There are a lot of urban myths when it comes to insurance. Here are some of the most common theories people have according to the Insurance Council of New Zealand and how they stack up compared to the facts.
Insurance companies always look for ways to decline a claim rather than pay a claim
In fact, more than 90 per cent of all claims are paid. The vast majority that are not, are claims that have been withdrawn because they're for less than the policy excess, outside the scope of the policy or people not wanting to lose their no claims bonus.
My insurance will cover me for everything including wear and tear
Insurance is there to support you for sudden and accidental events. It doesn't cover gradual damage that can be prevented by carrying out regular maintenance. For example – if a washer or pipe on your washing machine perishes, your insurance won't cover you to repair the part but will cover you for any damage caused from it leaking.
There is no point in complaining because nothing will happen.
Insurers are bound by the Fair Insurance Code to treat their customers honestly and fairly.
Many bad complaint experiences are the result of a lack of knowledge of what is and isn't covered. However, if a claim is in accordance with the contract and policy it will be paid.
If you feel that you have not been treated fairly, there are two independent dispute schemes to help you, Financial Services Complaints Limited or the Insurance and Financial Services Ombudsman. Their services are free and binding on the insurer.