people’s property.
Non-drivable vehicle coverage is almost exclusively associated with Comprehensive car insurance. Third-Party policies generally don’t include such benefits. Therefore, If non-drivable coverage is important to you, you will likely need to opt for a comprehensive policy. This makes sense as non-drivable situations usually stem from events where your own vehicle is damaged, a scenario best addressed by the wider coverage of comprehensive insurance. Some Third Party Fire & Theft policies may provide limited towing coverage related to theft or fire damage, but that would be rare.
Key Components of Non-Drivable Vehicle Coverage
Several crucial elements fall under the umbrella of non-drivable vehicle coverage. Understanding these helps individuals make informed decisions when selecting or reviewing their car insurance policy.
Towing Costs
Towing is perhaps the most immediate concern when your car is undrivable. Non-drivable coverage usually includes the cost of towing your vehicle from the accident site to the nearest approved repairer or a safe storage location. A standard policy will likely have a limit on how far they will tow your vehicle, so it’s important to understand that limit. For example, some policies may cover towing within a 50km radius, while others might extend to 100km or more. Always check these limits within your policy documents. Exceeding the limit would generally leave you responsible for paying the difference. Some insurers may have preferred towing partners, using these partners often gets you closer to the full amount covered. Conversely, you may only get partial reimbursement if you opt for your own towing service.
Example: Sarah crashes her car 80km away from her home. Her policy has a towing limit of 50km. Sarah will be responsible for paying the additional cost of the towing distance beyond 50km.
Storage Fees
Once your car is towed, it might need to be stored while awaiting assessment or repairs. Storage fees can quickly accumulate, adding to the stress of the situation. Non-drivable coverage often includes reimbursement for reasonable storage costs for a specified period, such as a few days or weeks. Some policies might have a daily limit on storage fees. For instance, a policy might cover up to $50 per day for storage, up to a maximum of seven days. Again, paying close attention to such limitations is important.
Example: John’s car is sitting at a repairer for a week waiting on an assessor. His policy covers storage fees of up to $40 per day for a maximum of five days. The repairer charges $50 per day. John will need to cover the $10 difference per day, plus pay for the sixth and seventh day, as his policy only covers five days.
Alternative Transportation
Being without a car can disrupt your daily routine. Some comprehensive policies offer alternative transportation benefits when your vehicle is undrivable due to a covered event. This could include reimbursement for rental car costs, taxi fares, or public transportation. The duration and coverage amount will vary significantly between insurers. Some policies might provide a rental car for up to 14 days, while others might offer a lump sum payment towards transport costs. Some insurers might only offer this benefit if your car is stolen, not damaged.
Example: After an accident, Maria’s car is deemed undrivable. Her policy includes rental car cover for up to 10 days. This allows her to continue with her usual daily activities without significant disruption.
Recovery and Delivery Costs
If your car ends up in a location that is difficult to access (e.g., down a bank or in a remote area), the cost of recovering it can be substantial. Some comprehensive policies cover the expenses of specialized recovery equipment and services needed to retrieve your vehicle. Furthermore, some policies may also cover the cost of delivering your vehicle back to your home or a preferred repairer after it has been repaired, especially if the repair location is a considerable distance away.
Repatriation Costs
If you have an accident a long distance from home and your car is undrivable, getting it back to your usual repairer can be costly due to freight charges. Some policies may contribute towards repatriation costs to assist in returning your car “home” – usually up to a specified limit.
Factors Influencing Non-Drivable Coverage Costs
The cost of non-drivable vehicle coverage isn’t usually separated into a specific line item in your insurance premium but is baked into the overall comprehensive insurance cost. Several factors influence that cost:
Vehicle Type and Value
The type and value of your car significantly affect your insurance premium. Insuring a high-value or specialized vehicle will generally cost more because the potential repair or replacement costs are higher. Similarly, newer vehicles may carry higher premiums due to the expense of replacement parts.
Driver Profile
Your age, driving history, and location all play a role in determining your insurance cost. Younger drivers or those with a history of accidents or traffic violations are typically charged higher premiums. Similarly, living in an area with a higher crime rate or accident frequency can increase your insurance costs.
Excess
The excess is the amount you pay out-of-pocket when making a claim. Choosing a higher excess will generally lower your premium, but it means you’ll have to pay more if you need to make a claim. Conversely, a lower excess results in a higher premium but reduces your out-of-pocket expenses if an accident occurs. When calculating your excess, it’s important to factor in any young driver excess applicable to the policy.
Policy Add-ons and Features
Additional policy features, such as roadside assistance or windscreen cover, can impact the overall premium. While these add-ons provide extra protection and convenience, they come at a cost. Carefully evaluate your needs and decide which add-ons are worth the extra expense.
Reading the Fine Print: Policy Exclusions
It is crucial to carefully read and comprehend the exclusions listed in your car insurance policy. Exclusions are circumstances in which the insurance company will not provide coverage, and being aware of these exclusions is crucial to avoid unexpected expenses.
Pre-existing Damage
Damage that existed before you took out the insurance policy is generally not covered. Insurers often require a vehicle inspection before providing comprehensive cover to identify pre-existing issues.
Illegal Activities
Any damage or loss arising from illegal activities, such as using the vehicle for criminal purposes or driving under the influence of alcohol or drugs, will void your coverage.
Unlicensed Drivers
If the vehicle is being driven by an unlicensed driver or someone who is not authorized to drive under the terms of your policy at the time of the incident, your claim may be denied.
Wear and Tear
Insurance policies are generally designed to cover accidental or sudden damage. Gradual wear and tear, such as rust, deterioration of tires, or mechanical breakdown, usually are not covered.
Racing and Off-Road Use
Damage sustained while participating in racing events or while driving off-road (unless specifically covered by the policy) is typically excluded.
Specific Incidents & Natural Disasters
Always clarify policy coverage for specific incidents such as earthquakes, floods, or landslides—these may have specific limitations or require add-on coverage.
Case Studies: Real-World Examples
Analyzing real-world scenarios can provide a clearer understanding of how non-drivable coverage works in practice:
Case Study 1: The Impact of Towing Limits
Mark was involved in an accident 120km from his home. His insurance policy had a towing limit of 80km. While the policy covered the first 80km of towing, Mark had to pay the additional cost for the remaining 40km. By reading his policy carefully beforehand, he could have prepared for this possibility or considered a policy with a higher towing limit.
Case Study 2: The Benefit of Alternative Transportation
Lisa’s car was stolen and recovered, but it needed extensive repairs. Her comprehensive policy included rental car coverage for up to 14 days. This allowed her to continue getting to work and managing her daily activities without significant inconvenience while her car was being fixed.
Case Study 3: Understanding Storage Fee Limitations
David’s car was damaged in a flood and taken to a repair shop. Due to a backlog, the assessment took longer than expected, and his car remained in storage for two weeks. His policy covered storage fees up to $50 per day for a maximum of five days. David had to pay the storage fees for the remaining nine days, highlighting the importance of understanding the limitations of this coverage.
Tips for Choosing the Right Car Insurance Policy in New Zealand
Selecting the right car insurance policy requires careful consideration of your individual needs and circumstances. Here’s how to find a policy that suits you:
Assess Your Needs
Consider your driving habits, the value of your car, and your financial situation. If you drive frequently or own a high-value vehicle, comprehensive cover with generous non-drivable benefits may be a worthwhile investment. If you mainly drive short distances and own an older car, a Third-Party Fire & Theft policy might suffice.
Compare Quotes
Don’t settle for the first quote you receive. Obtain quotes from multiple insurance providers to compare premiums, coverage levels, and policy features. Online comparison tools like MoneyHub, Canstar, and Glimp can streamline this process.
Read Policy Documents Carefully
Before committing to a policy, thoroughly read the Product Disclosure Statement (PDS) and policy wording. Pay attention to coverage limits, exclusions, and any specific conditions that apply. If anything is unclear, don’t hesitate to contact the insurance provider for clarification.
Consider Optional Add-ons
Evaluate whether optional add-ons, such as roadside assistance or windscreen cover, are worth the extra cost. If you frequently travel long distances, roadside assistance could provide peace of mind. If you live in an area prone to hailstorms, windscreen cover might be a wise investment.
Review Your Policy Regularly
Your insurance needs may change over time. Review your policy annually to ensure it still adequately meets your requirements. If you’ve purchased a new car, moved to a different location, or changed your driving habits, you may need to adjust your coverage levels.
Bundle Your Insurance
Some insurance providers offer discounts if you bundle multiple policies, such as car, home, and contents insurance. Explore bundling options to potentially save money on your overall insurance costs.
Increase Your Excess
Choosing to pay a higher excess could significantly lower your insurance premiums. However, it’s crucial to balance affordability with your ability to pay the excess in the event of a claim.
Maintain a Clean Driving Record
Safe driving habits are not only crucial for your safety but can also reduce your insurance costs. Avoiding accidents and traffic violations will help you maintain a clean driving record and potentially qualify for lower premiums.
The Claims Process: What to Expect
Knowing what to expect during the claims process can make a stressful situation more manageable:
Report the Incident Promptly
Contact your insurance provider as soon as possible after an accident or any other covered event. Provide them with all the necessary details, including the date, time, and location of the incident, as well as a description of the damage.
Gather Evidence
Collect as much evidence as possible to support your claim. This may include photos or videos of the damage, police reports, witness statements, and any other relevant documentation.
Cooperate with the Insurer
Be cooperative and responsive to your insurance provider’s inquiries. Provide any additional information or documentation they request promptly. Honesty and transparency are essential throughout the claims process.
Understand Your Rights
Familiarize yourself with your rights as a policyholder. If you believe your claim has been unfairly denied or undervalued, you have the right to appeal the decision. You can also seek assistance from the Insurance & Financial Services Ombudsman (IFSO) Scheme, an independent dispute resolution service.
Keep Records
Maintain a record of all communication with your insurance provider, including dates, times, names of representatives, and summaries of conversations. This documentation can be helpful if any disputes arise.
Frequently Asked Questions
What does “non-drivable” actually mean?
A vehicle is considered “non-drivable” when it is unsafe or impossible to operate legally on public roads. This could be due to mechanical damage, structural issues, or any other condition that renders the vehicle unusable.
Does non-drivable coverage apply if I cause the accident?
Yes, in most cases, non-drivable coverage applies regardless of fault, provided the damage is covered under your Comprehensive policy.
What if I don’t have a Comprehensive policy?
If you have a Third Party or Third Party Fire & Theft policy, you likely won’t have non-drivable vehicle coverage. You may need to pay for towing and storage costs out of pocket.
Can I choose my own repair shop?
Some policies allow you to choose your repair shop, while others require you to use an approved repairer. Using a preferred repairer often streamlines the claims process and ensures quality repairs.
What if the other driver was at fault?
If the other driver was at fault and is insured, you can pursue a claim against their insurance policy to cover your damages, including towing and storage costs. However, this process can take time, so having your own non-drivable coverage ensures immediate assistance.
Will claiming for non-drivable coverage affect my insurance premium?
Making a claim, even for non-drivable coverage, can potentially impact your future insurance premiums. Insurers consider claims history when calculating premiums, so it’s possible your premium could increase upon renewal. However, the extent of the increase will depend on the severity of the claim and your overall driving record.
If my car is written off, does non-drivable coverage still apply?
Yes, non-drivable coverage will typically still apply to cover towing and storage costs until the write-off settlement is finalized. Once the insurer deems the vehicle a total loss, they will usually arrange for its removal.
Take Action Today
Don’t wait until you’re stranded with an undrivable vehicle to understand your insurance coverage. Review your existing policy today, compare quotes from other providers, and ensure you have adequate protection for unexpected events. The peace of mind knowing you’re covered is well worth the effort. Protect yourself, your vehicle, and your wallet – start exploring your options now!
References
MoneyHub. Car Insurance.
Canstar. Car Insurance Providers.
Glimp. Car Insurance.
