Insurance is a safety net for when things go wrong. Money from insurance can help cover the cost of repairs, medical treatments, travel changes or theft.
How insurance works
When you buy insurance, you apply for protection from a risk of something going wrong.
For example, you could insure your home and car. Depending on your insurance policy, the 'insurer' (insurance company) will pay you money if something goes wrong. Such as if your home is damaged in a storm, or you have a car accident. When you borrow to make a large purchase, like a home or car, getting insurance may be a condition of your loan.
Before giving you insurance, the insurer will assess your risk level. They may consider if you've had prior insurance claims or accidents, or an existing illness.
You may be assessed as higher risk if your situation means things are more likely to go wrong. For example, if you live in a flood zone (for home insurance). Or you travel to a country with a higher crime rate (for travel insurance). Or you work in a high-risk job (for life insurance).
Insurance terms
- Insurance policy – A legal agreement between you and the insurer that tells you what you are covered for.
- Insurance premium – What you pay for your insurance, monthly or yearly. If your risk is higher, you may have to pay a higher premium.
- Insurance excess – How much you need to pay up front, before you get any money from your insurance.
Types of insurance
Different insurance types cover you for different things. Here are some common types of insurance:
- Car insurance – to pay for your car if it is damaged or stolen
- Home insurance (building insurance) – to pay to rebuild if something happens, like flood or fire
- Home contents insurance – to pay for things in your home if damaged or stolen, like furniture, appliances or jewellery
- Health insurance – to pay a portion of medical costs if you are sick or injured
- Life insurance – to pay a set amount of money when you die, to the people you nominate in your policy
- Income protection insurance – to pay some of your income if you can't work due to illness or injury
- Pet insurance – to pay vet bills for your pet if it gets sick or hurt
- Travel insurance – to pay for accident, illness or delay while travelling
- Funeral insurance – to pay for the cost of your funeral when you die
How to choose insurance
Before you get insurance, check if you need and can afford it. You may not need some kinds of insurance, so consider what is right for you.
When choosing insurance, compare the cover across different insurers. Check:
- insurance premium – what you will pay each month or year
- cover limit – how much you can claim for certain items or events
- policy excess – how much you need to pay before you get money on an insurance claim
- exclusions – what items or events are not covered
- payment – if you can pay monthly (at no extra cost)
How to claim on your insurance
To make a claim on your insurance, contact the insurer you bought the policy from.
Give details of your claim
Explain what has happened, such as:
- the accident or event – location, what happened, relevant reports
- what you want to claim for – repair, medical costs, rebuilding, replacement, lost income
How long it takes
An insurance claim may take months. Or years, depending on the type of insurance.
If you need urgent money help while your claim is being assessed, contact your insurer.
Get help if you need it
There is free help available, if you need it:
- For help in your language, call the translating and interpreting service TIS National on 131 450. They will get an interpreter to call the service you need help with.
- For help to sort out money issues, call the free National Debt Helpline on 1800 007 007. The helpline is open Monday to Friday, 9:30am to 4:30pm.