We are sure that you werent the only kiwi sitting safe at home during our COVID-19 lockdown wondering why have car insurance when you’re not driving your car or why have contents insurance because there’s no chance of a burglary when you’re home 24/7.
While we agree there are some things your insurance covers you for that either won’t be used as much or the risk of an accident happening are much reduced, your insurance coverage has benefits far wider than just home burglaries and car accidents. There are also some other risks that may actually increase with you being at home.
Your car insurance covers you for theft or damage while it’s parked up on the side of the road, your driveway and your garage as well as for the odd trip to supermarkets. Your insurance protects you against damage to your car while parked and out of sight, theft, accidental damage caused by others or even worse if the garage burns down. While the garage burning down seems a little unlikely, you would be surprised how often insurers receive claims for things falling on the car while it’s parked in the garage, or people clipping the side of their garage door when they reverse it out, even if just to clean it. If you don’t have a garage and park on the street, you are more open to malicious damage and damage from weather. Last year, a hailstorm in Timaru was New Zealand’s most costly motor event and damaged 10,000 cars in one hit. If you have finance on your car, you are required to have car insurance, and while you may think it’s a manageable risk to cancel while you’re not driving it, if something was to happen, paying a car debt with no car would be painful.
Your home contents insurance covers you for damage to your belongings for things such as burglaries and theft but also for earthquakes, fire, floods or accidental damage. Damage to your contents can still happen while you are at home and arguably the risks may in fact increase with more use. Children wanting to run about and burn off energy brings a higher likelihood of breaking things. Cell phones, tablets, televisions and computers are a vital link to the outside world, being used for work and schooling and keeping a lot of parents sane at the moment. Imagine damaging those things with no funds to get them replaced.
Earthquakes, storms and floods are not something easy to contemplate when we are already undergoing massive change to the way we are living. New Zealand is the second riskiest country in the world to the threat of natural disaster, and mother nature is probably not going to give us a break while we fight this virus. While the chance of a natural disaster is reasonably small, the financial impact is very high.
The risks of fire are increased due to additional load on the wiring from everyone in the house working from home all day every day – if your home is more than 20 years old it is probably not wired for this new kind of living. A little known benefit of most contents insurance policies is temporary accommodation which covers the reasonable costs for you and your family and pets for alternative accommodation if your house becomes uninhabitable due to a loss covered by the policy – even if you’re a renter, this benefit applies. If you needed to vacate your home until repairs have been made during COVID-19 restrictions, your insurer would be there to help.
Another little-known benefit of your contents insurance is a liability benefit. Liability cover protects you if you accidentally damage someone else’s property, with a limit usually between $1-2 million. That could be damage you cause to someone else’s property or your child’s runaway bicycle or even your shopping trolley damaging someone’s parked car.
Many of the risks insurance covers you for have not gone away, just because you are at home right now. We know many people are struggling financially now due to reduced hours or losing your income. If you are currently struggling with affordability of your premiums – call your insurer as they may have ways to save you money.
Next week we will talk about ways to save on your insurance premiums and what measures insurers are putting in place to help people in financial hardship.