Recent natural disasters have highlighted the need to be aware of what your insurance policies do, and don’t, cover.  It is also important that you understand the type of cover that you have, and how this will be interpreted in the event of a natural disaster.

Insurance exists to protect you from the financial consequences of natural disasters, (such as the recent tornados in Auckland or the Christchurch earthquakes), or natural events, (such as the disruptions caused to air travel by the Chilean ash cloud).  What then do you need to know about your insurance cover?

Start with your insurance policy. This records what you are covered for. If your copy of the policy has been lost or damaged, request a replacement copy. Read your policy carefully and don’t rely on your insurance company to tell you what you are covered for.  This was highlighted during the disruptions to air travel as a result of the Chilean ash cloud. Many air travellers who had booked “non-refundable” airfares were surprised to learn that they could apply to have the costs of airport taxes and surcharges refunded – and many airlines elected not to make travellers aware of this!

Research whether your insurance policy includes any “add-ons” – insurance companies are in the business of competing for your insurance dollar. Different companies provide different add-ons as incentives to choose their policies over those of competitors. Examples of add-ons can include:

• Cover for all people in the household, which can include extended family and their belongings;
• Cover for business assets as part of a domestic policy;
• Cover for alternative or emergency accommodation and a food allowance;
• Loss of rent if the property is a rental property (and in some cases this can be paid out in advance if the whole of the property is damaged);
• Cash advances of part of your claim entitlement.

Good records will assist your claim – if you are throwing out damaged property, keep a record (ideally, take photos) of what you are throwing away and what condition it was in.  Even better, take photos of your significant assets (particularly jewellery and electronic goods) when purchased so you have a good record of what you own. If you ring your insurance company, keep a note of what day and time you ring, and the full name of the person you are talking to. This will assist if there is any dispute with the insurance company later on about what was said and by whom. Contact your bank and finance companies to obtain records of ownership and payments for assets that are subject to loans or hire purchase arrangements. Lastly, consider keeping electronic copies of records, photos, and important legal documents off-site.  Many residents in the Christchurch earthquake found themselves either unable to get into their homes, or their homes completely damaged – records that were in those homes were lost forever.