Insurance can be divided into three broad categories: health, life (including related forms of cover), and general. Unlike health or life insurance, general insurance is all about your property. A serious car accident in which your vehicle is written off, the theft of a valuable possession, or a natural event such as a flood affecting your home can really shake your confidence and sense of security. But if you have insurance, at least you have some peace of mind knowing you can face the practical aspects of your situation without being overwhelmed.
We’ve put together a summary of the different types of general insurance available in New Zealand. Remember, if you need any advice on taking an insurance policy you can always schedule a free chat with an independent adviser via Quashed! All you need to do is sign up to our free platform today.
Some key terms
Sum insured: Life insurance policies discuss a “sum assured” that your family is guaranteed to receive, but general insurance and particularly house insurance is about having a “sum insured”. The sum insured is the maximum amount you’re able to claim from your insurer, in the event of a total loss.
Exclusions: Exclusions are circumstances in which your policy won’t apply. When it comes to car insurance, if you’re found to have been breaking the law (for instance speeding or drink-driving) you might not receive the pay out you were insured for. Likewise if you have a house insurance policy and are found to have deliberately damaged your own home.
Excess: Your excess is the amount you have to pay before your insurer will cover the rest of your claim. In the case of car insurance, it’s common to have an excess of around $500 to $1000 – and the higher your excess, the lower your insurance premiums tend to be.
House and contents insurance
House and contents insurance are often considered must-have forms of insurance. House insurance is designed for homeowners and covers you for damage to your home due to natural disasters (such as the tornado that swept through Papatoetoe in June, damaging about 80 dwellings), accidents, fires and malicious damage. The risk of being caught up in a natural disaster is particularly relevant in New Zealand. In 2018, Lloyds of London stated the country was the second most disaster-prone country due to its flood risk, behind only Bangladesh. It's very common for banks and other lenders to make house insurance a condition of your mortgage when you purchase a home.
Home insurance usually includes cover for any structural damage to your existing house and may also include any damage to future permanent extensions (and it could also cover damage to your swimming pool or garage). Features such as paths, fences, pipes and solar panels are also usually included in house insurance, as are carpets and other fixed floor coverings. Many people choose to consult an adviser for this form of insurance, as your house is often the most valuable asset you have. House and content insurance premiums have risen in New Zealand this year and are growing particularly expensive in Wellington and Christchurch – so it pays to shop around to find the best option for you. You can use our MarketScan tool to compare your policies to others available on the market.
Contents insurance (also known as renters’ insurance) is available to both homeowners and renters and covers damage to or theft of your belongings. Often people who own their own properties have both types of insurance. Contents insurance is available for just about everything in your house: furniture, whiteware, and more personal items such as jewellery, musical instruments, artwork, cell phones, laptops, books and clothes. Not only damage to/loss of your property, but also the harm you cause when you accidentally damage someone else’s property is often covered by contents insurance (depending on your level of contents). Unfortunately, normal wear and tear on your possessions is not covered, and a drawback of this form of insurance is there are limits on how much cover you can get. Very valuable items may have to be listed individually in your policy as "specified items".
Contents insurance usually comes in two forms: new-for-old (the replacement cost of your possessions at the time they’re damaged) or indemnity (the current value of your items, taking depreciation -decline in value over time -into account). Both contents and house insurance may also cover your temporary accommodation costs in the event of a fire or disaster. Take a look at our contents insurance and home insurance articles for more information, and don’t forget to check out our MarketScan tool when you sign up to Quashed. And if you're a landlord, check out our Explore Insurance > Landlord feature on the Quashed dashboard, about how to best protect your property.
How much should I insure my house/contents for?
You can use our calculator (under the Explore Insurance > Contents Insurance tab in your dashboard) to work out how much contents insurance cover you need: often policies have an upper limit for how much you can be insured for per item. If you have artwork or jewellery in your home and know or suspect it’s worth a lot of money, it might be a good idea to get it professionally valued before taking out contents insurance, so you don’t end up underinsuring your possessions.
Since the Christchurch earthquakes, insurers in New Zealand have moved to a “sum insured” approach to house insurance. The homeowner needs to set a sum before taking out an insurance policy. The amount you pick can’t just be drawn out of the air – it should be a realistic estimation of how much it would cost to rebuild. If your house is unusual, then talking to a registered valuer, a builder, or a quantity surveyor may help clarify how much your sum insured should be. Insurance companies also sometimes work using an “indemnity value” instead (the amount the house was worth, just before the damage occurred). In this case, the insurer assesses how valuable the home was.
Car, boat and motorbike insurance
If you don't have car insurance already, it's a good idea to think about taking out a policy: an estimated 70% of New Zealanders have been in a road accident. Types of car insurance include third party insurance (protecting you only when you damage to someone else’s car), third party, fire and theft (also protecting you in the case of accidents or break-ins) and comprehensive (protecting you and your vehicle whatever happens, no matter who was at fault). Third party insurance is the cheapest, and if your car is going to be easy to replace it will probably be an attractive option for you. Comprehensive insurance provides the best cover, but is also the most expensive form of car insurance.
The cost of your car insurance depends not only on the type of policy you’ve selected, the excess you’ve chosen, and the value of your car (more valuable cars are more expensive to insure), but also where you live. If you’re in an area known for break-ins or an area which has a high accident rate, your premiums will increase. For instance, premiums in Auckland are among the most expensive in the country, but those in a less risky area (such as Invercargill) are cheaper. Likewise, if you’re considered a high-risk driver – for instance if you are under 25 (especially if you’re male), or you have a history of vehicle accidents – you will inevitably pay more.
Many insurers recognise good drivers with a “no claims bonus” (in the form of a discount) if you don’t make any claims within a specified period of time: check out this provision in your policy, as it may be a way to win back a significant portion of your premiums. If you already have car insurance, you can take a look at our MarketScan tool to compare your vehicle insurance to other options on the market.
Motorbike insurance functions in the same way: how expensive it is to insure your bike will depend not only on where you are, how old you are, and how much your bike is worth, but the type of bike you have. The cheapest bikes to insure are scooters and mopeds, while the most expensive are often cruiser motorbikes. Read on for information about buying a motorcycle in New Zealand, and our brief guide to motorbike insurance.
Boating is a popular past-time, and if you like to hit the water your boat may be one of the most valuable assets you have. There are companies around the country, for instance Crombie Lockwood, who offer marine insurance. As with car insurance, the amount you end up paying will depend on your vessel type and age, your storage location, your level of experience, your security system and the excess you choose. If you choose to take out a boat insurance policy, your gear will usually also be covered: including your sails, outboard motor, protective covers and potentially even your fishing, diving and water-skiing equipment . Find out more using our brief guide.
How do I work out how much cover I need?
Vehicle insurance can usually be calculated on an agreed value basis (similar to a sum insured for house insurance) or a market value basis. If you pick an “agreed value” it means coming up with an estimation of your vehicle’s value, that your insurer must agree to. You can’t pick any sum you like – as with house insurance, it should be based on a realistic appreciation of the market. If you go with this approach you will have to pay a slightly higher premium, but it will give you certainty about how much you’ll receive if something happens.
Market value is usually a cheaper form of cover, and means you are essentially handing things over to the insurer. Market value is based on what you would receive if you sold your vehicle just prior to having an accident. Your insurer will take into account the make and model, and age, before deciding upon a figure.
Next steps
If you’re interested in taking out home, contents or vehicle insurance, or you’re thinking about insurance for your pet, you can get in touch with an independent adviser via Quashed – for a no-pressure, no strings-attached chat. When you do get your insurance policies, you can upload them to Quashed – our free platform lets you see all of your documents in one place.
