Past indiscretions of yours or your family could deny you home and contents insurance

Applying for house, contents, car, business, etc. insurance isn’t always a given, or just a matter of routine. For example, previous convictions – even by family members that will be living in the home with you – may upset your chances of getting insurance, which is catastrophic if you want to secure a mortgage.

While there are several obstacles that could inhibit your ability to get insurance, it’s also not a given that those obstacles, like a conviction for example, would absolutely rule you out either – in other words, a criminal record can be a problem, and sometimes not, in the same way as owning an old pre-1945 house in New Zealand could be refused insurance, and sometimes not.

For example, if you are buying house insurance, there are two elements that the insurer looks at.

One is the property itself. The factors they take into account include location – if in Christchurch the issue can be complicated – but if it is an average Joe Soap home in Torbay, Auckland, the insurer may just want to know square meterage, age of the house, its location and the sum you want to be insured for (not that close proximity to water courses may also be an obstacle).

The second part an insurer considers is the client’s personal details. Dubbed a ‘personal profile’ test by some in the industry, you might find that the insurer may decline to insure you – even for house, car or contents insurance – on the basis of criminal convictions (including pending), and drink driving (in the case of car insurance), as well as if you have every had an insurance claim declined or renewals refused, experienced bankruptcy in the past ten years (may not be an issue if disclosed and approved by the Insurer) and any gang affiliations, etc.

The personal profile test does not only apply to the person applying and paying for the insurance, but extends to spouses, partners, parents and children, among others, who are also living in the home with you. The clause most insurers use sounds something like: ‘have you or any person to be covered by this policy…”

For example, I had a mother and father whose son was remanded to their home after a drug conviction. The parents wanted to put their son on the car insurance. The insurance company actually cancelled the parents’ insurance too, just because their son now lived there (and they were existing clients of the insurance company).

The best approach then is to get expert advice (from an insurer, adviser/broker as well as a solicitor) and make sure you provide full disclosure.

The Home Owner’s Guide to Fire and General Insurance in New Zealand

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