If you have more than one insurance policy for the same property or risk, this can cause complexity when you need to make a claim. Read this guide to understand what double insurance is and how to avoid problems.
Double insurance is when you have more than one insurance policy for the same property or risk.
For consumers, this generally occurs by accident. For example, you may have thought you cancelled a house policy and took out a new policy with a different insurer. However, both policies are still in place.
If you hold more than one insurance policy for the same property or risk and need to make a claim, it can add complexity to the claims process.
Holding more than one insurance policy does not necessarily mean your claim will not be accepted. However, it will require the insurers to go through their relevant double insurance claims process, consistent with the relevant policy wordings.
Mr Kay’s* policy mistake
Mr Kay had contents insurance. In 2021, he realised he mistakenly held another contents policy with another insurer. He notified his insurer and asked if he could receive a reimbursement of premiums. Later, Mr Kay made a claim for a damaged television. His insurer accepted the claim. However, it said because he had made a claim, he was not entitled to receive a premium refund. Mr Kay said he was not advised he would not be eligible for a premium refund if he made a claim.
The IFSO Scheme confirmed the insurer had not been transparent about the premium refund Mr Kay would have been entitled to and this should be balanced with the fact the insurer had paid the claim. Mr Kay and the insurer agreed to settle the complaint with an ex gratia payment of $500.
Ms Bee’s* insurance mix up
In 2001, Ms Bee purchased a unit and insurance was arranged through both a body corporate policy and individual policy. In 2015, Ms Bee realised that her unit was insured twice and notified the insurer. She said that the insurer was aware of the body corporate policy and should not have arranged a second policy. The insurer confirmed that an accidental duplication of insurance had occurred and that it would reimburse 6 years of premiums, in accordance with its protocols. Ms Bee said she should be reimbursed for all premiums paid from 2001.
The IFSO Scheme confirmed that the Limitation Act 2010 applied to Ms Bee’s situation and that the insurer could limit the premium refund to 6 years. The extension in the Limitation Act did not apply, because Ms Bee received confirmation each year that her unit was insured through the body corporate and she should have been reasonably aware within 6 years that she was insured twice.
*Names have been changed
You should tell your insurer as soon as you become aware that you have more than one insurance policy for the same property or risk. The insurer will let you know what this means for your insurance and your options moving forward. For example, with house, contents or car insurance, if you don’t make a claim, you may be able to get a full refund of premiums on one of the policies.
If you need to make a claim, you should contact one insurer to make a claim and let them know you have a second insurance policy.
The insurer will then let you know the next steps for the claim. Your insurer will provide you with more information about how the claim will be assessed and settled during the claims process.
Even if you hold more than one policy for the same insured property or risk, the total amount you are entitled to receive is the amount to repair or replace the damage or loss to your property, consistent with your policy wording.
It is fraudulent not to tell your insurer that you have another policy and seek to obtain the full claim amount from both insurers. This is because you are receiving more than you are entitled to repair or replace the damage or loss to your property.
More information is available from the Insurance Fraud Bureau New Zealand.
If you have two insurance policies for the same property or risk and believe your insurer isn’t following its double insurance process correctly, you can make a complaint through the insurer’s internal complaints process. If you are unhappy with the complaint response, you can ask the IFSO Scheme to investigate your complaint, for free.
Make sure any policy cancellation instructions have been actioned
If you cancel an insurance policy, make sure you receive confirmation that your instructions have been actioned.
Check your bank statements following the cancellation to ensure the premium payments have stopped. If the premiums continue to be paid, the policy probably has not been cancelled by the insurer and you will need to follow up.
Keep your contact details up to date with your insurer
For house, contents and car insurance your insurer will send you a renewal notice each year with details of the policy you hold with them.
Make sure your insurer has your correct postal address and other contact details to ensure you receive the renewal notices and can notify the insurer if you have received a renewal notice for a policy you thought was cancelled, or requires cancellation.
Read your policy
Check your policy wording to see what double insurance provisions apply to you. If you have any questions, talk to your insurer.