Diana Clement: Insuring the obscure has hit the big time

The form of All Black Daniel Carter's kicking foot will be of concern to more than a few Kiwis over the next few weeks. Believe it or not, it's possible to arrange insurance for such obscure things as a rugby player's foot.

While it's not uncommon to have house, contents, motor, life and even boat insurance, there are policies springing up that you never knew existed, let alone needed.

Not so long ago if your pet got seriously ill you might have had it put down. If you found the boundaries of your property weren't where you thought they were, you paid to deal with the legal ramifications. But now you can insure against such things.

Pet insurance

Pets, like people, get sick, but their medical treatment isn't paid for by the Government. It's not surprising, therefore, that vets encourage owners to buy insurance cover.

Pet cover varies and it's essential to read the fine print, but the options include cover for: minor medical problems, surgery, advertising, replacement pets and funeral expenses (including a headstone in some cases).

Pets can suffer from chronic ongoing conditions and, in this case, you might find that your cover is limited. Two of the three Pet Plan policies limit this cover to $200 and $300 a year, although the third plan has a $3000 limit. Pet Medicare also offer this type of insurance.

Criminal liability

One obscure insurance policy that Kiwis give little thought to is legal defence cost insurance. Steve Lockwood, director at broking firm Crombie Lockwood, says that for about $250 a year, you get protection from costs of defending a criminal case against you.

"People think they will be looked after by the Government [if they are accused] but that is not the case."

Cases must have an unintentional component. So if you rob a bank, you can't expect the policy to pay for your defence. According to Vero Liability, which underwrites such as policy called Lawsafe, the government bill for a 10-day High Court hearing, excluding lawyer's fees, is $22,000.

Wedding insurance

Chuckle as you may about the idea of insuring a wedding, this is big business overseas, says Dennis Orme, chief executive of the Insurance Brokers Association of New Zealand.

A big fat Kiwi wedding commonly sets a couple back $10,000, says the website www.weddings.co.nz. If yours has to be cancelled or postponed, and much of it paid for again, you could start married life with sizeable debt.

Debbie Street, CEO of BrokerNet, says that although you can't buy wedding insurance in New Zealand, public liability cover will protect you if the venue is damaged, or consider events cancellation or curtailment cover.

Title insurance

Title insurance is new in New Zealand and protects homeowners against problems with their house title as well as the risk of such things as encroachment on neighbouring properties, problems with building permits and unpaid rates and body corporate levies.

Buying a policy involves a one-off premium, which covers you for the entire time you own a property.

Jonathan Flaws, a lawyer who runs Fast Lender Services, which offers the insurance, says some of the risks should be identified by the lawyer. "But, in reality, lawyers will tell you that regardless of how much time or effort they put into the job of investigating the legal aspects of your property, there can always be things that they do not find."

Computer insurance

When you buy a new computer, you may consider insuring it and the chances are your retailer will encourage you to do so - probably because they receive commission.

But computers devalue at such a great rate that unless you're carrying a laptop with you and risk losing it, the cost is barely worthwhile. If your computer is stolen the biggest loss is probably going to be your data - especially if you are self-employed.

The obvious answer to this problem is to back up your information regularly. You can get your computer covered with an extended warranty or specialist insurance, but it's unlikely to cover data loss.

Obscure cover

Specialist insurance brokers handle some very obscure risks. Top sports people cover legs, feet or arms, depending on the sport that they're in, says Lockwood. So Carter, conceivably could take out cover on his kicking foot, although he probably makes more money from his butt, modelling underwear, these days.

Some brokers specialise in arranging cover for risks specifically excluded from life policies, such as hot-air ballooning, says Orme.

Crombie Lockwood arranged insurance cover for a $100,000 gun being taken to Argentina by its owner for a shooting trip and has found cover for privately-owned helicopters.

The company twice organised cover for basketball promoters where it promised to (and in fact did) pay out $25,000 a time in the event of one random audience member being able to shoot a goal from the halfway line.

Virtually any risk can be insured through a specialist syndicate at Lloyd's of London, which can be accessed by brokers here.

Lloyd's isn't a company, rather a market where professional underwriters work on behalf of syndicates who accept premiums and pay out in the event of a claim.

One thing you should be aware of is that you can't complain to the New Zealand Insurance Ombudsman about insurance policies underwritten overseas. You can, in these instances, complain to the authorities in the countries where they originate, says Ombudsman Karen Stevens. Most often that is Australia and the UK, where the complaints process is probably as good as ours.

Are these policies worth it?

Insurance policies exist for the purpose of the company making profit - not because you necessarily need them. Companies look at the actuarial likelihood of an event happening, based on past experience, then add a margin to the premium for their profit. Statistically, you will pay out more than you ever receive.

Before you take out any sort of cover, ask yourself if you can afford the loss. If the risk that's covered is your house, it's definitely worth it. A policy covering mortgage or debt should you become unemployed may not be worthwhile if it pays out for a limited period only. You could put a chunk of cash in the bank instead.

Likewise with health insurance, you might choose to go without and rely on the state for non-urgent care, paying cash to jump the queue.

In the case of accident or disability, you may not be able to afford your existing lifestyle long term and might consider buying a policy that pays out until you reach 65.

Think twice about the policies you're offered when buying electrical and other goods.

Often called extended warranties, they can be expensive - considering the small likelihood of equipment and cars breaking down in their first few years of life.

The Consumers' Institute doesn't believe that mechanical breakdown insurance - commonly known as extended warranties on cars - are worthwhile.