Christmas present freeze

Feel free to roar with laughter. While I'm feeling miffed, there is an amusing side to an insurance pickle I've got myself into.

With pink cheeks and my tail between my legs, I may as well own up. I'm now the proud new owner of an uninsured bicycle. That's right, 'she' who was recently reminding you about the insurance freeze caused by the Kaikoura and North Canterbury Earthquakes, has tripped over her own column inches.

I've been excited about a new annual event in Nelson – the Abel Tasman Cycle Challenge. So an early Christmas present was in order. A racy ink-blue Specialised road bike. After all, it might help me keep up with George Bennett, our local Tour de France rider on his Bianchi. All I've thought about is compact gearing and the rather contentious addition of disc brakes. Not a single puff of brainpower considered the insurance consequences of my purchase.

The cost of this gorgeous beast is several thousand dollars more than the standard limit on our contents policy. In normal circumstances I'd ring the insurer and add the make, model and amount paid to the policy.

As the insurance broker was politely trying to explain the meaning of 'insurance freeze' to someone who knows very well we are in one, I began to feel the error of my inattention. Yes, yes, I understood it wouldn't be covered in an earthquake. Offshore reinsurers are not allowing anything to be added to home or contents policies. I had a mountain bike squashed under a retaining wall in the Christchurch earthquakes, so the risk is clear.

But I assumed they would still cover a new bike for theft or accidental damage. Wrong. When they say 'freeze', they really mean it. Totally unrelated risks have been swept up into the earthquake problem.

So here I am sitting in Nelson, where we got a good jiggle-up, but not a single ornament fell over. All the thieves and baddies are still running about breaking and entering garages. Bolt cutters are still being sold. Bikes are still falling off the back of cars. Road riders are still having the odd pile up, wrecking a few thousand dollars of carbon.

As far as I can see, the risk of theft or an accident is no larger than it was pre-earthquake. Yet I can't insure my bike. What are the insurance actuaries trying to tell me? That because we are in a heightened earthquake environment, the baddies wake up each morning feeling more frisky?

The freeze is currently north of the Waimakariri River (just outside Christchurch) and south of Masterton. That's a great wodge of central New Zealand that probably shouldn't be buying bikes, watches, jewellery, artwork, or stamp and coin collections for Christmas. These items tend to have limited contents cover, generally in the range of $2,000 to $5,000 per item.

Ok, so this bike is hardly the size of a normal Christmas present, but we do use the festive season as an excuse to get something we've been longing for. Retailers in Wellington and the Top of the South will be most unhappy with insurers. They in turn are stuck between a rock and hard place, with offshore reinsurers wielding some of the power on this matter.

If I could see a heightened risk, I'd have no issue saying it's tough luck. Yet it all feels like an unintended consequence. They impose a full shutdown rather than deal with the risk in a commercially fair fashion for consumers.

The bike is not entirely uninsured. The first $3,000 is covered under my policy. Yet it is worth much more, so I'll need to keep a very firm grip on the handlebars and chain it to my ankle when it's not it use.

Tim Grafton, Insurance Council chief executive says "each insurer will approach contents policies differently immediately after a significant earthquake and will have different restriction zones and different policies about increasing sum insured for existing or new customers. Our advice is to ask your insurer and then shop around."

By shopping around, the only insurer I could find to cover the bike was Youi. A small contents policy of $6000 with an excess of $410 will cost $841 for the year or $77 monthly. That made me hyperventilate. But to give them credit, Youi will provide full earthquake cover as well. On a monthly basis until this freeze is over, it's worth considering. Either that, or I'll need to defrost the Christmas turkey and heave it at passing burglars.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.