The 'Knock-for-Knock' Agreement: Why NZ Insurers Won't Chase the Other Driver (2026 Guide)

Introduction

In New Zealand motor insurance, “Knock-for-Knock” is an arrangement used by participating insurers for crashes involving insured vehicles. Broadly, each insurer deals with its own policyholder’s vehicle damage rather than seeking recovery from the other insurer. It can make the insurer-to-insurer side of a claim more straightforward, but it does not decide legal fault, guarantee repairs, or replace the terms of your policy.

As at 17 August 2026, the revised agreement that has been in force since 1 June remains the latest verified change. It removed the former threshold arrangement. However, drivers should not treat that change as an automatic right to a waived excess: the policy wording, available evidence and claim circumstances still matter.

In our editorial review, the practical message is simple: make a claim through your own insurer where your cover allows, provide clear information about the other driver, and check how your policy handles excess, valuation and total loss. If you are comparing cover, our car insurance guide can help you identify the policy terms worth checking.

What Knock-for-Knock does — and does not do

Knock-for-Knock is an insurer-to-insurer arrangement, not a consumer policy benefit that overrides your contract. For a qualifying crash between insured vehicles, it generally means each participating insurer pays the repair cost for its own policyholder instead of pursuing the other insurer.

It is important to separate this arrangement from the questions that affect your individual claim:

• Fault: your insurer may still need to assess the evidence and decide whether you were at fault, partly at fault or not at fault.
• Excess: whether an excess is payable or refundable depends on the policy and facts of the claim.
• Cover: your insurer can only pay for loss that is covered under your policy.
• Settlement amount: the valuation basis and limits in your policy remain important, especially after a total loss.

The agreement should be described as applying to signatory or participating insurers. ICNZ membership alone is not proof that every insurer, product or claim participates.

The current position on the former threshold

The revised agreement removed the previous threshold arrangement. This is a meaningful operational change between participating insurers, but it should not be overstated. It does not mean that every not-at-fault customer will have an excess waived regardless of the evidence, identification details or policy wording.

Consumer Protection says an insurer may waive or refund an excess where its customer can prove they were not at fault and has obtained the other driver’s identifying information. An insurer’s own conditions may be more specific. AMI, for example, says its no-excess treatment for a not-at-fault collision requires confirmation that its driver was completely free of blame, the other vehicle’s registration, the other driver’s name and address, and acknowledgement of involvement.

Information to collect at the scene

Where it is safe to do so, record the other vehicle’s registration, the driver’s name and contact details, the location, time, damage and photographs. Preserve dashcam footage and details of any witnesses. These records can assist an insurer’s assessment; they do not by themselves guarantee a particular outcome.

How your cover and excess affect the outcome

Comprehensive and third-party cover

For a comprehensive policyholder, claiming through their own insurer may provide a route to having insured damage assessed and repaired under that policy, subject to its conditions. If you have third-party cover only, it generally does not insure damage to your own vehicle. That is not the end of the analysis: Consumer Protection notes that an at-fault driver’s insurance should cover repairs where that driver admits fault, and some policies may include limited innocent-party benefits. Read the particular wording rather than assuming every third-party product works alike.

Why valuation still matters after a not-at-fault crash

Knock-for-Knock does not create a separate payout ceiling. Your settlement basis comes from your policy. Consumer Protection distinguishes:

• Market value: what the vehicle was worth immediately before it was damaged.
• Agreed value: the value agreed with the insurer when the policy starts and at renewal.

Review an agreed value at renewal and make sure it remains suitable for your vehicle. A market-value policy also has its own valuation approach, so ask the insurer how it will assess a total loss.

Total loss: check the wording before assuming a refund

Premium treatment after a total loss is not an industry-wide rule. State’s current policy wording is one example: after settlement of a total loss, it says cover is cancelled from the date of loss, premium is not refunded or credited, and instalments owing for the period of insurance may be deducted before settlement. Other policies can differ. Check your own wording before relying on a refund or assuming instalments will be treated in a particular way.

If you disagree with a claim or fault decision

Ask the insurer to explain its decision and make a formal complaint if you believe the evidence has been misunderstood. Keep the discussion focused on the facts: photographs, diagrams, witness information, dashcam footage, correspondence and any other relevant records.

1. Request the reasons: ask what evidence and policy terms were used to reach the decision.
2. Provide a clear written response: set out what you dispute and attach supporting material.
3. Use the insurer’s internal complaints process: every New Zealand financial service provider must have one.
4. Escalate to the provider’s approved dispute-resolution scheme if unresolved: depending on the provider, this may be IFSO, FSCL, FDRS or the Banking Ombudsman Scheme.

Do not assume IFSO is the correct scheme for every insurer. Check your policy, the provider’s complaints information or the Financial Service Providers Register. In suitable circumstances, property-damage claims arising from vehicle accidents may also be taken to the Disputes Tribunal. The appropriate route depends on the facts, any insurer recovery rights and your policy wording. Do not compromise a possible recovery or begin proceedings without first checking those matters.

What to Do Next

• Check whether you have comprehensive or third-party cover, and read the excess clause.
• Keep the other driver’s registration and identifying details, together with photos and witness information.
• Ask whether your insurer is treating the claim under the Knock-for-Knock arrangement and what this means for your excess.
• Review your agreed value or market-value basis before renewal.
• For a total loss, ask specifically about settlement valuation, cancellation and outstanding premium treatment.
• If you dispute a decision, use the insurer’s complaints process and then its nominated external scheme if needed.

This article provides general information, not personal insurance or legal advice. Policy wording, eligibility and the facts of an accident can change the outcome.

References

• Insurance Claims Information Bureau — Updates to the Knock-for-Knock Agreement
• Insurance Council of New Zealand — Annual Review
• Consumer Protection — Car insurance
• AMI — Excess in a not-at-fault motor accident
• State Insurance — Car insurance policy wording
• New Zealand Government — Complain about your financial services provider
• Consumer Protection — Making a claim through the Disputes Tribunal

Author / Editorial Team

This content was produced by Insurspy’s internal editorial and research team. In our editorial review, we compare publicly available policy information and prioritise authoritative New Zealand government, industry and insurer sources. We review articles for accuracy, clarity and practical usefulness, but readers should always check current policy wording and obtain professional advice where their circumstances require it.