"She'll be right. I'll just drop my mates home so that they don't have to walk. After all, I'm the sober driver."

Good? No.

You were driving after 10pm on a restricted licence with passengers and no supervisor, which means you breached your licence and invalidated the insurance policy on your mum's car.

Kiwi drivers can and do score own goals on their insurance cover too frequently.

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It's not just young drivers.

Any breach of your licence conditions is enough for your claim to be declined. That could be carrying passengers on your restricted licence, driving with excess breath alcohol, or even in some circumstances driving without wearing your glasses.

The accident may not be your fault, but don't expect your insurer to cough up. You've broken the contract between you and the company by breaching your licence conditions.
Agreed value versus market value also creates a lot of confusion when it comes to claim time.

With agreed-value policies you and the insurer agree in advance the value for your car. That will be the sum of money paid out if the car is written off. Often people don't realise this figure is adjusted at each renewal.

Market-value policies are more common and cheaper. Although you insure your car for a value, if it's written off the insurance company pays you the current market value. That's the price the car would fetch if sold through a Licensed Motor Vehicle Dealer, says IAG's Brendan McGillicuddy .

By and large this is a fair solution. Some people, however, prefer to know in advance what they will receive.

Accidental dishonesty and lapses of memory cost Kiwis. Legally, points out Insurance and Financial Services Ombudsman Karen Stevens, you have to tell your insurer anything that could affect its decision to insure you.

This basic insurance concept is called the doctrine of "utmost good faith" and applies when you first take out the policy and on each anniversary when the policy is renewed.

Examples include: receiving a motoring conviction part way through the year, changing jobs and using the car for business purposes, or using your car part-time as an Uber driver.

If you fail to declare any of these at renewal the insurance company is within its rights to tear up your policy and say "tough luck". Insurance companies base premiums on risk and if they don't know the risk has changed they will not be charging you the correct premium.

Another gotcha for car lovers is that all modifications need to be declared.

Modified vehicles are statistically more likely to be involved in accidents, in part because they tend to be favoured by boy racers.

According to the Ombudsman, modifications include work that enhances the vehicle's performance, such as modified air intakes and lowered suspension, and those that make the car more attractive to thieves, such as the addition of mag wheels, spoilers, a full body kit, tinted windows or a special paint finish.

The best course of action is to call your insurer to let them know what has been done when you made changes to the vehicle, says McGillicuddy. "If the change is material to the terms and conditions then you're allowing the insurer to consider their position with regards to what you've done," he says.

If not, you avoid the chance of an argument come claim time.

Driving a car that isn't fit to be on the road is also no-no. To drive a vehicle legally it must have registration and a current warrant of fitness. If not, you could be kissing goodbye to any chance of claiming. In theory even if you have a Wof but the car is unsafe, an insurer could decline a claim.

Price definitely isn't everything when it comes to motor vehicle insurance. Often the cheap policies just mean less cover. Some policies, for example, provide excess-free glass claims. Others don't.

Even third-party insurance differs between insurers. For example, says John Lucas, insurance manager at the Insurance Council of New Zealand, if you have third-party cover only, some insurers offer $1000-$5000 innocent-party cover if you're hit by a third party who is at fault and can be identified.

In a quick Google search I noticed that AA, AMI, and Tower, among others, offer this.
Also, be aware that if you have just spent a fortune on new tyres, locks, or other items and you write off the car, you won't get any extra money back, says Amelia Macandrew, customer relations manager for AA Insurance.

It is a condition of your policy to properly maintain, repair and keep your car in good order at all times, which means spending money on tyres and a service when it's needed.

This type of maintenance doesn't generally increase the value of your car or the amount it's insured for.