Understanding common exclusions in home, contents, and motor insurance policies

Insurance exclusions can come as a surprise to policyholders – particularly when they're attempting to make a claim. According to the Insurance Council of New Zealand (ICNZ), it's important for consumers to understand what their policies do not cover, ideally before committing to a new policy or at renewal time.

ICNZ recently published a checklist summarising common exclusions across three major insurance categories: house, contents, and personal vehicle cover. The guidance aims to improve policyholder awareness and reduce misunderstandings during the claims process.

House insurance: business use, gradual damage among exclusions

Several types of claims are commonly declined under house insurance due to specific exclusions. These include:

• Homes used for business or commercial activity beyond what is allowed under the policy
• Damage from insects, vermin, or gradual deterioration such as rust, rot, or mildew
• Damage occurring during renovations or construction unless additional cover is arranged
• Drug contamination or damage caused intentionally by occupants
• Pre-existing damage, or losses that occur while the home is unoccupied for an extended period (usually 60 days or more)
• Damage to land or parts of the home not covered by the policy’s definition of “home”
• Liability arising from non-compliance with landlord obligations in rental situations
• Consequential loss, such as indirect financial impacts of an event

Contents insurance: exclusions tied to wear, pets, and business use

Like house policies, contents insurance also includes a number of standard exclusions. Commonly excluded are:

• Items used for business purposes or associated with home-based commercial activity
• Damage caused by pets, animals, insects, or vermin
• Wear and tear, depreciation, and other forms of gradual degradation
• Items damaged during renovations or building works without additional cover
• Unlicensed software, business-related items, or cash and valuables with limited coverage
• Property that has been removed from the home, unless specifically covered for off-site risks
• Motor vehicles and powered equipment
• Pre-existing damage and losses occurring when a home is vacant beyond the stated policy period
• Plants (indoor or outdoor), though containers may sometimes be covered

Motor insurance: limitations on driver conduct and vehicle use

Motor insurance policies tend to exclude claims involving:

• Driving under the influence of drugs or alcohol
• Unlicensed or unauthorised drivers, or use outside licence conditions
• Modifications not disclosed to the insurer
• Overloaded vehicles or unsafe towing practices
• General wear and tear or mechanical failure (unless a specific mechanical breakdown policy is in place)
• Use of incorrect fuel, deliberate damage, or pre-existing issues
• Commercial use of the vehicle such as for rideshare services, unless specified
• Participation in motorsport or reckless driving
• Consequential losses like loss of use or depreciation

Reviewing your policy and next steps

Consumers are encouraged to read the full wording of their current insurance policies to understand specific inclusions and exclusions. Policy documents typically outline the scope of coverage, limitations, and terms. For any uncertainties, contacting the insurer directly is advised.

ICNZ also offers consumer guides covering different aspects of insurance, available via its website.