If you’re new to insurance, or new to a certain type of policy, perhaps you’ve purchased your first home, there’s plenty to consider when you’re thinking about buying it. Here at the Insurance Council of New Zealand Te Kāhui Inihua o Aotearoa, we understand there can be a lot to find out about the cover you need.

Here are our top three tips for anyone looking for a new insurance policy.

1. Understand what you need

Before you launch into an evening of Google searches and online insurance calculators, take some time to make notes on exactly what you need. Some questions you might ask yourself may include:

• For your house, having insurance will be a condition of your mortgage so make sure you’re getting all the cover you need to meet that obligation. It’s also a great idea to check out the likely cost of insurance before putting in an offer on a new home or car. 
• How much is the asset worth that you want to insure? In the case of your house, how much would it cost to rebuild or replace? You may also have a rough idea of what your car’s worth but do check. Over the past year or so, the value of late model cars has actually gone up! When it comes to calculating the value of all your stuff (what would be covered by a contents policy) from furniture and electronics, to clothes, towels and crockery, that can be difficult to add up without a little help. Luckily, most insurers provide tools to help make sure you include everything.
• For your car, options range from third party only (covers you for damage caused to others) third party fire and theft (adds cover if you lose your car to fire or theft), or comprehensive which covers you for other damage to your vehicle. Also consider who you want to cover for driving your car.
• Think about how much you are willing to pay towards putting things right in the event of a claim (your excess). By contributing to a share of the risk, you can reduce your premiums. For example, agreeing to pay the first $800 of any claim yourself will lead to lower premiums compared to paying only the first $300 of a claim yourself.
• How do you want to pay? Some insurance providers may provide discounts for different payment types. 

2. Do your homework

Just because friends and whānau have been with the same insurance provider for 20 years, that doesn’t mean that provider will suit best your needs or budget.

Now that you understand what you’re looking for in an insurance policy, some online research would be a sensible next step to ensure you understand the premiums you’re likely to be paying, and whether you need to consider any other elements for your insurance policy.

Many insurers provide online calculators that you can use to assess your insurance requirements and provide you with your insurance quotes. They are typically available to help you calculate the cost of rebuilding your home or to estimate the cost of replacing everything in it as you might need to do if you lost everything in a fire. If it’s your first time calculating these costs, you may well be surprised just how quickly things add up. 

Once you know how much cover you need, it’s easy to get quotes for insurance. Insurers also typically provide tables listing the key benefits and exclusions of regular policies so you can readily see what is, and just as importantly, what isn’t, covered. You should now have a reasonable idea of what’s on offer and costs.

3. Don’t buy purely on price

Having done your homework, and with a few quotes in front of you, it’s time to pick the insurance that’s best for you. Take care here because the right cover for you might not necessarily be the cheapest on offer.

It’s a good idea to jump on the phone and ask questions so you can better understand exactly what’s on offer and any optional extras that might make sense for you. Chatting through your unique situation can help support your decision-making process, and ensure you get good value for the policy you end up purchasing.

Other considerations to check with potential insurers are provisions for extensive landscaping or if you have a lot of retaining walls. Levels of cover for gradual damage (for instance, damage caused by unseen leaks) also vary, so be sure you ask about this and that you understand the scope of what’s covered. Fixing a leak that’s got into your floor and walls can be an expensive business. 

For personal motor vehicle, the choices are typically an agreed value set at the start of the policy, or whatever the market value is at the time of a loss.  There are also many add-ons you can purchase such as excess free glass and windscreen cover.  Make sure you think about which extensions are best suited to your situation. For contents insurance, you may have some particularly valuable items you wish to specify to ensure they are properly covered such as jewellery.

For properties, you don’t want to do all that hard work and realise further down the track that you’re under insured. Most policies in New Zealand are replacement policies up to a sum insured where the insurance company will pay for or repair your home up to a specified amount, particularly for damage caused by natural disasters such as earthquakes. Some insurance companies are moving to cover a total replacement value (based on the area of your house) for causes like a house fire and keeping the sum insured for causes from natural disasters. 

A couple of hundred dollars more in premiums may well buy you an additional few hundred thousand dollars’ worth of cover. Ask yourself the value of a few dollars saved today compared to potentially being hundreds of thousands of dollars short if you ever needed to rebuild your home.

What to do once you’ve selected your policy

Once you’ve purchased your insurance policy, you must read it carefully. Be sure you know the ins and outs of your specific policies before you need to make a claim. That way you can address any questions or concerns you have with your insurer about what you’re covered for, and for how much, before anything happens.  

Insurance is not a set and forget product. You need to review and understand what you’re covered for every time you buy or renew it. Circumstances change, rebuilding costs increase and it’s your responsibility to ensure you’re maintaining adequate cover.

Finally, insurance is a trust-based product based on honesty. You must answer the insurer’s questions honestly and to the best of your knowledge. Failure to do so may result in your insurance being cancelled or claims not being paid.

This is an ongoing process, so if you have your car modified, have someone new driving it (especially if they are young or have anything less than a blemish-free driving record) or are having building work done on your home, let your insurer know in advance to ensure you’re covered. Lots of people also rent their homes out these days, even if just for a few nights a year, while others leave them vacant for weeks at a time. Your insurer will want to know about this too.

Keen to understand more about insurance? Head over to Sorted who have some great resources about insurance, or check out our Insurance Health Check page. We also have a range of Consumer Guides about specific insurance topics that you might find helpful.