TIPS & ADVICE

TIPS & ADVICE

Smoke Detectors
Make it a priority to have a smoke detector/alarm. They save property but more importantly they save lives! Don’t wait for the alarm to tell you that the batteries need changing, they should be changed annually. Chose a date to do this that you will remember every year, a birthday, an anniversary, or public holiday, like Christmas, or Easter.

Security
Like Smoke Detectors, security at a property can prevent loss from burglary. Not everyone can afford a burglar alarm, however there are small steps that can be taken to make your property less appealing to a burglar, who does not want the risk of being caught. Deadlocks on doors and windows. Communication with your neighbours. If going away, ensure your mail box is cleared, maybe a friend or neighbour could park their car in your driveway, Put a lamp on a timer so at night it appears someone is home.

Under Insurance
Unfortunately it is very common that most property at the time of a major loss is under insured, this is of course of less of a concern to most people until they do have a major loss.

Commercial Covers
Building owners should have their buildings valued at least every 3 years by a registered valuer. In the Insurance Industry, commercial buildings are the most commonly under insured type of cover. A valuation is a small cost to bear to protect such a large assest. Providing a valuation also helps with the calculation and payment of Government Regulated Fire Service Levies. Changes in the Fire Service Levies Act on the 01-07-2008, means that unless a valuation is provided levies are charged on the full sum insured of the building. If a valuation is provided, this will advise the Indemity Value of the building, and therefore the levies are able to be charged on the Indemnity Value of the building. This can result in substancial savings on the Government Levies charged for which your insurer is required to collect on behalf of the Fire Service.

The hidden traps in making a house and contents claim
According to the Insurance Council of New Zealand, only a tiny percent of claims are declined. But if you want to avoid becoming a claims-department casualty, it's worth having a little insurance savvy and your wits about you when you make a claim.

Disclosure
You come home to find your house broken into and your tired old laptop computer gone. To replace it with something half decent you're going to need $1,500, so you tell your insurer it was a newer model than it was. It was just one little white lie. What does that matter? It matters a lot. If your insurer finds out that you've been lying or have failed to disclose material facts - either when you took out the policy or when you make a claim - then that little white lie may stand between you and your payout. It may also affect what you pay in premiums or excesses - or even getting insurance cover in the future. Take a look at the fine print of your policy. You'll find you have the duty of "utmost good faith" when you take your policy out. The Insurance Council says that means "to disclose to the insurer all material facts that could affect the risk". As a rule of thumb, you should declare any information that might make an insurance company alter the terms and conditions of your contract - such as previous claims, a criminal record, or the fact that you travel overseas regularly and leave your house empty for long periods of time. Chances are, you think, you won't be investigated. But if you have a guilty or suspicious air about you, you may find yourself being questioned by an insurance investigator. And insurers investigate some types of claim, such as burglary or stolen vehicles, as a matter of course. You aren't being singled out for special treatment when this occurs. You need to be very careful when you first make your claim - especially if you do so over the phone. Make sure that all the information you give your insurer is truthful and consistent. And give the same version of events in any later written communication with the company.

If you want to be covered you need to:

  • tell the truth
  • pay their premiums
  • provide all material information at the time they take out their policy
  • read their policy carefully before submitting a claim
  • avoid trying to outsmart their insurance company.

Near enough isn't good enough when it comes to insurance policies and claims. White lies = fraud

Honesty is not always the most common policy when it comes to insurance. But it does pay if you want to get your money. Common types of white lies - also known as fraud - told to insurers include:

  • claiming for goods that aren't yours, but are those of a flatmate or friend who is staying with you - this immediately sets off a red flag with the insurer
  • claiming for goods that weren't listed in the initial claim
  • claiming for goods other than those mentioned in an initial telephone call
  • adding items to the claim immediately after you find you are not covered for other items
  • advertising goods for sale and then claiming on them - especially motorcars and other large-ticket items.

Other common reasons for claims being declined are:

  • theft by people who have authority to be on the property - such as friends or members of the family
  • failure to specify expensive items on the policy schedule
  • failure to lock or secure items of value
  • claiming items used for your business under a home contents policy.

Prevention better than payout
Perhaps the best way to avoid being turned down for a claim is make sure you don't have to make one in the first place. Taking preventive action also means you don't have go through:

  • hours wasted on the claims process
  • cost of excesses
  • loss of no-claims bonuses
  • the heartache of losing favourite things.

When it comes to your house and its contents, one of the best preventive measures you can take is to keep your house well maintained. Consumers are often shocked to find they are not usually covered for rotten walls, floors or cupboards. This type of damage, which occurs gradually, is limited or excluded from policies. Yet it is one of the biggest causes of house and contents claims. A typical example of gradual damage was a person who repeatedly over-watered the same plant and then claimed for the rotted carpet beneath the pot; the claim was declined. However, there's a very grey line. Competitive pressure on insurers has pushed some of them to give partial cover for gradual damage - often limited to $2,000 and excluding rot. The cover, which is not offered by all insurers, is limited to damage caused by leaking internal water or waste-disposal pipes. It excludes leaky roofs.

What we claim for
Knowing the types of goods that most people lose or damage - and how they do this - is the first step in preventing loss.

The most commonly claimed items under household-contents claims are:

  • spectacles, sunglasses and hearing aids
  • jewellery
  • appliances such as TVs, stereos, playstations, and computers
  • cameras
  • CDs and DVDs
  • cash
  • power tools
  • mobile phones.

The main causes of "loss" (from most to less common) are:

  • glass breakage
  • gradual damage such as water damage
  • water damage from burst pipes, leaking roofs, or leaking water cylinders
  • burglary
  • storm damage
  • carpet damage from spills such as red wine, coffee or nail polish
  • lost items
  • freezer breakdown
  • accidental damage such as dropped appliances, holes in walls, or damaged doors.

Burglary
Despite its prominence in the media, burglary isn't top of the list - although you're likely to suffer a greater loss from burglary. Also be aware that the second and third most-common causes of "loss" (water damage of various kinds) are not well covered by most house and contents policies. To reduce the risk of burglary, record the serial numbers of your possessions and photograph your valuable items. Burglars are deterred when there are stickers on the house saying serial numbers have been recorded. You can find out about this from the Insurance Council's website, including a downloadable serial-number recording form. Serial numbers and photos make claims processing much easier as well.

Making a claim
Before you make a claim, read your policy and gather your facts - in writing if possible. You should keep written records of all conversations including names, dates, times, and details of what was agreed. You can also take a look at the Fair Insurance Code on the Insurance Council's website. The code applies to all insurance policies bought directly from companies belonging to the Insurance Council, or through a broker or agent. This sets out member companies' responsibilities to you and how to complain if companies don't carry out their responsibilities.

What if you're turned down?
Complain. It may be that your insurer has misinterpreted the facts. What's more, if there's a grey area then a complaint might just push your insurance company to pay out. During the research for this article the Insurance Council told us: "in the competitive market, policies get extended". In other words insurers don't stick to the letter of the policy - which we think is an invitation to argue your case. One term well worth knowing is: "ex-gratia". It means "out of the goodness of my heart". When the insurance company makes an ex-gratia payment, it pays out but doesn't accept legal liability for the claim. These are cases where it's probably cheaper for the insurance company to pay a bothersome client than to fight the case through the courts. Unless you can resolve the dispute easily, you'll need to send a formal complaint to the insurance company. A form for this can be downloaded from the Insurance Ombudsman's website.

Our own Letters that Get Results may help you if your claim is turned down. These include the following:

  • Denial of liability
  • Dispute over a claim
  • Rejecting an offer

However, there are times when arguing with the insurance company will get you nowhere. In that case, you may want to take your claim to the Insurance Ombudsman. You'll need to get a "letter of deadlock" from the insurance company, so that you can then lodge a complaint with the Ombudsman.