Insurance

Checking policies, what to tell your insurer, and what to do if things go wrong.

What is insurance?

An insurance policy is a contract between you and an insurance company. It protects you against financial loss due to specific events, such as property damage, redundancy, illness.

It's designed to put you back in the financial position you were in before your loss. This is called indemnity.

For free independent insurance claim support for insured homeowners affected by a natural disaster, visit the New Zealand Claims Resolution Service.

New Zealand Claims Resolution Service(external link)

Insurance types

There are many types of insurance cover, but the main types are:

house
contents
motor vehicle
life
health
travel
business.

Decide what kind of policy is relevant to your situation.

Different insurance companies call their products different things. They may have varying levels of protection and cover different events, so it pays to shop around.

For legal advice on your rights with credit and debt after a disaster, visit the Community Law Centre website.

Disaster relief(external link) — Community Law

Insurance brokers

Using a broker may be helpful to:

help identify risks
compare policies and prices.

This may be useful if you're in business or need expert advice. You can also arrange insurance directly with insurer.

Avoid problems when you make a claim in the future by understanding what your policy covers.

What you need to tell insurers — disclosure

You need to be honest, and give complete, up-to-date, and relevant information when:

you apply for insurance
you renew your policy
you make a claim
your circumstances change.

Make sure you:

answer all the questions on the insurance application, even if you don’t think they are relevant
contact your insurer if you forgot to include something on the application
read through your application carefully before signing it if someone else fills it in
tell the insurer about any events, such as convictions, speeding tickets, accidents, losses that have happened since you the last renewal, each time you renew your policy
ask your doctor for a copy of your medical notes if you can’t remember your full medical history.

Before you make a claim, check the information you have already provided. If it is incorrect or you left out information, the insurer may refuse your claim, or even cancel your insurance from the starting date of the policy. They can only do this if the information is important (material) and would have affected their decision to insure or the level of premium charged.

Common problems

Claim denied or not given full amount

Your insurer may decline a claim, or pay less than you expected if:

the loss or damage isn't covered in your policy
it wasn't sudden or accidental
you can't provide proof of your loss or damage
you haven't paid your premiums
you didn't tell your insurer something they need

Think creatively about proof. If you don't have a receipt, you may have other evidence, eg photos, bank statements, documents relating to repairs, emails about a Trade Me transaction.

If you aren't happy with the outcome of a claim, complain to your insurer. Another assessor must look at your claim to see if there was a good reason not to accept it, or pay more.

You aren't happy with the standard of repairs

If your insurance company organises a repair, and you aren't happy with the work, ask your insurer to sort it out. It is their responsibility. They must coordinate with the tradesperson, or repairer, to make sure the work is to a professional standard.

Don't ask someone else to put the work right, before you've talked to your insurer. They may not cover your costs.

Not telling your insurer something relevant – called disclosure

You must tell your insurer about anything which affects your insurance — when you first take out your policy, each time it renews, and if something changes in-between.

Examples of something which might affect your insurance could include:

you work from home
you're putting items in storage
you're doing renovations
the main driver of your car changes
you have a medical condition
you, or someone you live with, have a criminal record
you're charged for drink driving or speeding.

If you don't tell your insurer about something, and it is relevant to your claim, they may refuse to pay. For example, if you cause a house fire while welding, and hadn't told your insurer you were running a welding-business from your garage, then your insurer might decline the claim.

Ask your insurer for your latest policy document to find out what it covers.

Replacement value versus what it's worth

Insurance is designed to put you back to where you were, before what you are claiming for happened.

This can mean you get less in an insurance claim than you paid originally, or what it would cost to replace.

Check if your car, house or contents policy covers you for:

Market value: what you might get for the item if you sold it today. In the case of cars, this is generally less. For a painting or antique, it might be more.

Replacement value: how much it would cost you to buy at the time of your claim.

Agreed value/sum insured: the maximum amount you and your insurer agreed you would get for loss or damage.

Indemnity value: the value of the item at the time of the loss. This is designed to put you in the same financial position you were in immediately before the loss.

Not realising you must pay some of the cost — the excess

When you make an insurance claim, it is normal for you to pay some of the cost to put things right. This is called an excess. When you take out your insurance policy, you agree on the excess.

Generally, the higher the excess, the lower the premium you have to pay. If the cost of putting something right is less than your excess, it may not be worth making a claim.

For example, if you have a $200 excess, and the cost of repairing your dented car is $200, your insurer will not pay anything to help fix the damage. If fixing the dent costs $700, your insurer might pay $500 towards the repairs.

Check your policy to find out your excess. Make sure you're looking at an up-to-date version. Ask your insurer to send you a copy if you can't find it.

Paying more than one excess

Some policies say one event means one excess. Others say you must pay a different excess for each policy. Check your policy documents to see what it says. If you aren't sure, ask your insurer.

For example:

If somebody breaks your car window and steals your bag, you may be covered by two different policies — and so have two excess payments.

Policy	Items covered
Contents insurance	Handbag, phone, glasses
Car insurance	Car keys, broken window

Different events usually mean more than one excess — no matter how seemingly connected.

For example, your belongings are damaged in a flood and you drop your phone, inspecting the damage.

Policy	Event
Contents insurance	House floods
Contents insurance	Drop phone

Costs aren't covered due to gradual damage

Insurance covers you for sudden, unexpected events. If something breaks because it's old, you're unlikely to get anything to replace it. If it is damaged unexpectedly, or by breaking it damages something else, you may have a claim.

For example:

Your old car breaks down = unlikely claim.

Your old car is in an accident = may have a claim.

Your old car's faulty handbrake causes it to roll into your garage door = may have a claim.

Cash versus repairs

Example — Sudden event versus wear and tear

A pipe on Stacy's washing machine bursts, drenching the nearby lino and walls. When his insurer assesses the damage, they find the rubber seals on the pipe have worn down. The washing machine is old, and the seals have perished over several years. Because wear and tear broke the machine, Stacy's insurer will not pay to replace it. But they will contribute to fixing Stacy's lino and walls.

If things go wrong

Complain to your insurer: Many people can sort out their problem directly. Your insurance company will have a complaints process, for example, if you're unhappy with the outcome of a claim, a different assessor will look at your case.
Go to your insurer's disputes resolution scheme: If you and your insurer can't agree, take your complaint to their dispute resolution service. Ask your insurer for the contact details — it's free and all insurers must belong to one. You can contact the dispute scheme for advice while you're still going through your insurance company's complaints process.
Go to the New Zealand Claims Resolution Service (NZCRS): After talking to your insurer, you can contact NZCRS if you have concerns about your claim. NZCRS provides independent support including advice, case management support and access to legal and technical services. This will help you to achieve a timely and fair resolution of your residential insurance claim.

New Zealand Claims Resolution Service(external link)

1. Complain to your insurer

Before you do, read our information on:

your rights
common complaints
how to complain.

Your rights

Insurance covers sudden and accidental events. It is designed to leave you no better or worse than before the event happened.

What insurers must do

Insurers must comply with standard consumer law, such as the Consumer Guarantees Act and Fair Trading Act.

Consumer Guarantees Act

Fair Trading Act

Most insurers also belong to a professional association, who have their own set of rules — called a code of conduct.

Codes of conduct are based on:

standard consumer law
other expectations of what it means to be a responsible insurer.

They include agreeing to:

provide a professional service
give accurate information
not pressure you
explain terms and conditions, and exclusions — if you need them to
tell you if anything changes
settle claims fairly and in a reasonable amount of time
protect your privacy
have a fair complaints process
act on feedback and complaints.

General insurance industry code(external link) — Insurance Council of New Zealand

What you must do

Customers must:

pay premiums on time
tell the truth
give insurers the information they ask for — called disclosure
report stolen items
take reasonable care, for example, lock car doors, not put valuable jewellery in checked-in luggage.

Disclosure

When you take out a policy, insurers ask you a set of questions, such as about medical conditions, criminal record, if you've ever had a claim refused. You are expected to answer these accurately, and to update your answers when:

your policy renews
if anything changes.

You are also expected to give an honest account of what happened when you make a claim.

Telling even a white lie could mean you claim is denied and make it harder to get insurance in the future.

Example: More evidence = accepted claim

Nessa's vinyl collection is stolen in a burglary. The records were collected over the last 15-20 years. She doesn't have receipts for most of them. She estimates their value in her contents insurance claim. Her insurer says they need evidence the collection was as big, and as valuable, as Nessa says. She provides photos of the collection, including pictures of her holding the rarest — and valuable — discs. Based on these photos, the insurer is accepting her claim.

Before you complain

Talk to your insurer's free disputes resolution scheme: They can offer guidance on settling your complaint
Check your policy: Look at what it covers. Make sure you're looking at the most recent renewal document. You can ask your insurer for it if it's hard to find.
Decide your ideal outcome: What would it take to make it right, such as an apology, your claim being accepted.
Gather evidence: Have on hand anything helpful to making your case, such as emails or letters between you and the insurer, receipts, photos, repair logs, valuation

Tips when complaining

Be clear it's a complaint: To make sure your issue is dealt with following your insurer's internal complaints process.
Stick to the facts: Explain the problem in detail and provide any evidence you have.
Tell them what you want: Be clear what you expect to fix your concern.
Take time out, if needed: If the conversation is getting heated or you need time to consider their response, call or email back another time.
Take notes: Write down the date you formally complained. Insurers must acknowledge your complaint in 5 business days and respond to it in 10 business days. For your own records, it may be best to put your complaint in writing, especially if it is complicated.

2. Disputes resolution schemes

All insurers must belong to a disputes scheme. Contact them:

for guidance before talking to your insurer
if you and your insurer are finding it hard to agree.

Their services are free.

Disputes resolution schemes are neutral — meaning they look at facts from both sides. They might help you and your insurer settle your complaint by talking it through, for example, with mediation. If this isn't possible, they will make a recommendation — sometimes calling on another expert, such as a loss adjustor, for extra advice.

Your insurer must act on whatever the scheme recommends. But you don't have to accept their recommendation if you don't agree. Speaking to a lawyer would be your next step if this were the case.

There are two disputes resolution schemes who look at insurance-related complaints:

Ask your insurer which one they belong to. Or find a list of members on each site.

Commerce Commission

Report your insurer to the Commerce Commission if you think:

you have been misled
they have said something untrue, such as telling you the policy covered something it doesn't
they have pressured you into taking out a policy you did not want.

The Commerce Commission enforces certain consumer laws, including the Fair Trading Act.
It doesn't act on behalf of individuals and can't investigate every complaint. But their investigations do help make sure businesses are complying with the law. Your information helps them assess which consumer issues are causing greatest harm.

Going to the Commerce Commission may stop the same thing from happening to someone else.

Make a complaint(external link) — Commerce Commission