Let’s take a walk through the most common types of insurance: Home and contents insurance, if you own your own home Contents insurance, if you’re renting Car insurance, if you have…
Let’s take a walk through the most common types of insurance:
- Home and contents insurance, if you own your own home
- Contents insurance, if you’re renting
- Car insurance, if you have a car
- Life insurance, if you have children or a dependent partner
- Travel insurance, every time you travel overseas
Home and contents insurance
Your home is probably your biggest asset, so clearly you need to insure it. All home insurance policies include an Earthquake Commission (EQC) levy, which offers protection in the event of a natural disaster. If you don’t have home insurance, you could stand to lose everything in an earthquake.
Also, home insurance is likely to be a requirement of your home loan. Remember that you need to insure your house for the cost of rebuilding it, which may be different to the market value of the property. Most insurance company websites have calculators that help you work out how much it would cost to rebuild your home.
Contents insurance covers all your belongings inside your house. It also often covers valuable items like laptops and mobile phones, wherever they may be within New Zealand.
If you’re wondering whether you need contents insurance, have a think about how much it would cost to replace everything you own if your home was destroyed by a fire. Enough said.
- Home reno tip: Depending on the size and scope of your project you’ll need to consider contract works insurance for the duration of your renovation. This type of insurance specifically covers sudden or accidental damage done to a property in the course of the construction period. A good policy should protect both areas under renovation and parts of the house not being worked on; it’s likely your usual house insurance won’t cover you during alterations. It can also cover building materials used in the renovation. Talk to your insurance company about what your existing policy will cover and what you may need to add during a renovation.
Think about how much you rely on your car, and get comprehensive car insurance. That way you’ll be covered if the worst happens and you’ll never be without a vehicle because your insurer will provide a car while yours is out of action.
Perhaps you drive an old rust bucket, and you think it’s not worth getting car insurance because your car’s not worth much? Think again.
No matter what condition your car is in, you should have ‘third party’ insurance, which covers you for any damage you might do to another car or person. Otherwise you could find yourself in a world of financial pain.
How would your family cope financially if you were to die tomorrow? It’s important to think about this question, even if you’re not the main breadwinner in your family. For example, if you take care of the children while your partner is at work, could your partner afford to pay for full-time childcare if you died?
Putting adequate life insurance in place is one of the best things you can do for your family, and for your own peace of mind. Just knowing that the mortgage will be paid off and your family will be taken care of financially will be a massive help to your partner as they adjust to a world without you in it.
It’s super important to take out travel insurance every time you travel overseas. Travel insurance covers you for a wide variety of holiday disasters but, most importantly, it covers you if you need medical care anywhere in the world.
It’s a good idea to get a policy with unlimited medical cover. Many people have been surprised just how quickly medical expenses rack up, when you’re travelling in countries that either don’t have a public health system, or where you as a traveller don’t have access to it.
Now let’s talk about the insurance you don’t really need, such as:
- Health insurance (although this is a ‘nice to have’)
- Mobile phone insurance
- Credit card repayment insurance
In New Zealand, we’re fortunate to have a public health system, so you can rest assured that if you need major surgery, you will get it regardless of your financial situation.
Where health insurance comes into its own, though, is when you need elective surgery and there’s a long waiting list. It’s great to be able to skip to the front of the queue - which is why we've listed health insurance as a ‘nice to have’.
Mobile phone insurance
Before you take out expensive mobile phone insurance, check your home contents insurance policy. Often mobile phones are covered, whether they’re in the house or not at the time they are lost, broken or stolen.
Credit card repayment insurance
These policies don’t offer a great bang for your buck - they’re usually quite pricey compared to the amount they will pay out. You would be better to save the same amount you would pay as a premium and keep this aside in case you ever can’t pay your credit card bill.
And finally, a word to the wise that applies to any insurance policy - always read the policy documents. Knowledge is power!