What is insurance? 

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Insurance is a legal agreement between you and an insurance company, sometimes referred to as a 'policy'.

 

You pay a regular amount to the insurance company, usually every month or year. In return, the insurance company will cover some or all your losses if something bad happens to you. There are many different types of insurance, to cover different types of events.

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If something bad happens to you, you can make a 'claim' on your insurance. This is a request that the insurance company pay for all or part of your losses based on your policy.

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You can have insurance for:

• Your car

• Your house and the things in it

• Your travel

• Your pet

• Your health

• Your life

 

Insurance is made up of different parts. These include:

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1. Premium - this is the amount of money that you pay for your insurance. This might be paid monthly, quarterly or yearly.
    

2. Deductible or excess - this is the set amount of money that you must pay first, if you are going to make a claim, before insurance will step in. Insurance does not usually cover all of your costs and losses. First, you must pay the 'excess', and then insurance will take over. For example, your pet insurance may have a $100 excess. This means that if your pet's treatment costs $500, you will pay $100 and insurance will pay $400.
    

3. Policy limit - this is the maximum amount of money an insurance company will pay. This is usually a very high amount but may change depending on your insurance. You may have a policy limit for each claim you make, and a policy limit for all the claims you make within a year.

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Why do I need insurance? ​

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Insurance can help you if you have expensive bills to pay after a big event, such as:

• A car crash

• Damage to your house, including fires, flooding and hail damage

• Theft of your car

• Theft from your home

• Hurting yourself on a holiday

• Suffering a serious injury or illness that requires lots of treatment
   

These events can leave you with huge bills to pay, and insurance can help.

 

Insurance can also cover other people's costs and losses. For example, car insurance often covers any damage that you do to another driver or their vehicle. This means that you will not have to pay for someone else's costs out of your own pocket - insurance will step in.

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It is important to know that you need to have insurance before these events happen. You will not be able to make a claim if you buy insurance after a bad event.

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Some insurance policies have an exclusion period. This is a set period of time, usually 90 days but sometimes up to 365 days, where the insurance company will not pay for certain types of claims. This is common for health and pet insurance.  

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We encourage you to think about the 'what-ifs' when it comes to what you want to insure. 

There are specific insurance factsheets available for your information which provide you with more information about what that type of insurance covers, the basic claims process, and what to do if you have a complaint.