Resources
NZ insurance glossary
Insurance paperwork is riddled with jargon. Policy wordings, product disclosure statements, claims forms. Half the time they read like they were written to confuse you.
So we put this glossary together. Plain definitions, no legalese. These apply whether you're insuring a car in Auckland or a home in Tauranga. If you run into a term that's not listed here, get in touch and we'll break it down for you.
- Agreed Value
- A dollar figure you and the insurer lock in when the policy starts, representing what your vehicle or item is worth. If it gets written off or stolen, that's what you receive, minus your excess. You see this most often with car insurance.
- Comprehensive Cover
- The top tier of cover. With car insurance, comprehensive typically pays for damage to your own vehicle, damage to other people's vehicles and property, theft, fire, and weather events. It costs more than third party, but it covers a lot more too.
- Endorsement
- A written change to your policy that tweaks the standard terms. Say you want to add a young driver to your car insurance, or extend cover while your home is being renovated. That gets added as an endorsement.
- EQC Levy
- A charge built into your home and contents premium. It funds the Earthquake Commission (now called Toka Tu Ake), which runs the natural disaster fund covering the first portion of earthquake and other natural disaster claims in New Zealand.
- Excess
- The bit you pay yourself when you make a claim. Choose a higher excess and your premium drops, but you'll pay more out of pocket if something goes wrong. Watch out: some policies stack different excesses for different claim types.
- Exclusion
- Something your policy won't pay for, full stop. Every policy has exclusions, and they differ between insurers. Read them before you buy. Seriously. Most claim disputes we see come down to someone not knowing what was excluded.
- Indemnity
- The principle behind insurance: putting you back in the same financial position you were in before the loss happened. Not better off, not worse off. Just back to where you were.
- Legal Liability
- Your legal responsibility when you cause injury to someone or damage their property. Most home, contents and car insurance policies include legal liability cover, but there's always a cap on how much they'll pay.
- Market Value
- What your vehicle or item would realistically sell for right now, on the open market. Unlike agreed value, market value shifts over time and the insurer decides the figure when you claim. That can mean a lower payout than you expected.
- Natural Hazard
- Earthquakes, volcanic eruptions, hydrothermal activity, tsunamis, natural landslips. The first portion of residential property claims from these events is covered by EQC (Toka Tu Ake), and that applies whether you're in Wellington, Christchurch, or anywhere else in the country.
- No-Claims Bonus
- A premium discount you earn by not making claims. Go a few years claim-free and the discount builds up. Some insurers offer protection on your no-claims bonus so a single claim won't wipe it out.
- Policy Wording
- The actual document that spells out what is and isn't covered, plus all the terms, conditions and exclusions. This is the contract between you and the insurer. It's not light reading, but it's the thing that matters when you claim.
- Replacement Value
- What it would cost to buy a brand new version of the same item. With contents insurance, you're either on replacement value (new for old) or indemnity (what it was worth at the time). The difference matters when you claim.
- Specified Item
- A valuable item you've individually listed on your contents policy. An engagement ring, a laptop, a camera. These get their own cover limit and are often covered even when you take them out of the house.
- Subrogation
- After your insurer pays your claim, they can chase the person (or their insurer) who caused the loss to recover what they paid out. So if someone rear-ends you and your insurer covers the repair, they'll go after the other driver's insurer to get that money back.
- Sum Insured
- The ceiling on what your insurer will pay for a claim. For home insurance, your sum insured should match the full rebuild cost. Set it too low and you're underinsured, which is a very expensive mistake to discover after a fire or earthquake.
- Third Party
- Someone else, or their property, that's affected by an incident involving you. Third party car insurance only covers what you do to other people's vehicles and property. Your own car? Not covered under third party.
- Underinsured
- When your cover limits fall short of what you'd need for a full payout. More common than people think, especially with home insurance in Auckland and Wellington where rebuild costs have jumped over the past few years.
- Unspecified Item
- Everything in your home that you haven't individually listed on the policy. These items are covered under your total contents sum insured, but each one is capped at a per-item limit the insurer sets. If something is worth more than that limit, you need to specify it.
Dig into the detail on your cover
You know the terms now. These guides explain how each type of cover works in practice.
Still confused? Talk to a broker.
Ask us anything about your cover. We'll give you a straight answer, not a policy document.