Five Insurance Mistakes Kiwis Make That Cost Them at Claim Time

Most people only truly understand their insurance policy when they make a claim. Unfortunately, that’s often when costly mistakes come to light. Here are five of the most common insurance mistakes New Zealanders make — and how to avoid them.

Being under-insured

Under-insurance is one of the biggest issues facing Kiwi households. According to data referenced by ICNZ, many homes and contents are insured for less than their true replacement cost. Rising building and construction costs have made this problem worse.

If your sum insured is too low, insurers may not pay the full cost of rebuilding or replacing your belongings.

Not disclosing all relevant information

Insurance in New Zealand operates on a principle of duty of disclosure. This means you must answer questions honestly and completely when applying for cover.

Non-disclosure — even if accidental — can lead to claims being reduced or declined. This is particularly important for life, health, and income protection insurance.

Assuming all policies are the same

Policies may look similar on the surface, but wording can differ significantly between insurers. Exclusions, waiting periods, and definitions all matter.

Cheaper premiums sometimes reflect reduced benefits or tighter exclusions, which may only become apparent at claim time.

Letting policies auto-renew without review

Life changes — but many policies stay the same for years. Income increases, new assets, family changes, or business growth can all mean your existing cover is no longer appropriate.

The FMA encourages consumers to regularly review financial products to ensure they remain suitable.

Not getting help at claim time

Many people try to manage claims alone, not realising help is available. Incorrect documentation or misunderstandings can slow down or jeopardise a claim.

An insurance broker can assist with claim preparation and communication, helping reduce stress during an already difficult time.

Most insurance problems don’t start at claim time — they start at setup time. Getting advice early can help avoid these common and costly mistakes.

Protect Your Whānau’s Future Today

Your future deserves clarity and confidence. Our advisers offer personalised guidance to help you choose the right cover for your needs. Get in touch for a free, obligation-free conversation.

Click here to connect with our Insurance advisers: https://peaceofmindadvice.co.nz/contact-us/

Sources: