Hanging a coat-hanger on a fire sprinkler caused a flood that damaged eight floors of an apartment building and left a group of students facing a $26,000 bill.
The Auckland flood was caused by one of three flatmates, but as all their signatures were on the tenancy agreement the trio faced liability for the damage.
If one of the students had not had insurance for up to $1 million of legal liability, the group would have had to pay the $26,700 repair bill.
This case is being used by insurers to highlight the importance of university students taking out what could be invaluable policies.
A Massey University study last year found that more than 80 per cent of students surveyed did not have contents insurance, and companies spoken to by the Herald said there was a common misconception that students were covered by their parents' policies.
Massey senior lecturer Dr Claire Matthews, who analysed the data from 269 respondents, said there were two common reasons so many were uninsured.
"Part of it is the cost of what they are insuring and part of it is being able to afford the premiums," she said. "(Many students) don't see a need for it because, for example, their contents may not be worth much.
"Students are typically on quite low incomes and they have got to make choices on what they are going to spend their money on. Insurance is not often seen as a priority."
Dr Matthews said another study showed nearly 40 per cent of 260 subjects aged between 18 and 25 had no insurance of any kind.
Respondents were most likely to have car insurance - about 40 per cent had motor-vehicle policies - and more than 20 per cent had health insurance, she said.
University of Auckland accommodation general manager Michael Rengers said theft was the most common problem for students without insurance.
All students were strongly advised to take out policies, he said.
AA Insurance's head of customer relations, Suzanne Wolton, said tertiary students could risk starting their careers in debt if they accidentally damaged another person's property.
"Parents are often surprised when they discover their policy doesn't cover the loss of their child's property from a flat," she said.
Insurance Council spokesman Samson Samasoni said the agency was trying to better inform young people on the subject.
• A Wellington student lost his $5,000 bike - his only mode of transport - when it was stolen, but because it was no longer kept at his parents' home it was not covered by their policy.
• In Dunedin, one student claimed for $420 of repairs to her laptop after coffee spilled into her laptop bag.
• A Wellington student's insurance covered her for the cost of nearly $2,000 when she dropped a bottle onto a stove top, cracking its corner.
- Source: AA Insurance