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So, you’ve finally grown up and flown the coop, leaving mum and dad tearfully waving at the door as you drive away to start your adult life (just quietly, we know they are inwardly rejoicing, also.)
You’ve got all your clothes, Ted-E-Bear from when you were five, stolen as much food from the pantry as possible, and left behind your childhood sports trophies and art projects (just in case your parents needed a reminder of you).
But in your haste to fly the nest into adulthood and freedom, you may not have considered your own independent insurance, for your now independent self.
You might not know or care much about insurance, it's not exactly glamourous, let’s face it. Maybe it is something your parents have, and therefore you are covered too, so that’s all good, right?
Well, unfortunately no! Changing your own sheets and cooking your own dinner is not the only downside of moving out of Hotel Mum& Dad.
Unless directly specified in an active policy, your worldly possessions are not covered by Mum and Dad’s insurance when you remove them from their premises.
This means that if you crash your car, burndown the flat, or get burgled – your car, devices, instruments, sports gear, etc – are not covered, and you will have to replace them yourself, with your own, hard-earned cash from that part-time, entry-level job you loathe.
Making sure you’re covered is not that difficult or expensive. Let’s look at a couple of scenarios for car and contents to get you started.
If you have a car, regardless of whether it is a beater or for making others envious, it needs to be insured. Don’t think about it as a judgement of your driving, but that accidents and life just happen(and not everyone driving on the road is particularly good at it either.)
For example, that car that you didn’t see while reversing might end up being the latest model 2022 BMW, and without insurance that is going to take you a loooooong time to pay off! No more online shopping or road trips for a while in that case. Grim.
You can be protected against this kind of risk with Third-party insurance (The Best Third-party and Fire and Theft Car Insurance Policies - MoneyHub NZ) Third party is commonly extended to include theft, which we highly recommend if your car is parked unsecured (carport, public carpark or on-street parking etc) especially overnight. This is common in flatting-type situations, where not everyone can enjoy the security of a garage.
Most Third party gives your protection against:
1. Damage you may cause to other people's property, whether that’s their car, or the corner of their garage, that came up out of nowhere!
2. Any bodily harm you may cause to other road users, whether that is from a crash and the other driver, or their passengers are hurt, or something more unusual, like your wheel rolling away and hitting a pedestrian.
3. Some insurers will even cover damage to your vehicle where you are not at fault, and the other driver is uninsured.
4. Most third-party policies have an extension called Fire & Theft which covers your vehicle if it gets pinched or if it catches fire (not as a result of a crash)
Third Party generally costs between $6 and $11a week for a car under 15k, or the price of a bought lunch.
If you rely on your vehicle to get to work, you might even look to go with Comprehensive Cover (Car Insurance NZ |Compare, Quote and Save - MoneyHub NZ), slightly dearer but that one covers you as well.
For example, if you are running late for the morning lecture, drop your coffee in your lap, and plunge into the neighbour's new fence, comprehensive cover will cover you for the car, and the fence.
Or, if your mechanic breaks the grim news that your beloved Suzuki Swift has had an engine failure and needs $2000worth of work, comprehensive cover will get you back on the roads and some policies even cover your costs too, like a rental car while yours is in the shop.
Most Comprehensive Cover gives your protection against:
1. Damage you cause to other people’s property(cars, objects and buildings), as well as cover for your own vehicle.
2. Free chip and small crack repairs in your windscreen and windows from those pesky bits of gravel, or your unusually large cat jumping onto your windscreen (yes, this has actually happened).
3. Towing costs to the nearest repairer, should you break down. Especially good if you’re planning on a summer roadie and don’t fancy getting stuck in the middle of nowhere if the Swift carks it. Most comprehensive policies have a roadside assistance extension you can add in as well, which means a friendly mechanic will come help you on the side of the road.
Comprehensive Cover can cost between $8 and $15 a week for a car under 15k and can be bought for roughly the same price as an Uber ride each week.
The second area of cover is equally important, protecting your contents.
This is everything in you own in your flat – i.e., your clothing, your jewellery, your bed, your devices including laptops, gaming PC, and mobile phones, maybe an instrument, camera, or a mountain bike. Everything that is of value to you, that would cost you cash to replace.
Contents insurance covers you for theft, losing the item and damage – think burgle, bungle and bust.
Even if your multi-tasking, messaging, and coffee-holding butter-fingers drop your new laptop at Uni, as long as the laptop is usually kept at your address, you’ll be able to claim on it with contents insurance. But wait, there’s more.
Insurance is there as a safeguard for not only your possession themselves, but also the liability you pose in using them.
For example, your possession themselves malfunction and cause damage to someone else’s property. Maybe the Trade Me washing machine you brought into the flat malfunctions, causing a flood, creating a $500repair bill for the laundry floor. Or the Ali Express LED glow lights you installed in your bedroom blow the circuit and need an electrician to come in to repair. This part of your contents insurance policy will kick in and cover the damages, instead of your landlord sending you the bill.
So that deals with the contents themselves. But what about the building that they are housed in?
Maybe the flat you are moving into is a bit old, leaky, or earthquake prone (a pretty common student-life scenario here in Wellington… Aro Valley, anyone??) Not only could this make you more motivated to get insurance in case things do turn to custard, but a catch is that it may make it harder to get.
When Insurers decide whether to accept new business, they assess the risk involved for them, and price their policies accordingly. This may mean that they deliberately price themselves out (i.e., where they give such a high price as to politely say, no thanks, they’re not interested), or may decline to offer cover entirely.
One big factor in all of this for home and content policies is earthquake risk.
Earthquakes are not good for people, houses, and contents, and not good for insurance companies either. Large earthquakes can affect many houses at once, in potentially large areas, concentrating the risk for insurance companies, and making them cagey about who they choose to cover.
You may be thinking, “It’s not my property, so why does it matter/affect me?” if the 110-year-old flat foundations are a bit shady.
Well, the answer is that houses with a high earthquake risk may be declined home cover by insurance companies who are unwilling to accept the risk. The flow on effect of that, is that tenants living in the property are subsequently declined contents insurance as well, because the insurer deems cover on contents in a risky house as, well, too much of a risk.
This can be solved with a small amount of due diligence, before you sign the lease. Give your insurer a call ahead of sign time and get a contents quote for the property (even if you don’t know all the details of what you will store there yet, or even that you’ll purchase insurance.) The point is to check that your insurer will insure your contents at that property. Then you will know before you sign your life away that you can get cover while living at that address.
Moving out or moving up the flat ladder is a big deal. Now you are flying solo you want to make sure that the things that are important to you are covered.
Getting covered doesn’t take long to arrange, or cost much more than a takeaway or two a week.
Take the time to do a little due diligence now and it will pay dividends. It can save you a massive hole in your pocket and headache when something does go wrong, or life just happens.
Want to get an idea of cost and cover? Give me a call and we will look at the best options for you.
All the best with this exciting stage!
Ben
Hi, I'm Ben, a Broker Support for Caveo, our Fire & General insurance arm at Velocity Financial. My main job is helping Joshua find the best cover for your situation, whether you've got a large portfolio, getting that first home, or bought a car - we will guide you through the process of protecting it, making sure it, and you, are looked after. Whether you work best by reading over things, or talking over coffee, I love taking the time to chat and explain things, so that you can be reassured that you've got the right cover for everything life throws at us. When I'm not working, I'll either be found riding my Kawasaki, out in my kayak, running trails, or packing the car for my next roadie. My friends will say I love talking about these just as much as I like doing them, so I'm always ready for a good walking track recommendation if you've got a stunner.
Disclaimer:
Before you make any decisions, discuss your situation with an adviser from Velocity Financial, and seek advice from professionals, such as a lawyer and accountant, to find the best solution for your unique situation.