Insurance – it’s a back up you should have

It's more than likely you have heard about insurance but never really thought you would need it.

That's all good, right up to the point when you left your iPhone on the bus, or someone kindly 'borrowed' your laptop.

"Don't worry -claim it on insurance" your mates tell you. Well, can you?  The answer is that it is not quite as simple as you might think or hope.

Insurance is all about having a back up in place should bad things happen. And they do. We break things, forget things, do silly things and have things stolen. Sometimes we just can't help it, and when bad things happen, it's nice to have somewhere to turn.

While you are at school and living at home, this back up is often provided by our parents and we can have things like clothing, sports items and even laptops and electronics covered by parents' policies. Moving away from home for work or study changes this and means it is likely our stuff actually is not covered at all. Insurance companies are generally onto claims made by parents on our behalf beyond school age, so maybe we need to look at insurance to cover our new situations.

You might not be covered by someone else

A study by Massey University a couple of years ago showed that just one of every five students had contents insurance for their stuff. Most believed they had some form of cover via their parents, or they could be covered by their landlord's or hostel's insurance. Most would be wrong.

Insurance is even more important when living in a rented flat. All sorts of possibilities can (and do) happen, and if there is any damage to the property and you, your flat mates or anyone visiting are shown to be responsible, the landlord's insurance company can make you cover the costs of repairing the damage. Signing the tenancy agreement can make the responsibility yours.

Use this calculator to see what your stuff could be worth

Work out who is responsible for insuring what in a flat

A real example of what can go bad

How about the case of the three flatmates in Auckland in 2014 who woke up to a flooded apartment? Turned out one of them hung a coat hanger on the sprinkler which set it off, flooding not just their place but a few other apartments below theirs. In the end the landlord's insurance company said the flatmates were responsible and owed almost $27,000 for the repairs.

They were lucky. One of them had a tenant contents policy that not only covered his personal losses, but included what is called personal liability cover. Basically his insurance company took responsibility and settled directly with the landlord's insurance company. It saved all three flatmates from a major legal debt none of them saw coming.

By the time you add up the cost of replacing your electronics, clothes and other gear you plan to take with you, it can be a reasonable sum. For the cost of a coffee once a week you will find that just about everything you want with you can be covered by insurance. It's easy to get and balanced against the cost of a new laptop, bike or surfboard, cheap.

Read more about renter's content insurance

Want to insure that car? Here's what you need to know

Here’s some insurance tips to help you:

  • You can get contents insurance from your bank, or from insurance companies themselves or one of their agents or brokers.
  • Getting a policy sorted online is really easy too, and it's a simple enough process to compare policies and prices between companies.
  • It is worth making sure you are covered for all risks and for where your stuff is, and in light of the guys above, that there is a personal liability cover included.
  • Some policies replace your items with new ones, while others pay you out either the new or the second-hand value. Make sure you know which type you have.
  • Finally, if you move from the address the insurance company has for you, let the insurance company know your new address.

Find out more about managing your money