Virtually all of us have some insurance policies. The idea is that we pay a small sum to the company in exchange for the promise of being reimbursed in the case larger loss.
Typically we buy insurance for our houses, cars, and possibly our lives. But beyond paying the premium we don't think much more.
We also sometimes don’t know what’s important and what’s not. Is covering your camera more important than covering your income, one financial planner asked me recently. It's a good question and I've written an article on the subject of earnings insurance for the NZ Herald.
There are many other tricks to insurance purchase. For example, it may be better to have specialist landlord insurance than a regular household buildings cover. And do you want a bargain basement life insurance policy or one that covers you for disability as well?
To really find out what you need it's a good idea to see a broker, but to make your own decision. Brokers earn commission from selling insurance and it's in their interest to load you up to the hilt.
Insurance company rules
Unless you're in the know, insurance companies seem to have rules of their own.
Most people don’t read their insurance policies until it’s too late. Fortunately I spent two years working as an insurance claims handler between school and university and I learned just how important it is to read every single word of an insurance policy.
As a journalist I've spent many hours over the years perusing the Insurance & Savings Ombudsman’s database for articles I've written and the sorry tales of woe always amaze me. Claim after claim is turned down because someone hadn't understood the finer points of their insurance policy.
A classic example a person who has a policy already and then gets a drink driving conviction. Few realise they have a duty to tell the insurer at the date of the policy's annual renewal. It's only when they fill in a claim form that the conviction comes to light and the claim declined for "non-disclosure"
That doesn't just relate to motor insurance. It relates to all policies. For example, if your son, daughter or even a lodger with criminal convictions comes to live in, your insurer needs to know at renewal date.
"Non-disclosure" and "pre-existing conditions" are real biggies with life and medical insurance. For example, in one case a woman failed to disclose being referred to a renal specialist and then complained when her subsequent claim for chronic renal failure was turned down.
There have been many articles written about types of insurance you should think twice about before buying. They include payment protection insurance, extended warranties, mobile phone insurance and many more. It's up to the individual to decide if these are necessary for you. Some are riddled with get-out clauses in the fine print and others can be included in your household contents insurance policies for less.
Tell us your insurance story?