One of the main reasons people delay getting insurance is the cost of insurance. If you’re struggling to make ends meet, then putting money aside just in case something happens in the future may feel like a luxury and a waste of time. But it’s important to consider that the cost of getting insurance could be much lower than the financial cost of remaining uninsured and replacing something valuable. For example, if a vehicle or an expensive electronic device is destroyed in an accident, replacing that item could leave you in an even worse financial position. A very possible example is a car accident: if you have a $10,000 car that is uninsured, and you don’t have any savings, you may have to go into debt to purchase another vehicle of lesser value – and end up paying steep interest on a loan for a long period of time. This could be more of a nightmare if the accident was your fault, and you are required to pay for the other person’s car repair or replacement. Whereas if you had been insured, you could have claimed most or all of it back. In this case, the cost of insurance is comparatively cheap. If you’re the main family breadwinner, a sudden illness or injury that is not covered by ACC, or that stops you from going to work for an extended period of time, can really throw you off your stride. If you have trauma insurance or income protection, however, your insurance pay out could bring you some breathing room to recover and prepare yourself to return to the workforce. The relative cost in this case is usually much cheaper. For example, a 30-year-old might pay $1,000 a year for $50,000 in trauma insurance cover. If you want to explore insurance options on a budget, use Market Scan on Quashed to easily check out your options or talk to an insurance adviser. Quashed can put you in touch with an independent and experience insurance adviser, free of charge and with no obligations. Simply sign up to our free platform and click on Get Advice! When you talk to your insurance adviser, let them know what your budget is, and they will be able to help you to work within your means as much as possible.
Contents insurance
In 2020, homeownership in New Zealand was put at only 65% - the lowest it had been since 1951. If you’re one of the hundreds of thousands of New Zealanders who rent, contents insurance should be on your list. Contents insurance will protect you if something happens to your property: it could be loss, damage by a flatmate, or burglary, as well as damage by rainwater or flooding. For many people, electronic equipment such as laptops and cell phones, or personal items such as a wedding or engagement ring, and even whiteware appliances, are among the most valuable assets they own. Most contents insurance policies will also protect you if you accidentally damage chattels or property belonging to your landlord. If you have a particular item that’s worth a lot of money, it’s a great idea to include it as a specified item in a contents insurance policy. You can shop around online – or use our Market Scan to compare your existing contents insurance policy to others out there. If your child is heading off to university, making sure they have a contents insurance policy in place or are able to be covered under your existing policy before they go flatting will mean less hassle and financial hardship for them if anything happens – for instance if their laptop is stolen, or their flat is burgled. Most insurers that offer Contents insurance such as AA, AMI, State and Tower offers different level of cover. For instance, if you’re looking to purchase the cheapest contents insurance with an insurer you can pick up their lowest tier cover which is the Limited Contents for AA, AMI’s Renters insurance, State’s Contents Essentials or Tower’s Standard. Mostly, this means a reduced limit on how much you can claim but in some cases some benefits are not included within the lowest tier of cover. For example, AA’s Limited Contents does not include cover for your electronics (e.g. mobile, laptops and tablets) but can be purchased as an add-on. On the other hand, Tower’s Standard Contents cover provides $500 worth of cover for your mobile phone compared to the next tier up which is the Premium Cover that offers $1000 insurance for your mobile. The easiest way to find this out is to use Quashed’s Contents Market Scan to compare not just prices, but also the benefits of these policies. Don’t forget that picking a higher excess amount will usually reduce your premiums. This could be between 5-20% of the yearly premium amount but be sure that you have enough in your rainy day fund to cover a higher excess. Another way to save is to pay yearly instead of fortnightly or monthly. This can make a difference of 10% in savings.You can calculate the amount of contents insurance you need via Quashed’s free calculator: just sign up, go to your dashboard and take a look at Explore Insurance > Contents Insurance.
House insurance and mortgage protection
If you have purchased a property, you probably already have house insurance (for most homeowners it’s a condition of their mortgage). If you’re thinking about buying, make sure you shop around and get the best deal. The same is true if you have an existing policy. Shopping around and comparing can save you money. Our Market Scan tool also allows you to compare your house insurance policy to other deals out there, without the hassle of going to each insurer and asking for prices and comparing their benefits. If losing your job and potentially being unable to pay your mortgage is something that is really worrying you, mortgage repayment insurance may provide you with some security: it is a flexible form of insurance that can be paid out over a period of months, or years. Even short-term mortgage protection will give you some breathing room to find alternative ways of meeting your obligations.
Vehicle insurance
Up to 90% of New Zealand drivers already have some form of vehicle insurance, making it one of the most popular forms of insurance nationwide. It's no wonder - in many places a vehicle is a must, to get to work, do daily tasks such as grocery shopping or dropping your children off at school. If your car is cheap and you feel that you could afford to replace it, third-party insurance (protecting you against damage to someone else’s car in the event that you cause an accident) may be the way to go. The cost of third-party insurance could be as little as 25% of the cost of comprehensive car insurance (e.g. $200 per year vs $800 per year). However, if you are struggling financially and know it will be difficult to purchase another reliable vehicle, then either third party, fire and theft insurance or comprehensive car insurance is something to look into. Comprehensive insurance is the most expensive option, but it will cover you and your vehicle, no matter what happens or who is at fault. We've discussed the difference between third party and comprehensive here. When you've selected the type of insurance you want, the amount you pay for vehicle insurance will depend on a number of factors including your make and model of car, where you live, your driving history, your excess level and your age. Even if your premiums end up being higher, remember you will often be eligible for a no-claims bonus if you don’t make a claim within a specified period of time. Most insurers allow you to pick an excess amount (though if you are under 25, you may be stuck with a higher excess). Once you select your excess, it’s a good idea to put this sum of money aside, in the event that you need to make a claim. The same rule applies: increasing your excess will reduce the amount you pay for your insurance.
Health insurance and trauma insurance
Healthcare in New Zealand is free, so for many people private health insurance isn't a priority: but it can give you access to faster treatment for elective surgeries, and access to drugs not funded by Pharmac. Depending on your policy, you can also use your health insurance to contribute towards the costs of doctors’ and dentists' visits. One of the best ways to get cheap health insurance is to look at what your employer is offering – frequently workplaces will offer a group deal, for instance via Southern Cross. If you're interested in health insurance for you and your family, talk to an adviser today to find out what your options are. If you are thinking of starting a family, you might also be interested in reading about the obstetrics benefits that come with this sort of insurance. Trauma (critical illness) insurance is there to protect you against a number of serious, and sadly common, conditions, including cancer, stroke and Parkinson’s disease. While your treatment for these conditions is free under our health system, trauma insurance can help you cope with related costs: you can use the money to help you access specialised help if you need it and contribute towards your rehabilitation. If you're interested in this form of insurance, or a related type of insurance, total permanent disability, take a look at our guides.
Life insurance
Most people consider life insurance when they get married and have a family. At a minimum, it should be enough to pay your mortgage and other debts, pay for your funeral, and make some provision for your children while they're still at school. During the course of your life, the amount of life insurance you need may change - while there are people who are dependent on you, it makes sense to insure yourself for more money. You can use Quashed's calculator to work out how much insurance you need to take out. Life insurance providers often give you a choice of paying via a level premium structure (which remains the same for the course of the policy), or a stepped premium structure (which starts low and gradually increases). If you don't have much money spare and think you will only need a high amount of life insurance for a period of a few years, then a stepped premium structure may suit you. However, if you think your life insurance needs will remain the same for the next 20 years, a level premium structure may be the cheaper option in the long run. Talk to an insurance adviser with expertise in this area about which type of policy to go with.
ACC, ACC CoverPlus and income protection
Most New Zealanders tend to focus more on insuring their property than they do on insuring their ability to work - not realising that sometimes your ability to earn is the most important asset you have. If you’re self-employed and your livelihood depends on your health (for instance you work in a physical job and you don’t have any employees) income protection may be a great measure to take to protect your family while you recover from injury or illness. When you have income protection, you're able to receive up to 75% of your income for set period of time (which can range from months til until retirement age). Work-related injuries are usually covered by ACC, but the great thing about taking out income protection is it will help you in situations ACC doesn't cover: for instance if you develop depression or burnout, or an illness such as cancer, or even a gradual onset condition due to sports or other hobbies. Generally speaking, even if you have an income protection policy, you can't receive both an insurance or an ACC payout: you will end up receiving one, or the other. If you’re self-employed you should also be aware of ACC CoverPlus and CoverPlus Extra. CoverPlus works out the amount you can be compensated for based on the past year, but CoverPlus Extra functions more like an insurance policy, allowing you to pick the amount you want to be insured for (the drawback is you need to pay a higher premium). Like all other forms of ACC cover, you need to have experienced an “injury” for the purposes of the scheme before you can receive any income support/rehabilitation costs. An insurance adviser can help with recommending if increasing your cover with ACC or purchasing a different policy altogether could work better for you.
Pet insurance
For most people, a furry friend is a much-loved member of the household. The SPCA and animal welfare groups advise people not to purchase pets unless they are able to pay for their veterinary care - but unfortunately until things go wrong, you might not realise how expensive veterinary bills actually are. Understandably, people grow deeply attached to their animals and do not want to give them up just because money is getting a little bit tight – and luckily pet insurance is a way of coping with unexpected costs. Surgical procedures for your cat or dog can range from several hundred to thousands of dollars. Depending on your plan, your insurer may agree to split all bills with you (for instance 50:50 or 25:75), or charge you an excess, and then cover the rest. Similar to your car, home or contents insurance, picking a higher co-payment option or excess will usually reduce how much you pay for your pet insurance. Unfortunately, some common exclusions apply:
You often can’t insure a pet if they are over a certain age
You may not be able to insure an animal that has congenital defects or a pre-existing health condition
You probably will not be able to insure your pet if you have declined to follow the routine course of vaccinations (e.g. the calicivirus vaccine for pet rabbits)
According to Southern Cross, last year the most expensive claims for dogs topped $18,000, while the most expensive claims for cats were more than $11,000. It's common for pet insurance to have co-payment plans - so make sure you read the fine print and understand exactly what's covered before you sign up.
Next steps
If you’re interested in getting insurance, you can speak to an adviser, free of charge, through Quashed today. If you want to learn more about different types of insurance, you can also sign up to our free platform and take a look at the Explore Insurance feature. When you're looking for insurance on a budget, shopping around is key. Market Scan can help you save money, time and the hassle of shopping around across multiple insurance companies. You can either compare your existing policies to see if we can find you something better or you can scan the market for a new policy and find the most affordable cover that works for you. On top of that, you can manage all your policies and find out how much you’re really spending on your insurance in one place.
