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NZ insurance glossary. Every term explained
Insurance is full of jargon. Policy wordings, product disclosure statements and claims forms are written in language that can be hard to follow.
We've put together this glossary of common New Zealand insurance terms, without the jargon. If you come across a term that's not listed here, get in touch and we'll explain it.
- Agreed Value
- A set amount you and the insurer agree your vehicle or item is worth when the policy starts. If it's written off or stolen, you receive this amount (less your excess). Common in car insurance.
- Comprehensive Cover
- The highest level of insurance cover. For car insurance, this typically covers damage to your own vehicle, other people's vehicles and property, theft, fire, and weather events.
- Endorsement
- A change or addition to your policy that modifies the standard terms. For example, adding a young driver to your car insurance or extending cover for a home renovation.
- EQC Levy
- A levy included in your home and contents insurance premium that funds the Earthquake Commission (now known as Toka Tu Ake). It contributes to the natural disaster fund that covers the first portion of earthquake and other natural disaster claims.
- Excess
- The amount you pay out of your own pocket when you make a claim. A higher excess usually means a lower premium. Some policies have multiple excesses for different types of claims.
- Exclusion
- Something your policy specifically does not cover. Every insurance policy has exclusions, and they vary between insurers. Reading the exclusions is one of the most important things you can do before buying cover.
- Hidden Gradual Damage
- Damage that happens slowly over time and isn't immediately visible - such as a slow water leak inside a wall. Some home insurance policies cover this, but there are usually specific conditions and limits.
- Indemnity
- The principle of putting you back in the same financial position you were in before the loss. Insurance is designed to indemnify you - not to leave you better or worse off.
- Legal Liability
- Your legal responsibility if you cause injury to someone or damage to their property. Most home, contents and car insurance policies include legal liability cover up to a specified limit.
- Market Value
- What your vehicle or item would sell for on the open market at the time of a claim. Unlike agreed value, market value can change over time and is determined by the insurer when you claim.
- Natural Hazard
- Events like earthquakes, volcanic eruptions, hydrothermal activity, tsunamis, and natural landslips. In New Zealand, the first portion of natural hazard claims on residential property is covered by EQC.
- No-Claims Bonus
- A discount on your premium that rewards you for not making claims. The longer you go without claiming, the bigger the discount. Some insurers offer no-claims bonus protection so one claim doesn't reset it.
- Policy Wording
- The full legal document that sets out exactly what is and isn't covered, along with all the terms, conditions and exclusions. This is the contract between you and the insurer.
- Premium
- The amount you pay for your insurance cover, usually monthly or annually. Your premium is based on factors like the type of cover, your claims history, and the level of risk the insurer assesses.
- Replacement Value
- The cost to replace an item with a new one of the same kind and quality. Contents insurance can be on a replacement value basis (new for old) or an indemnity basis (current value).
- Specified Item
- A valuable item that is individually listed on your contents policy, such as an engagement ring or a laptop. Specified items usually have their own cover limit and may be covered outside the home.
- Subrogation
- The right of your insurer to recover costs from a third party who caused the loss. For example, if another driver causes an accident, your insurer may pursue their insurer for reimbursement after paying your claim.
- Sum Insured
- The maximum amount your insurer will pay out for a claim. For home insurance, this should reflect the full cost to rebuild your house. Getting this wrong can leave you significantly underinsured.
- Third Party
- A person or their property that is affected by an incident you're involved in. Third party car insurance covers damage you cause to other people's vehicles and property, but not your own.
- Underinsured
- When your cover limits are too low to fully cover a loss. This is surprisingly common in New Zealand, particularly with home insurance where rebuild costs have risen significantly.
- Unspecified Item
- Contents items that are not individually listed on your policy. They're covered as part of your total contents sum insured, usually up to a per-item limit set by the insurer.
Learn more about your insurance
Now that you know the terminology, explore our guides to understand your cover better.
Still confused? Talk to a broker.
Ask us anything about your insurance - no jargon, no pressure.