Insurance in New Zealand - a guide for migrants
If you’re thinking of coming to New Zealand for work, study or a holiday you may want (or need) to get insurance to protect yourself from unexpected costs.
Moving to a new country can be a stressful and costly exercise, so gain peace of mind by covering yourself from the unexpected. There are many different types of insurance in New Zealand and it may be different from what you are used to.
It is a good idea to buy travel insurance whenever you take an overseas holiday or move overseas for a short period of time. Typical policies will cover your belongings against loss or theft, cancellation resulting in loss of deposits, medical treatment, costs to return home in certain emergencies and personal liability. It is important to remember to purchase your travel insurance before you leave home as it is unlikely you will get insured if you have already left the country. Hazardous pursuits, such as adventure tourism or extreme sports, are not always covered so it pays to check with your insurance provider when purchasing the policy.
New Zealand’s public health system is subsidised by the government, but there may be part-charges for services when private healthcare providers are involved. You are eligible for subsidised healthcare if you are a citizen, resident or hold a work visa valid for two years or more from the date you arrive in New Zealand. If you meet these criteria, then your children aged 17 years or under will also be eligible for publicly funded healthcare.
To be able to take out private health insurance in New Zealand, you must be eligible for our public health system. If you are not eligible, make sure you get comprehensive travel insurance before you leave home.
If you are on a work visa that is less than two years, you will need to pay for your healthcare, as and when you need it. There are some exceptions to these rules, so check all the details on the Ministry of Health eligibility page.
Most costs of injuries from accidents are covered by our accident compensation scheme, ACC.
ACC provides no-fault insurance cover to everyone in New Zealand for injuries resulting from accidents - everything from car crashes to injuries at work, slips, trips and falls at home or breaking your arm skiing, even if the person who is injured caused the accident. Due to the wide range of help available from ACC, you cannot sue for personal injury in New Zealand.
Home insurance is only necessary if you own your own property.
In New Zealand, home insurance is usually calculated on a ‘sum insured’ basis. This means that if your home needs to be rebuilt, the insurer will only pay out the maximum sum that you specify when you take out your policy.
It means that you will need to have a good idea of what it would cost to replace your home if the worst should happen.
If you are buying an apartment, insurance for the building will normally be included in the annual body corporate fee. However make sure you check the details of this before you purchase. You will need to provide your own contents insurance.
Contents insurance is for both home owners and renters.
Whether you are renting an individual room or the entire house, the landlord is responsible for insuring the building. Tenants are responsible for getting cover for their own possessions. Contents insurance covers the contents of the home, including household possessions, furniture, clothes, appliances, carpets and curtains. Most policies will have claim limits and there may be different restrictions. There are two specific covers available:
- Replacement policy: Insured items will be replaced or repaired to new condition.
- Indemnity policy (present value): The insured items will be put back in the same position they were in before the loss of damage occurred.
Natural disaster insurance - EQCover
EQCover provides natural disaster insurance for residential homes, land and contents. You are automatically covered if you have home or contents insurance that includes fire insurance. Cover insures you from loss or damage from an earthquake, natural landslip, volcanic eruption, hydrothermal activity or a tsunami. There is also limited cover for storm and flood damage and covers fire resulting from one of the listed natural disasters.
In the event of a major natural disaster where EQCover cannot cover its obligations, the New Zealand Government will pay the shortfall.
Vehicle insurance is not compulsory in New Zealand. However ‘third party insurance’, which insures you against having to personally pay the cost of damage to someone else’s vehicle, is recommended as a minimum.
There are three types of motor vehicle policies:
- Third Party Property Damage: this covers you against the damage you cause to someone else’s vehicle and/or property. It is the least expensive type of car insurance
- Third Party, Fire and Theft: This covers damage caused by fire and theft to your vehicle as well as Third Party Property Damage.
- Comprehensive: This covers you against accidental loss of, or damage to, your motor vehicle. It also covers you for any damage to other people's vehicles or property, whether it was your fault or someone else's, and for other costs such as salvaging your car from the accident scene and towing it to a repairer. As well as the standard policy, companies offer a wide variety of options and benefits. Generally, the more extensive the cover, the more expensive the policy.
Income insurance allows you to protect a percentage of your income in the event you become ill and are unable to work. The insurer will make monthly payments of up to 75% of your “pre-disability income” until you can return to work, or your payment period ends. There are three important things to keep in mind:
- Your claim payments are based on your “pre-disability income”. This typically means your income over any consecutive 12 month period in the last three years.
- Your claim payments cannot be more than the amount you have insured. Even if your income at the time you are disabled has increased you will still only receive the amount you have insured.
- The claim payments that you receive are taxed as income by the IRD (your premiums are tax deductible).
It is important to check your cover amount regularly and increase or decrease it with changes in your income.
If you are a resident in New Zealand, you can get life insurance. This is a lump sum that is paid out to the policy owner if the insured person dies or is terminally ill (meaning they have 12 months or fewer to live). Any cause of death is covered with the exclusion of suicide within the first 13 months of the policy. Claims may be denied if there is significant non-disclosure of a history of illness on the application form.
Migration insurance provides a sense of security for individuals, couples and families moving overseas.
Policies can cover:
- Temporary return cover: in the event of a serious illness, injury or death of a close relative, or damage to your house in your home country
- Involuntary redundancy: to assist with gaining further employment if you’re involuntarily made redundant. This does not include income protection insurance
- Permanent return cover: to assist in returning to your home country if your move does not work out
- Travel insurance: covers your trip to your new country and up to 30 days of additional travel insurance
If you want help with your insurance decisions, you may wish to go through an insurance broker. An insurance broker is an independent professional adviser who is instructed by you and acts on your behalf. Their task is to help you identify risks you should be insured against and to find the most suitable insurance protection to meet your needs. They will also arrange the insurance policy and documentation, support you with claims, and remind you to update or renew policies.
This article is a summary of the insurance industry in New Zealand, if you wish to learn more visit the following websites