Credit Related Insurance - things to consider

Is credit-related insurance mandatory when taking out a loan?

Credit-related insurance is optional insurance that you can buy to insure any secured items under a credit contract and your ability to repay your loan if you have an injury, sickness, redundancy or other unexpected event. Refer Consumer Protection website for more information on credit related insurance.

Insurer verses brand

Insurance products are often packaged up and sold under a brand. It is important to understand who is insuring that product and what their financial strength rating is. You’ll often find this as an additional logo on the front page or under the title ‘Financial Strength Rating’. All insurers must be transparent with their rating.

It is also important to ascertain what associations they belong to such as Insurance Council of NZ or Financial Services Federation, to ensure they are working to codes and standards. Also, do they belong to a disputes resolution scheme where you can escalate a complaint if necessary?

Are you getting apples with apples?

When considering purchasing insurance, be sure to do a comparison:

• What are the criteria? Are you/your vehicle eligible?

• What does your policy cover? What are the claim limits? What’s the excess?

• What are the policy terms and conditions?

• What are your obligations?

• Are the claims team based in New Zealand or overseas?

• Who will support you at claims time? Do they have claims experience?

• What’s the price?

Is cheapest the best option?

Not always. A better way to look at it is: ‘For the price, am I getting the value I need?’. How many boxes is it ticking? What boxes are essential and what’s ‘nice to have’?

Many insurers and brands have different options, it’s really down to your needs and what you’re prepared to pay for it. There are often payment options - pay more now and a lower excess or pay less and have a higher excess? It’s important to understand your needs first and ensure that it’s covered under the policy, then you can start looking at the price. This will help when it comes to doing your comparison. You certainly don’t want to select the cheapest insurance and discover later that you’re not covered.

However you select your insurance, be sure to consider these things before-hand so you can make some informed decisions - putting you in the driver’s seat.

Contact us on 021 2377804 or finance@driversseat.co.nz for more information.