Are your children covered by your New Zealand insurance policies?

First off, always ask your insurance company or broker when something changes. Always inform your insurer, no matter what.  family of four on grass with hands up

  •  When your children leave home to study – in Auckland or Wellington or Dunedin – are they still covered by your home and contents insurance?
  • When your children drive your motor vehicle, are they covered by your motor vehicle insurance?

Home and contents

If your son or daughter leaves home to study and goes to live in university accommodation, he or she could still be covered by your home and contents insurance policy, within certain conditions. The criteria varies from insurer to insurer, but commonly you might find that there is a limit on their cover, for example, up to $5,000 is not unusual.

It is possible that there will be a couple of conditional changes to the policy that the average person might not be aware of. For example the policy could state that if a burglary takes place, there must be evidence of a forced entry. If items went missing because your son or daughter held a party, or the door was left unlocked, you may not be covered in this instance.

However, should your son or daughter leave home to go flatting or live off campus, they will in every instance I know of, not be covered by your home and contents insurance.

If your child is still living at home he/she will be covered by your insurance, and there is no time frame or age restriction on that. Your child could be 21 or 71 and still be covered. If somebody new moves into the house, like your daughter’s boyfriend, then you should advise your insurer and look to adjust your cover up to include the new person’s property. In all instances, it is best to inform the insurer and let the insurer agree to it in writing.

Vehicle insurance

If your child is driving your motor vehicle, which is still used as your own regular motor vehicle, then your insurance policy should still pay out. However, if you give the car to your child, and don’t change the main driver status with your insurer, you may well find yourself on the losing end of a claim.

One of the reasons is called premium prejudice, which means the change in premiums may be so large that the insurer loses out by not being properly informed about the change in ownership status. For example, it’s not inconceivable that while your policy costs you $400 per year, it would cost your son $1,400 per year. The gap between premiums is so vast that your insurer has every right to decline the claim. More importantly, the lack of notifying the Insurer of that driver change is non-disclosure – the insurer needs to know of the change in the risk to them and set the premiums, terms and conditions accordingly.

Also, make sure that you do not have exclusions on your policy, which you may have agreed to in order to save money. Let’s say your daughter was 14 when you took out the policy and the prospect of her getting her full drivers license was still some years off. To save money you agreed to excluding drivers under 25 from your policy. Then you forget about it and your daughter starts driving the car. You can see how that might be a problem.

Review your exclusions, or better still, give me a call to discuss your options.

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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