Car insurance in New Zealand operates on a private, voluntary market system where vehicle owners contract with commercial insurance companies to mitigate financial risks. When you purchase a policy, you select a nominated "sum insured" (the maximum payout value of your car) and a policy excess (the upfront amount you pay during a claim). If a covered incident occurs, you lodge a claim, pay your excess, and the insurer funds the repairs or replaces the vehicle up to your policy limits.
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