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The basics

Having insurance is an important part of being resilient. It puts you back on your feet when the unexpected happens so you can get on with your life.

What is insurance?

Insurance exists to protect against unforeseen loss or damage.

It takes the form of a contract where one person or business (the insured) agrees to transfer the risk that a range of unforeseen events may happen to a business (an insurer). In return, the insured pays the insurer a fee (a premium). This is formalised in a legal contract (a policy).

If an unforeseen event covered by the policy causes loss or damage to the insured or their property, the insurer pays for that loss or damage. 

You can insure yourself, your property, and your legal liabilities.

Unforeseen events

An unforeseen event can be any event that the insured or insurer would not expect to happen. The more likely an event is to happen, the higher the risk taken on by the insurer.

Unforeseen events may include:

  • natural disasters (such as a cyclone or an earthquake)
  • a car accident
  • a house fire
  • theft.

Three types

There are 3 types of insurance:

  • health insurance
  • life insurance
  • general insurance (such as property or liability insurance; sometimes known as fire and general insurance).

ICNZ only represents general insurers so the resources on this site are specifically about general insurance.


Risk refers to the likelihood an insurer will need to pay for loss or damaged caused by an event. Risk is calculated based on the probabilities of events happening and takes into account circumstances specific to the insured.

If certain circumstances are statistically shown to increase the risk of an event, they will be taken into account when premiums are calculated. If statistics around those circumstances change, it may change the way premiums are calculated.

Learn more about risk

My Risk is a tool on the Know Risk website that uses a range of self-chosen circumstances to help you discover the sorts of risks you may face. It provides articles and guides to help you learn to manage risk better.

Use the tool

Example 1

If you're a 17 year old male, on a restricted license, and you want to insure your first car, then you may pay more in premiums than a 40 year old male would in the same circumstances. This is because young men are statistically more likely to get into car accidents than older men.

If you don't have any car accidents, then your insurer may decrease your premiums each year as you get older. When you turn 25, provided you still haven't had any accidents, you'll start paying the same premiums as other adult men in similar circumstances.

Example 2

If you live beside a river, you may be paying more in premiums now than you did 10 years ago. This is because climate change has caused an increase in severe weather events, which can result in flash flooding. Houses beside rivers are, on average, more likely to be affected by flash flooding than those further inland.

Insurance policies

An insurance policy is a legally-binding contract between an insurer and a person or business seeking insurance. It lays out what types of loss or damage the insurer will pay for and under what circumstances. It also outlines what sorts of events they will not pay for and what circumstances may result in them declining to pay.

Be honest

It is incredibly important that you're honest with your insurer when you sign up for a policy. Insurers calculate risk based on the information you give them. If you choose not to tell them things that would increase the risk they're taking on, your insurer has the right to decline claims or cancel your contract. Likewise, if you don't tell your insurer about things that may decrease their risk, you could end up paying more than you need to.

If you're not sure what your insurer may need to know about, ask them.

You have rights

Because a policy is a contract, you have the right to complain if you believe your insurer has treated you unfairly or not honoured your policy. If you and your insurer can't agree on a resolution, you can take your complaint to a free and impartial disputes resolution scheme.

Find out more

No better or worse

Insurance is about putting you back to where you were before an unforeseen event happened. Sometimes, that means items will be depreciated (have a portion of their original value removed based on their age or how much they've been used) to ensure you receive back only what you had before you needed to make a claim. In other cases, the amount paid out may be determined by how much it would cost to recreate what you have lost.