The Fine Print: Understanding What Your Insurance Does Not Cover

We buy insurance for peace of mind, to know that if life takes a wrong turn, there is a financial safety net to catch us. But nothing is more frustrating than reaching for that net and finding a hole in it.

These holes are called exclusions. They are the specific situations, conditions, or actions that your insurance policy will not cover. While they can feel unfair, they serve a vital purpose: they keep insurance affordable for everyone by ensuring insurers aren't paying for risks that are certain to happen or impossible to price.

Understanding these boundaries *before* you sign the paperwork is just as important as knowing your sum insured.

The Pre-existing Elephant in the Room

The most common exclusion New Zealanders face relates to pre-existing conditions.

Insurance is designed to protect against the *unknown* future, not the *known* past. If you try to insure a car that has already crashed, no insurer will take you on. Similarly, if you have a history of chronic back pain, an insurer is unlikely to cover you for back disability, because the risk is already there.

However, a pre-existing condition rarely means you can't get insurance at all. Instead, insurers will often offer you standard cover with exclusions.

• •Example: You have a history of knee surgery. The insurer offers you a policy that covers cancer, heart attacks, strokes, and car accidents, but specifically excludes any claim arising from or related to the right knee.

This is still valuable cover. Don't throw away protection for 99% of your body just because 1% is excluded.

The Honesty Rule (Duty of Disclosure)

For years, New Zealand law placed a heavy burden on you to tell the insurer everything a prudent insurer might want to know, even if they didn't ask.

The rules have recently shifted to be fairer to consumers. Under the new Contracts of Insurance Act, your primary duty is to take reasonable care not to make a misrepresentation.

In plain English? You must answer the insurer's questions honestly, accurately, and completely.

If the application asks whether you have visited a doctor in the last 5 years and you forget to mention that mole map or the physio visit for your shoulder, you are walking on thin ice. If you need to claim later, the insurer can check your medical notes. If they find you withheld information, (even accidentally) they may have the right to:

• •Adjust your claim: Pay you less than the full amount.
• •Void your policy: Cancel the contract entirely as if it never existed, meaning no payout at all.

The Golden Rule: If in doubt, tell them. It is far better to have a specific exclusion applied upfront than to have a claim declined years later because you didn't mention it.

The Standard Exclusions

While health exclusions are personal to you, some exclusions apply to almost everyone. These are written into the policy wording (the fine print) and usually include:

• •Suicide: Most Life Insurance policies in New Zealand have a 13-month stand-down period for suicide. If death occurs by suicide within the first 13 months of the policy starting (or being reinstated), there is no payout. After 13 months, full cover generally applies.
• •Intentional Acts: You cannot claim for injuries or damages you deliberately caused yourself.
• •Criminal Activity: If you are injured while committing a crime (e.g., crashing your car while fleeing police or driving over the legal alcohol limit), your Life and Income Protection policies will typically decline the claim.
• •Pregnancy (Income Protection): Most Income Protection policies do not cover standard pregnancy or childbirth time off. However, many *do* cover complications arising from pregnancy (like eclampsia) that keep you off work longer than a set period (often 90 days after birth).

Mental Health: A Sensitive Subject

Mental health is a major focus for New Zealand insurers, and their approach varies significantly.

Because stress, anxiety, and depression are common reasons for Income Protection claims, insurers look closely at your history. If you have a history of mild anxiety managed by your GP, one insurer might exclude *all* mental health claims, while another might only exclude that specific condition, or offer full cover after a stand-down period.

This is where working with an adviser is critical. They know which insurers are more progressive with mental health and can help you find the provider that offers the fairest terms for your history.

Exclusions Can Be Temporary

Here is the good news: an exclusion doesn't have to be a life sentence.

Medical exclusions are often reviewable. If you had a back exclusion because of an injury five years ago, but you haven't seen a doctor, chiro, or physio for your back since then, you can ask your insurer to review it.

If you can provide medical evidence that the issue is fully resolved and you have been symptom-free for a set period, insurers will often remove the exclusion. This restores your policy to standard full cover.

Protecting Your Uninsurable Risks

If you have a major exclusion, (say, your lower back) is excluded from your Income Protection), you need a Plan B.

• •Build an Emergency Fund: If the insurer won't cover your back, you need to self-insure that specific risk. Build a specific savings buffer dedicated to covering your bills if your back flares up.
• •Check Your ACC Code: Remember that ACC covers accidents. Even if your insurance excludes your back, ACC will still cover you if you injure your back in a fall or sporting accident. The insurance exclusion usually applies to *illness* or *degeneration*, not accidental injury.

Summary: Read the Schedule

When your policy is issued, you will receive a document called a Policy Schedule. This is the most important piece of paper you have. It lists exactly who is covered, for how much, and lists any Specific Exclusions applied to you.

Read it. If you see an exclusion you don't understand, or one you think is unfair, ask questions immediately. It is much easier to fix a misunderstanding today than during the stress of a claim.