Can you look at this list of 10 potentially costly scenarios and work out which ones your insurance would cover you for or not?
- Contents taken overseas on holiday
- My contents ‘in between addresses’ while you are moving house
- Contents which have been moved from my home to a storage facility/unit/location
- Damage of my house or loss of my contents caused by my visiting guests
- Damage caused by a leaking pipe that has suddenly burst at my home
- Damage to my carpet caused by a pipe that has suddenly burst at my home
- Damage caused over time by a leaking pipe under my kitchen sink
- The cost of trying to locate the source of a leak
- Car engine damage caused by putting the wrong fuel in my car
- Car breakdown from overheating
Damage caused to your engine by putting the wrong fuel in your car, dishonest guests stealing property from your home and leaky pipes that burst were just some of the situations put before people by insurer IAG New Zealand in a survey.
While some scenarios left many people in little doubt, others left respondents split almost down the middle.
As part of the ‘IAG Safety Insights Monitor’*, the survey highlights how knowing the finer points of your insurance policy can help you get more out of your cover, and help avoid nasty surprises.
More than three-quarters (79 per cent) of people thought they would be covered for damage caused to their carpet caused by a pipe that suddenly burst.
Fewer than one in two people (46 per cent) thought they would be covered for damage caused over time by a pipe leaking from their kitchen sink.
“When a pipe bursts and causes sudden damage, you can expect this to be covered by an insurance policy,” Chris Kiddey, National Technical Specialist at IAG New Zealand, said.
“However, if there is gradual damage from a leaking pipe then that may or may not be covered depending on the specific insurance policy.”
But what if your pipe has been leaking for a while and then suddenly burst, causing damage?
Almost three in four people (78 per cent) thought contents would be insured if an already leaking pipe burst.
Chris added: “If a pipe has been leaking – and causing damage – for some time and then it bursts, there might be two types of damage to consider and the policy might respond in two different ways.”
What may surprise people is that your insurance company might be able to help you out with costs of finding a leak.
Just one in five (21 per cent) respondents thought they would be insured for the cost of trying to locate the source of a leak, but Chris said an insurer may be able to help.
“Generally speaking, most comprehensive home policies (such as State and AMI) allow for additional costs related to locating the source of a leak as part of a gradual damage claim Chris said.
“However, you’ll generally need the Insurer’s approval in advance, and this isn’t quite the same as cover for all of a plumber’s costs. If your pipes themselves need maintenance, for example, that won’t be covered.”
Car problems that fall outside of what would generally be regarded as an accident are unlikely to be covered by insurance, respondents thought.
Just one in eight people (13 per cent) thought they would receive help from their insurance company if you caused damage to your engine by putting the incorrect fuel in your car.
A little over a quarter of people (27 per cent) reckoned they would have cover if their car broke down from overheating.
However, while technically you would not be insured for damage caused by putting the wrong fuel in your car, there could be some leeway in this.
“If it’s a single, provable, external, one-off that causes mechanical damage, then we will often cover that damage,” Chris said.
“It’s not ongoing mechanical breakdown, you have an identifiable single cause and you can compare that to more common ‘external causes’ like dinging another car.”
But it’s unlikely a car breakdown from overheating would be covered, unless you have a specific mechanical breakdown insurance policy.
“Even then, a policy like that is going to require that certain steps have been taken to prevent a breakdown,” Chris said.
Check your guest
More than half (58 per cent) of respondents to the survey felt they would not be covered for “damage of my house or loss of my contents caused by my visiting guests”.
Chris said it is better to have clumsy friends to your house than dishonest ones.
“Accidents happen, but it’s reasonable to expect that your guests won’t deliberately get up to mischief.
“Say you have guests and one of them accidentally knocks a vase of your mantelpiece, that would be covered.
‘But, say a guest, someone legally in your home, were to steal that same vase, that is less likely to be covered.”
Time to move
Less than half (47 per cent) of respondents thought they would be insured when moving goods to a different house, while fewer policy holders (40 per cent) thought they would be insured for moving contents from their home to a storage facility.
“The key requirement is that you tell your insurance company first,” Chris said. “By simply moving your television out of the house you are putting it as much greater risk than it was when it was sitting on a TV stand or bolted to the wall. Insurance companies do offer some limited cover but it’s best to get a ‘Goods in Transit’ policy.”
Kevin Hughes, Executive General Manager – Consumer at IAG said the survey highlights the importance of reading, knowing and understanding what is in your insurance policy, because you may have some cover when you do not think you do – or may not be covered when you think you are.
“It’s remarkable the number of people who do not read their policy and go on to get some unpleasant surprise,” he said.
“There is no such thing as small print anymore. Everything is in clear and plain English and is as straight forward as possible. We are not writing insurance policies that only lawyers can understand.”
“An insurance company that sells you a policy wants you to understand what you are covered for. If you do not understand, we are only a conversation away.” Kevin also recommended iag.co.nz for more information as well as the websites of the Insurance and Financial Services Ombudsman and the Insurance Council of New Zealand.
* ‘IAG Safety Insights Monitor’ is a series of regular and seasonal surveys commissioned by IAG which trades in New Zealand under AMI, State, NZI, Lumley and Lantern brands. The purpose is to increase customers’ awareness of how to be safer on the road and at home. This Survey results are based on an online survey of a representative sample of the national population aged 18 plus, conducted from 17 to 24 June, 2016 by Trace Research. The survey had a sample size of 800. In order to ensure the national representativeness of the results, the survey data has been weighted against key demographic indicators (e.g., age, gender and region) according to the 2013 census data (Statistics NZ). The margin of error is 3% at the 90% confidence level.