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Insurance and convictions

Harbouring a convicted criminal? Check your insurance coverage allows it.

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Something as simple as having a family member on parole living with you could affect your house, contents or motor vehicle insurance coverage. This was the case in a situation we heard about recently. A couple had their grandson, who was on parole, living with them. When they advised Tower, their insurance company, their cover was withdrawn. Fortunately they were able to find coverage elsewhere with AMI.

You might already be aware you have to disclose information about traffic convictions to your motor vehicle insurer. You also need to be sure you disclose criminal convictions that you, your partner, or others insured under your household policy may have. If you’ve been “clean-slated” under the Criminal Records (Clean Slate) Act 2004 you don’t need to fess up.

What happens when you declare criminal convictions to your insurer? Well, it’s up to the insurer to decide whether to take the risk. They are not compelled to. They’ll probably want information on what type of crime was committed. For instance if there’s an arsonist living in the house there’s a good chance they won’t provide house insurance.

Drug convictions tend to raise a red flag for insurers – understandably so given the concerns about houses used as P labs. There’s also a concern people with criminal convictions may associate with other criminals. This can raise a risk alert for an insurer. If you don’t disclose the information and something happens which an insurer can link to your non-disclosure, you run the risk of them not paying a claim or even cancelling your insurance.

The Insurance Council’s Tim Grafton says, “taking on the risk is an issue for each insurer and their appetite for risk in a competitive market. Your example illustrates that some are not prepared to take on some risks while others are”.

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