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Insurance traps to watch out for over the holidays

Don't take expensive items to the beach.

'Tis the season for making an insurance claim.

Whether it's a travel disaster or a Christmas burglary, this is a busy time of year for insurers.  But some basic mistakes mean New Zealanders still sometimes have their claims declined when disaster strikes on holiday.

To make sure you are not caught short this summer, check out these common insurance pitfalls and how to avoid them.

Check the limitations on your travel insurance if you're heading overseas

Lots of people think once they get travel insurance they're sorted. 

While having the cover is a good start, it is important to make sure you read the terms of the policy and understand any limitations that might apply.

One of the big ones that catches people out is a limitation on the length of cover provided. If you are going away for more than a couple of weeks, you need to be sure that you have taken out a policy that allows for that.

Insurance and Financial Services Ombudsman Karen Stevens said she dealt with one customer who missed out on cover for his watch because his trip was 100 days in total, but his credit card only offered cover for 90.

"Despite the watch being stolen on the 57th day of his trip, the policy stated that to be eligible for insurance, the trip must not exceed 90 days."

Make sure you understand all the terms and conditions of your insurance policy before you set off.

According to research firm Canstar, it pays to be extra vigilant about policies that come free with credit cards.

It notes that many do not include as much cover as a standalone policy would, and sometimes only cover the cardholder, not the whole family.

Tell your insurer about any medical conditions - even if you don't think they're serious

You might not think your niggly health problem is a concern, but it's unlikely your insurer will feel the same way.

Stevens said it was common to hear from people who had their claims turned down because of a pre-existing medical condition. "You must tell your insurer about all conditions and symptoms you know about. Even if you don't think they are serious, find out if you are covered for them before you go."

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Insurance and Financial Services Ombudsman Karen Stevens deals with a lot of complaints about holidays gone wrong.

Most often, you will not be covered for pre-existing conditions unless the insurer has accepted them in writing and charged an extra premium for them.

In one case Stevens' office dealt with, a family's trip to Fiji was cancelled because a child had to have his tonsils out. The claim was turned down because the boy had had recurrent tonsilitis before the policy was issued.

Stevens said even pre-existing conditions among relatives could be an issue.  She said, in one case, a trip to Noumea had to be cancelled because the policy-holider's father-in-law died. "There was no cover because the claim arose directly or indirectly from the father-inlaw's pre-existing condition of lymphoma."

Take care of your belongings

Insurers can turn down a claim if they decide that the person claiming did not take "reasonable care". 

In one case, a woman had her claim turned down after her home was burgled while she was away. The insurer said it would not pay because her ranch slider, which led to a fenced and locked courtyard, was unlocked at the time.

But Stevens said it had to be a step up from just being careless.

"Insurers will take into account whether the lack of reasonable care was deliberate or not," Stevens said.

"For example, when bags were stolen outside a public toilet in Sydney, the mother and daughter both thought the other was standing beside the bags. This inadvertent mistake was taken into account by the insurer and the complaint was settled."

... And don't leave your bags on the beach

It's common to head down to the beach for a final swim after you've checked out of your hotel and before you fly out.

But you can be caught out.

Stevens dealt with one case in which a woman left her bag on the beach in Bali, containing two diamond rings and two pairs of sunglasses. She covered it with a towel but the rings and glasses were stolen.

Her flight home was then cancelled because of a volcanic eruption and she tried to make a claim for the theft and extra expenses due to the cancellation.

The insurer declined cover for the stolen items, relying on an exclusion that removed cover for items stolen when left unattended in a public place, such as a beach. 

Don't wait to report a problem

Travel policies specify a timeframe in which you are required to report something going wrong.

They also often want copies of police reports, receipts or proof of ownership if you are claiming for something that has been stolen.

Stevens said one claim was turned down for rings stolen in Argentina because it was not reported to police within 24 hours.

Tell your neighbours you're away

One way to help demonstrate you're taking reasonable care of your stuff is to tell your neighbours you are away, make sure someone is clearing the letterbox for you and keeping an eye on the property.

It is also a good idea not to advertise your absence on social media.

Insurance Council chief executive Tim Grafton said it was not a good idea to have a message on your voicemail saying you are away.

If you are renting your house out through a platform such as Airbnb, or doing a house swap, you will need to notify your insurer. Under most standard contents policies, theft or intentional damage is not covered if you allowed people into the house.

If you're going on a road trip, make sure your car is fit for the job

About a quarter of the complaints Stevens' office receives relate to motor vehicle insurance.

She said claims could be declined after an accident if the car was deemed to be unroadworthy. That can even happen if the car has a warrant. Check things such as tyre tread before you set off.

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