Consumer understanding of what policies do not cover vital - ICNZ
Insurance exclusions can come as a surprise to policyholders – particularly when they're attempting to make a claim. According to the Insurance Council of New Zealand (ICNZ), it's important for consumers to understand what their policies do not cover, ideally before committing to a new policy or at renewal time.
ICNZ recently published a checklist summarising common exclusions across three major insurance categories: house, contents, and personal vehicle cover. The guidance aims to improve policyholder awareness and reduce misunderstandings during the claims process.
House insurance: business use, gradual damage among exclusions
Several types of claims are commonly declined under house insurance due to specific exclusions. These include:
Homes used for business or commercial activity beyond what is allowed under the policy
Damage from insects, vermin, or gradual deterioration such as rust, rot, or mildew
Damage occurring during renovations or construction unless additional cover is arranged
Drug contamination or damage caused intentionally by occupants
Pre-existing damage, or losses that occur while the home is unoccupied for an extended period (usually 60 days or more)
Damage to land or parts of the home not covered by the policy’s definition of “home”
Liability arising from non-compliance with landlord obligations in rental situations
Consequential loss, such as indirect financial impacts of an event
Contents insurance: exclusions tied to wear, pets, and business use
Like house policies, contents insurance also includes a number of standard exclusions. Commonly excluded are:
Items used for business purposes or associated with home-based commercial activity
Damage caused by pets, animals, insects, or vermin
Wear and tear, depreciation, and other forms of gradual degradation
Items damaged during renovations or building works without additional cover
Unlicensed software, business-related items, or cash and valuables with limited coverage
Property that has been removed from the home, unless specifically covered for off-site risks
Motor vehicles and powered equipment
Pre-existing damage and losses occurring when a home is vacant beyond the stated policy period
Plants (indoor or outdoor), though containers may sometimes be covered
Motor insurance: limitations on driver conduct and vehicle use
Motor insurance policies tend to exclude claims involving:
Driving under the influence of drugs or alcohol
Unlicensed or unauthorised drivers, or use outside licence conditions
Modifications not disclosed to the insurer
Overloaded vehicles or unsafe towing practices
General wear and tear or mechanical failure (unless a specific mechanical breakdown policy is in place)
Use of incorrect fuel, deliberate damage, or pre-existing issues
Commercial use of the vehicle such as for rideshare services, unless specified
Participation in motorsport or reckless driving
Consequential losses like loss of use or depreciation
Reviewing your policy and next steps
Consumers are encouraged to read the full wording of their current insurance policies to understand specific inclusions and exclusions. Policy documents typically outline the scope of coverage, limitations, and terms. For any uncertainties, contacting the insurer directly is advised.
ICNZ also offers consumer guides covering different aspects of insurance, available via its website.
