How much does car insurance cost?

How much does car insurance cost?

There’s no one answer to the question of how much car insurance costs. The amount you pay for your car insurance will come down to factors like how much your car is worth, what type of insurance you want, and your driving history. 

Understanding the things that make vehicle insurance cost more or less could help you keep your costs down. Read on to find out more about how car insurance premiums are worked out, and how much your car could cost to insure.

How are car insurance premiums calculated? 

When you’ve decided you want to get car insurance for the first time, you can generally choose to either have your car insured by its “market value” – what it would cost to replace it – or “agreed value” where you and your insurer agree on a sum insured to be covered for. Your insurer will then consider the driver age, the make of your car, your location, and your claims history, and use these to calculate how much you will pay for car insurance.

All the figures on this page are rough guides that make assumptions about drivers, but they might not apply to your situation. The best way to find out how much you’ll pay in car insurance is to get in touch with MAS for a quote – our advisors can help you choose the right car insurance for your situation. 

More expensive cars normally mean higher premiums 

Whether you opt for market value or agreed value cover, it makes sense that someone with a new Audi will pay more in car insurance than someone who drives a 20-year-old Honda Civic, as repairing or replacing more expensive cars is more expensive for an insurer.

Younger drivers cost more to insure

Most car insurers in Aotearoa New Zealand will charge more to insure younger drivers, because they’re statistically more likely to be involved in car accidents. Every insurer has their own policy on driver age, but at MAS our motor vehicle insurance has additional costs for drivers aged 25 and under, which are removed for all drivers aged 26 or older.

Let’s say you’re a 25-year-old living in central Auckland, driving a car with a replacement value of $10,000. With MAS, you could expect to pay around $1,200 a year for your car insurance, which includes your no-claims bonus. Once you turn 26, that premium could drop by around 10%, going down to about $1,100 a year.

You may be able to save on your car insurance costs by not allowing anyone under 26 to be a “named driver” on your policy.

Where you live affects your car insurance costs

The type of area you live in will also impact how much you pay in car insurance. In general, it costs less to insure a vehicle driven in a rural environment or small town than in a major city, as more cars on the road generally means more accidents.

It also typically costs more to have a vehicle repaired in Auckland than it would in Ashburton, which means drivers living in big cities will normally pay more for car insurance.

A 25-year-old Auckland resident driving a car worth $10,000 might pay around $1,100 a year for car insurance, including their no claims bonus. The same driver living in Ashburton might pay around $820.

A history of accidents might make your car insurance cost more

Insurers will look at your claims history when you apply for car insurance. If you make a claim on your car insurance for an accident or damage that you caused, this will probably make your car insurance cost more as you lose your “no-claims bonus.”

Going back to our hypothetical 25-year-old Auckland driver with a car worth $10,000, they could be paying around $1,200 a year with a no-claims bonus. If they make a claim where they’re at fault, their premium could go up to around $2,000 a year.

How to lower your car insurance premiums 

There are a few ways you can lower your car insurance costs. One way is to choose a voluntary excess, which means increasing the amount of money you pay towards repairs or replacement. You can also reduce your premium if you have no under-25-year-old drivers using your car, or even consider naming all potential drivers on your policy. 

Looking to get car insurance? Get a quick estimate now.