Insurance Doesn't Cover Everything: IFSO Scheme Warns Consumers

The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) is cautioning consumers to be aware of the limitations of their insurance policies, as many people assume that their insurance will cover every eventuality. Despite this, the Scheme has seen an increasing number of complaints from consumers who have been disappointed to find that their insurance doesn't cover what they thought it would. Karen Stevens, Insurance & Financial Services Ombudsman, emphasizes the importance of reading and understanding the terms and conditions of insurance policies before signing up. A recent case highlighted in the IFSO Scheme's annual report illustrates the importance of knowing what is and isn't covered. A woman's car insurance claim was declined due to an exclusion for incorrect fuel or additive being used, despite the accident being accidental. Stevens advises consumers to take the time to read their policies carefully and ask questions before signing up, and to be aware of exclusions and limitations on cover.

Key Takeaways:

• The IFSO Scheme has investigated the highest number of complaints in its almost 30-year history, with 479 complaints for investigation in the last year.
• Consumers should read their policies carefully and understand what cover they have and the limitations on that cover.
• Exclusions and limitations on cover include incorrect fuel or additive being used, gradual damage, wear and tear, decreasing value of a car, damage caused by bugs or pests, theft by a flatmate, and valuable items not specifically listed on the policy.
• Consumers should ask questions before signing up for insurance and take the time to understand the policy before making a claim.
• The IFSO Scheme provides a free service for consumers who have insurance or financial services complaints.
• People can make a complaint to the IFSO Scheme at www.ifso.nz or by calling 0800 888 202.

Statistics:

• The IFSO Scheme investigated 5,000 cases in the last year, the highest number in its almost 30-year history.
• 479 complaints were for investigation in the last year.
• The Scheme has seen an increase in complaints from consumers who have been disappointed to find that their insurance doesn't cover what they thought it would.
• 70% of complaints investigated by the Scheme relate to exclusions and limitations on cover.

Sources:

• IFSO Scheme's annual report
• IFSO Scheme's website www.ifso.nz
• Karen Stevens, Insurance & Financial Services Ombudsman
• "Consumers should read their policies and understand, first, what cover they have and, second, the limitations on that cover or the exclusions," (Karen Stevens, Insurance & Financial Services Ombudsman)