Humans break things. We have all sorts of unexpected accidents and they cost us lots of money.

Most people assume they'll be covered by insurance when they have an "accident". Fortunately, that's usually the case, but not always.

Assumptions are always a bad mistake when it comes to insurance. Believe it or not some house and contents policies don't even cover accidental damage.

Unlike other insurers, Youi, for example, doesn't include accidental damage cover as standard in its home and contents policies. Customers have to request accidental damage as an "extra".

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Virtually all the standard house and contents policies from other New Zealand insurers include accidental damage.

Anyone who has taken out a "budget" policy needs to check the wording should they want their house, TV, phones and anything they own to be covered in the event of an accident.

Even if you have accidental damage cover it's worth thinking about what an "accident" is.
To a layperson, it's an unexpected event. Insurance policies, however, exclude damage that can be attributed in some way to wear and tear, gradual deterioration and lack of maintenance.

Policyholders can find this unfair.

It's not at all unusual to see claims for engines that have failed.

The vehicle or boat owner believes the damage to be accidental, but the insurer says the cause is mechanical wear and tear, therefore excluded.

Or it may be accidental, but excluded because the damage was "mechanical".

For example, complaints resolution service Financial Services Complaints Limited (FSCL) heard one case where water got into a boat engine after a bilge pump failed, which "Bill" viewed as an accident.

Bill's insurer declined the claim, saying the $19,761.78 damage was due to a design fault.
In the end the insurer backed down and paid half the claim because there were contributing factors.

But it was an expensive exercise for Bill, who assumed he'd be covered.
Insurance customers have a way of having "accidents" that don't quite fit the policy wordings.

For example, sometimes Kiwis make accidental damage claims on items that are almost worn out.

One claim was heard by FSCL where falling scaffolding damaged a roof that was at the end of its economic life and the insurance company argued it shouldn't pay the cost of a new roof.

Another example was a holidaymaker who damaged her tooth by crunching on a lobster shell.

Insurance customers have a way of having "accidents" that don't quite fit the policy wordings.

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She had the tooth repaired when she arrived home, only to find her policy didn't cover her for dental work performed in her "country of origin".

Some policies will have a reasonable care exclusion, says Insurance & Financial Services Ombudsman Karen Stevens.

"So you won't be covered if you do not take reasonable care."

Accidental damage often has to be sudden to be covered, adds Stevens.

A shower leaking over time causing hidden damage beneath the showerbox or behind the wall isn't considered to be "accidental damage" because it's gradual, not sudden, although many policies do have some gradual damage cover.

Landlords need to choose their house policies wisely to ensure they're covered when tenants accidentally or intentionally damage their property.

A Court of Appeal judgment last year found the tenants weren't liable for the cost of repairing the landlord's home for a careless act when that landlord has accidental damage cover, Stevens says.

Landlords need to ensure their policy covers this. Tenants are still liable for intentional damage.

But the line between intentional and accidental damage can be fine.

A District Court judge overruled a Tenancy Tribunal decision that dog urine on carpet was accidental, meaning the tenant wasn't liable.

In February, the Palmerston North District Court ruled in that case the damage was intentional because the tenant had breached the tenancy agreement that specified no pets were allowed.

As well as accidental damage to your own belongings, mainstream insurers offer third party liability cover in their contents and other policies.

That covers you for damage to other people's property.

Until the Holler v Osaki case it was always recommended that tenants take out contents insurance in order to protect themselves for third party liability.

That includes damage to your rental property by partygoers and other visitors legally visiting your property or other damage you're legally liable for that isn't related to property you're renting.

Landlords and their insurers are still arguing against the Osaki case and the Government said in October it was considering changes to the Residential Tenancies Act 1986 as a result.

If you have an au pair, international student, Airbnb guests or similar living or staying in your home, you need to contact your insurance company and be 110 per cent sure what is covered should they accidentally damage your home.

Failing to do this could prove an expensive mistake.