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Money Expert - Diana Clement - Financial Planning, Career, Investing, Economy, Property - MSN NZ

Ten things you should know about contents insurance

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In tight times, it can be very tempting not to take out contents insurance cover. But imagine what would happen if you accidentally burned down your landlord's property? Or if a burglar backed up to your house with a truck when you were away for a weekend? Could you afford the bill to repair and replace?

It's a good idea to have your personal belongings covered by contents insurance — even if you have very few possessions. But beware, insurance policies are riddled with get-out clauses. Here are 10 tips you should know.

1. Never assume your policy covers you for everything. Contents insurance usually covers loss or damage to your personal belongings at home. It may not cover you away from home and often wear and tear and gradual damage are excluded.

2. Cheap insurance doesn't always pay. In some cases cheaper policies are riddled with more exclusions. A good rule of thumb is the cheaper the policy, the more exclusions and fish-hooks it contains. It's sometimes best to save money by getting a bigger excess rather than choosing a little-known budget insurance company.

3. Be careful when completing claim forms. Keep what you say in a claim form brief and make sure that everything you say is 100 percent truthful. It's a good idea to keep a copy of the form and records of all telephone calls in case a claims assessor or investigator pays you a visit.

4. White lies don't pay. So you added an extra iPod to your claim. "It was just a little white lie," you say. Well get this. White lies are fraud. And if you're caught adding one little thing, your entire claim could be turned down.

5. Don't let dodgy people on the property. You're not covered if your flatmate's friends steal or deliberately damage your stuff or the landlords' — providing they've been invited onto the property.

6. Disclose criminal history. If you or anyone who lives at your property has a criminal record and you haven't told your insurer, your policy can be void from inception — because it was based on a lie.

7. You're responsible for damage to your landlord's policy. In one widely reported case in Dunedin, all of the tenants in a student property were jointly ordered to pay $77,381 to the landlord after one left a pot on the stove, causing a fire. The Department of Building and Housing recommends that all tenants have contents insurance because it covers careless damage to the landlord's property caused by you or your invited guests. At the time of writing, the government was reviewing the Residential Tenancies Act and this could change.

8. Working from home. If you work from home — even occasionally — be aware that your computer or other equipment you use will have limits applied to them. For example, AMI's Premier Cover has a limit of $1500 per claim for personal equipment used for business purposes. You'll also only be paid current market value of those items even if you have a "replacement" policy.

9. Read the policy! Read the policy! Read the policy! If you don't read the policy, don't complain if you're not covered thanks to a curly clause.

10. Complain. If your insurance company turns you down and you think you're in the right — complain to the Insurance and Savings Ombudsman. The Ombudsman will investigate your claim and negotiate with the insurance company if you've been treated unfairly.

Have your say: Do you have household contents insurance? Or, do have any insurance tips and stories?

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User comments
Recently we had a claim rejected because my wife's family could not be contacted. My wife's friends children squirted cordial through the house on the carpet - the insurance company okayed the insurance claim with the carpet people - we were scrutinized by a ruthless investigator who did not believe what we told him. He only had to interview people in our community and they would've told him that they had not met any of my friends let alone family. My wife's friend also sent a letter stating she would reimburse money and she was sorry for what her children had done - she also stated in the letter, she did not know any of my wife's family or friends and still the investigator wanted to interview family members - we have been told our insurances will be cancelled and will have to reimburse for carpet - feel we have been victimized twice - what to do?
Well, I started with Insurances in the late 1980's. I had Contents, Vehicle, Life and Hospitalization policies. All was great until I was attacked at work and Hospitalized on 'Life-support' after being stabbed by a robber. The policies paid out. But the aftermath was the problem. Having my income cut to 80% on ACC, then being on an Unemployment Benefit, I had to stop & stop some policies. Why? You ask. Well our brilliant Govt. Dept., WINZ, felt that I {you} do not need these insurances. So I suspended those I could, & cancelled those I couldn't. A year or two later, NZ Govt. start pushing these same insurances. And to prove their lake of compassion, today I'm on the Sickness Benefit, and they still say you don't need insurances, as I requested assistance for Car & Contents Insurances in June 2010. I was told that 'you don't need these insurances', as many kiwi's can't afford insurances. Well Govt. , close your dam insurances on ACC & WINZ corps!!!
Thanks for your posting DJ. You can go to the Insurance & Savings Ombudsman and make a complaint for free. The ombudsman will consider your claim fairly. Not all insurance companies belong to the Ombudsman's scheme. But most do. Kind regards Diana Clement
Good advice that should be considered when taking out other types of insurance cover. I've had Life Insurance problems and been struggling with 2 kids when we thought we had protected ourselves against the unforseen. The Insurance companies seem to know that alot of people cant afford to fight them and they have the upper hand.

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