Word of Advice

27 August 2007

Ensuring your insurance is up to scratch

It’s probably written on one of your ‘to-do’ lists: sort out the insurance. It’s hardly one of life’s most enjoyable pastimes, but it’s pretty much a necessity.

Getting Quotes

We recommend that you obtain at least three or four quotes from insurance companies who are members of the Insurance Council. You should ask each insurer to confirm their current claims paying rating. These ratings are issued from time to time by international rating agencies and are a good indication to the financial soundness of the insurer. In addition, you should ask these questions:

• What will the premium be for the type of insurance I want?
• Can I pay my premium monthly? Will it cost more than paying once a year?
•  What excess will I pay?
• When won't the insurance company pay out on a claim?
• What do I get on top of the basic cover? (Ask: "What extensions to the basic cover are there?")
• When do I lose my insurance cover?
• For vehicle insurance: Who will be covered? (Just the owner or all the drivers?)

What information should be disclosed to the insurance company?

If in doubt, check it out with your insurer. In fact, you can never be sure just what is relevant to your policy. For example, will a conviction for vehicle theft affect your house insurance?

You must provide complete and accurate information when completing proposals, confirming renewals or providing claims information. This may include giving information that has not been asked for directly.

If you don't provide all the facts, the insurer may refuse to pay your claim, or even cancel your insurance from the starting date of the policy.

If you’re not sure about your contract, ask.

If you have insurance already, check your contract and see what the parts about disclosure say. If you don't understand, or may not have disclosed everything, write to the insurer and ask them to write back explaining how they operate/interpret their disclosure requirements - keep this letter, as it will be useful if there are later claim problems.

After this process, don't be afraid to disclose something not previously disclosed.

Car Insurance: Insure your vehicle for no more than the market value

With car insurance, the insurance company will only pay what the vehicle is worth at the time it is stolen or damaged. If you insure the vehicle for less than it’s worth, you won't get its full value if the vehicle is ever written off.

Check the newspaper and a few car dealer yards to get an idea of the current market value of your vehicle. Include the value of fixed accessories such as the stereo system.

Each year the insurance company sends you a renewal notice to insure your vehicle for the coming year. The premium is based on the value the insurance company has placed on your vehicle. If you think the value is too high tell them how much you think the vehicle is worth. The insurance company should lower the premium.

Disputes with an insurance company

If you have a dispute with an insurance company, you should discuss this with the local manager. If the problem can’t be resolved, ask for the name of the company's controlling officer or the person responsible for handling complaints.

The Insurance Council's Fair Insurance Code requires its members to acknowledge complaints promptly, investigate through a neutral person, and inform you of the decision within two months.

If you still cannot resolve the complaint through this channel, you can contact the Insurance and Savings Ombudsman's office on 0800 888 202, or visit their website.

Insurance Council of NZ

The Council's Fair Insurance Code aims to improve the standard of practice and service you get from Insurance Council members, and looks at ensuring:

• a high standard of satisfaction
• that you have a means of resolving disputes with Insurance Council members
• that policies are understandable
• that you are protected against financial loss or hardship.

The code includes a requirement for all members of the Insurance Council to explain the meaning of legal or technical words or phrases, and clearly specify the conditions of your policy.

The Fair Insurance Code is administered by the Insurance Council of NZ. If you have any concerns about the performance of your insurance company find out if they're a member of the Insurance Council and, if they are, contact the Council on (04) 472 5230 to make a complaint, or visit their website.