On 1 June 2025, a new version of the Knock-for-Knock agreement, which applies to motor vehicle crashes, between insured vehicles, came into effect.
What is Knock-for-Knock?
Knock-for-Knock is the arrangement that insurers have between each other when it comes to motor claims.
It essentially means that, rather than pursue money from another party’s insurer, each insurer just pays for its own policyholder’s repair cost.
Insurers realised decades ago, after analysing all their motor claims, that the costs between them essentially come out in the wash. To reduce administrative costs and delays therefore they simply don’t pursue each other for costs, in most cases.
What is changing?
- Up until 1 June the Knock-for-Knock agreement only applied if the excess was under $10,000. After 1 June, the excess threshold has been removed.
- Pre 1 June, the insurer would only waive an excess of up to $2,000 (representing the lesser of the customer’s excess or the amount of the damage to their vehicle). Post 1 June, the insurer of the innocent party will reimburse/waive the excess (or up to the amount of the damage if less than the excess) paid or payable by their customer in respect of the damage to their vehicle. The insurer will also not seek recovery of the excess from the insurer of the at fault party.
What is staying the same?
Further to the current agreement –
- Knock-4-Knock only applies when all vehicles are fully insured by the participating insurers.
- Vehicles who have third-party insurance are therefore not covered, meaning insurers will pursue costs from each other.
- Similarly, an ‘at-fault’ party who is not insured with one of the participating insurers in the Knock-for-Knock agreement will be pursued for costs.
- Hire vehicle costs or loss of use costs are not covered by the agreement so must be pursued separately.
- Not-at-fault customers can still pursue recovery for losses not covered by their policy.
- The agreement will continue to prevent liability disputes between insurers, which ultimately helps to keep insurance premiums down for consumers.
Ultimately, if you are fully insured with an insurer that participates in Knock-for Knock there will be no visible difference if you need to make a claim.
For those customers where their excess is higher than $2,000 pre 1 June, this new regime will have an impact on their claims/loss history.
Questions?
If you have any questions about this please contact your broker.
insurance@icib.co.nz
0800 644 444
