Third party car insurance is cheaper than comprehensive insurance but it means in an accident you are only covered for the damage you cause to another person's car, not your own. Photo: 123RF
It appears more people are looking at downgrading their car insurance to third party cover as policy costs continue to rise.
Figures from insurance price comparison website Quashed shows the price of car insurance premiums are up 7 percent compared to last year and up 40 percent over two years.
It is most expensive in Auckland, according to Quashed.
Data gathered from up to 50,000 users shows queries about third party insurance are up almost 50 percent.
Generally, third party insurance covers someone for damage to other people vehicles and property, but not your own, and is cheaper than a full insurance policy.
Insurance Council of NZ chief executive Kris Faafoi said last year's Stats NZ figures showed the cost of car insurance had risen by 20 percent on the previous year.
"The cost of repairing vehicles has inflation too and we're certainly seeing that and people who are driving home now are driving cars that have got a lot more kit and it is a lot more expensive to fix."
Increases in the cost of labour and the fact that modern cars contain a lot more electronic gadgetry have also contributed to increased insurance costs, he said.
"When things like sensors or cameras get taken out that can be more expensive [to fix]."
Global reinsurance costs have also increased, he said.
The Insurance Council's message to motorists was to make sure they shop around for car cover, he said.
"But I think it's obvious that people are having a look at what other cheaper options are available but we just make sure that there's a buyer beware message about whether or not people have got the appropriate cover."
How much insurance costs could also depend on what type of car you drive, your age and your driving history, he said.
Premiums may also be higher in areas where car theft is prevalent, he said.
The cost of insurance depends on an individual's circumstances, he said.
"I'm sure when people would realise when they ring their insurance company to let them know there are lots of questions like 'where are you parking it, have you got a garage', all those impact what the premium for an individual customer might be at the end of the day."
Faafoi said there were no figures to indicate how many people were completely dropping car insurance but traditionally most New Zealanders had comprehensive car insurance cover.
"But we have seen in some other lines of insurance as times have got tougher that some people are asking the question of whether I need this or whether the likes of excess is something they can look at to reduce costs."
Insurers were aware that things were tight and some were looking to ensure that suppliers of parts and services could give a good price to keep premiums down, he said.
It was worth talking to the insurer when the annual insurance premiums were due to ensure the vehicle was being insured for the correct amount, he said.
"If people are finding that the premiums are a challenge either to have a discussion with their insurer about what their options are or again to ring around other insurers to see what other options are available."
Quashed advised that people looking to save on car insurance should look at the sum their vehicle was insured for, their excess (the amount you pay when you make a claim) and the type of insurance cover for example whether it was comprehensive, third-party, third-party fire and theft.
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