Insurance

Insurance is simply a must have for virtually everyone. By going without, or even just choosing the wrong insurance, you’re exposing yourself to massive risk! A significant number of New Zealanders are either not insured or are underinsured.

The insurance industry as a whole gets a bad rap, some of it is deserved. However a lot is simply down to assumptions and not understanding the product being purchased. We’re going to explain more about this, so you can avoid the pain of a denied claim!

We have a breakdown of specific types of insurance in our guides directly below. But keep reading on for some tips advice about insurance in general.

Cover & Premium Costs:

There are significant differences in the cover you can purchase, and the cost of premiums. It’s not uncommon for two policies with different companies to be exactly the same, but one costs twice as much as the other!

Therefore, it is important to compare, look around and understand the product – Not just the occasionally pushy sales pitch.

We recommend you do this process every year when your insurance policies lapse.

Correct Information:

It is absolutely vital to ensure you are providing correct information. If any part of the information you provide is false, it can invalidate the entire policy when you go to claim.

Even if the omission had nothing to do with the claim, the claim can still be rejected. Therefore, never think you can save a little money by stretching the truth. You might as well not even have insurance.

Understand the Policy Document:

This is the most tedious and time-consuming part for most, but very few people know what they are and aren’t covered for. We have outlined typical inclusions and exclusions in each section of the insurance, but you should make sure to understand them yourself too.

You may be surprised to see just what isn’t actually covered by your insurance policy!

Excess:

An excess is the amount you need to pay for each claim (normally deducted automatically from any claim pay-out amount). The higher the excess is, the lower your premiums.

In general, we recommend a higher excess, to get a lower premium. However, this varies by type of insurance, so ensure you read through each section.

You should also ensure you have the excess amount in your savings, to make sure you won’t suffer any shortfall if you need to claim.

Instalment Frequency:

The installment frequency can also have an impact on the premium cost. If possible, you should always try to pay annually, and put a little aside each pay cheque to cover the next annual instalment (more about this in budgeting here).

In addition, if you do not pay for your premium up front (i.e. you pay monthly or fortnightly) then if you make a claim you will also lose the rest of the remaining cost of the policy.

For example, you’re paying $50 a month for car insurance, and are 2 months into your policy. If you make a claim for your vehicle being stolen, you will have the excess, and the remaining $500 of premium payments deducted from your pay out.