NZ Car Insurance Excess Explained: Costs, Waivers & Secrets (2026)

Introduction

An excess is the amount you pay towards an accepted motor-insurance claim. It is the portion of the risk you retain; the insurer covers the balance subject to your policy. In our editorial review, the key point is simple: the premium is only one part of the cost. Your policy schedule and wording determine which excesses, driver conditions and exceptions apply to a particular claim.

When comparing car insurance, consider whether you could comfortably pay the relevant excess if an accident happened tomorrow. This is general information, not personalised insurance advice.

How excess affects a claim

An excess is not necessarily an additional bill on top of every repair. It is your contribution to a covered claim. If repair costs are no more than the applicable excess, the insurer may pay nothing towards the repair. A higher excess can reduce the premium, but it also increases the amount you may need to fund after a loss.

Check whether an excess applies per event, which claims are exempt, and whether more than one excess can apply. Do not assume that a lower premium represents lower overall financial risk for you.

Common excess terms: what they can mean

ICNZ's guide uses several useful explanatory categories. They are not a fixed set that every policy must contain, and the schedule and policy wording remain the controlling documents.

• Standard excess: the ordinary excess stated for a claim.
• Voluntary excess: an amount you choose to accept, often in exchange for a lower premium. In the ICNZ guide's example, it is added to the standard excess; check whether that is how your own policy operates.
• Imposed excess: an additional excess an insurer may apply under particular terms or circumstances.
• Graduated excess: an excess that changes with the circumstances of a claim.

Policies can also have driver-related conditions. Do not assume that an open-driver policy automatically creates an unnamed-driver excess, or that every policy requires named drivers. Before lending the vehicle, check who may drive, any age restrictions, and the consequences of a breach or claim.

Not at fault: when might excess be waived or refunded?

Being not at fault does not automatically remove an excess. Consumer Protection NZ says an insurer may waive or refund it if you can prove you were not at fault and obtain the other driver's name, address and telephone number. Insurers can set further requirements in their policy wording.

At the scene, where safe and appropriate, collect the other driver's contact details, vehicle registration, photographs, witness details and a clear account of what happened. Notify your insurer promptly and ask it to confirm in writing whether it requires payment before repair or settlement, and what information it needs to assess a waiver or refund.

If the other driver cannot be identified, it may be harder to meet a policy's waiver criteria. Avoid assuming an excess will be returned; ask for the insurer's decision and reasons based on your policy and the available evidence.

Glass claims: read the benefit, not the label

Consumer Protection NZ notes that excess normally applies regardless of the type of car cover, except for some windscreen cover. Some policies may provide an excess-free glass benefit, but its scope is policy-specific. It may depend on the type of glass damage, repair versus replacement, approved repair arrangements, or other conditions.

Our team recommends checking the glass section of the wording before relying on it. Confirm the applicable excess, what glass is covered, and the process for arranging a repair or replacement.

Total loss and written-off vehicles

A total-loss claim is not a universal formula. The settlement basis, insured value, applicable excesses and any premium adjustment are determined by the policy wording and schedule. Ask the insurer for a written settlement explanation showing how it has applied the relevant terms.

Hypothetical only: if a policy provides for an excess on a total-loss claim, the settlement available to the policyholder may be reduced by that applicable amount. Whether a voluntary or any other excess also applies depends on the policy; it should not be assumed.

There can also be registration consequences. NZTA says an insurer must cancel registration when a vehicle is damaged, the insurer decides not to repair it, and the vehicle's safe tolerance has been compromised. NZTA may add a safety flag to the Motor Vehicle Register for fire, water or structural damage reported by an insurer.

If you disagree with an excess decision

Start with the insurer. Request the specific policy clause, the facts relied on, and written reasons for the excess decision. Keep the policy schedule, claim correspondence, photographs, witness details and any sales communications. The Fair Trading Act prohibits misleading or deceptive conduct in trade, but whether conduct breaches the Act depends on the circumstances; do not assume a complaint outcome.

Insurers providing services to New Zealand consumers are required to hold an FMA financial-institution licence and maintain fair conduct programmes. If you believe you have not been treated fairly, use the insurer's complaints process and, if necessary, its external dispute resolution scheme.

Practical Takeaway

1. Read the schedule as well as the full wording before buying or renewing.
2. Choose an excess you could realistically fund from your own savings.
3. Check whether voluntary, imposed or graduated excesses can apply in addition to the standard excess.
4. Confirm driver eligibility before another person uses your vehicle.
5. After a crash, gather the other driver's contact details and evidence where safe to do so.
6. For a disputed decision, ask for the insurer's written reasons and the relevant policy clause.

References

• Consumer Protection NZ: Car insurance
• Consumer Protection NZ: Insurance
• NZ Transport Agency Waka Kotahi: Insurance claims
• Financial Markets Authority: Insurance
• New Zealand Legislation: Fair Trading Act 1986
• Insurance Council of New Zealand: Insurance Basics
• Insurance Council of New Zealand: Guide to Excesses
• Insurance Council of New Zealand: How to Make an Insurance Claim

Author / Editorial Team

This article 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, regulator and industry sources. Insurance terms and eligibility can change, so we encourage readers to check the current policy schedule and wording and to seek appropriate professional advice for their circumstances.