We have outlined some common insurance terms to help you understand insurance better.


Used to describe an event that’s unexpected and unintended.

Agreed value

The amount we agree as the sum insured for any item which is the subject of an insurance policy. This is always shown in the insurance policy schedule.


When loss or damage occurs that’s likely to be covered by an insurance policy, this is the action that the policy-holder takes to obtain the benefits provided by the insurance policy.


Cover is the amount of protection provided by an insurance policy.

Dependent children

Children who are under 21 and who aren’t self-supporting.

Duty of disclosure

When you apply for insurance you have a duty of disclosure. This means you must tell us everything you know that an insurer would want to take into account when considering your application for insurance or determining the cost and terms of your application.

The duty of disclosure doesn’t just apply when you take our your insurance. If something happens at any time that you think we ought to know about, then this duty means you are bound to let us know about it. Examples might include criminal convictions, traffic offences other than minor infringements, or modifications to your vehicle or home.

You also need to let us know about any person or organisation who has a financial interest in an insured item.

EQ cover

This is the cover provided by the Earthquake Commission in the event of damage to houses and their contents caused by natural disaster such as a flood or earthquake. It’s funded by the compulsory levy which is included in every home and contents policy premium.


A single event or a series of events which have the same cause.


This is the amount a person making a claim contributes towards the cost of the claim. For example, the standard excess for our home cover is $400, so a policy holder pays the first $400 of any claim on their home policy. The excess is deducted for each and every event that is claimed for.

Sometimes we may vary the amount of excess depending on the particular situation.


For the purposes of a travel insurance policy ‘family’ is defined as two close family members travelling either together, or with their dependent children or grandchildren.

A close family member is defined as your spouse, de facto partner, fiancé, fiancée; or child, step-child, grandchild; or brother, sister, brother-in-law, sister-in-law; or son-in-law, daughter-in-law; or parent, step-parent, grandparent, guardian or parent-in-law.

Imposed excess

This is the term that we use for an excess that we have applied to your insurance cover due to your personal situation.

Indemnity value

An item's current value allowing for its age and condition immediately before the loss or damage happened.


For the purposes of a travel insurance policy, an individual is one person travelling either on their own, or with their children or grandchildren under the age of 21 who aren’t self-supporting.

Legal liability

Legal liability is when you’re found to be responsible for damage to someone else’s property or injury to someone else, by the courts, a tribunal, or arbitration.


Responsibility for injury or damage caused.

Linked policy discount

If you insure both your home and your contents at the same address, you can choose to link them as a single policy called HomePack. This may qualify you for our linked policy discount.

Market value

What your car was worth before it was damaged. This refers to the reasonable cost to buy a replacement item of similar age, general condition and model or specification.


For vehicles, this means any change to a vehicle that’s different to the manufacturer’s original specification or recommendations. These can include changes to the engine, suspension, body kit, or wheels.

For your home, this means alterations and extensions to the original structure.

Multi Policy Discount

If you have your contents insured with State and you take out another home, car, contents, motorcycle or landlord policy with us you may qualify for a Multi Policy Discount on your premiums.

Named driver

Any driver listed on a vehicle’s insurance policy schedule.

Period of cover

This is the period of time that an insurance policy is valid for. It’s always shown in an insurance policy’s schedule.

Personal liability

Personal liability is the legally-enforceable liability that a person has for loss or damage suffered by someone else. For example, if you forget about a pan of oil on the stove and it sets fire to the house you’re renting, you’ll be held legally liable (or personally liable) for the damage the fire causes.

Pre-existing medical condition

This is how we describe a physical defect, medical condition or disease that has been medically treated or for which medical advice has been received during the six months prior to applying for travel insurance. It also applies to an ongoing medical condition or disability that exists when you apply for State travel insurance.


This is the money that must be paid for your insurance policy. Depending on the type of cover you have, your premium is made up of the company premium which goes to State, the Earthquake Commission levy, the Fire Service levy, and GST.

Present value

This is the reasonable cost to repair or replace an item in New Zealand that is of comparable age, quality and capability, and is in the same general condition.

Specified item

Any item that is listed in the policy schedule with a corresponding specified sum insured.

Sum insured

The maximum amount payable in respect of the loss or damage of the insured item.

Uneconomic to repair

Used when an insured item is stolen and not recovered, unsafe to repair or would cost more to repair than replace.


The use of an insured item will depend on the item. If it’s a car or motorbike, the use will usually include driving on a public road or private driveway, parking, garaging and storing, but exclude racing or off-road use. A caravan or boat use usually also extends to towing. It’s best to check the details of your policy so you’re clear about what use is covered for any item you’ve insured.

Years of insurance discount

If you have held your insurance policy with us for more than a year you may qualify for this discount.

Working manually

For the purposes of a travel insurance policy, working manually means using your hands or physical strength to carry out tasks. e.g. as a builder, plumber, plasterer, mechanic.