One drink can end your cover

You can lose your cover for a car accident even if you weren't drunk. Photo / Herald on Sunday

While tough new drink-driving regulations attract headlines, few motorists are fully aware of how driving after drinking alcohol can affect their insurance cover.

Many people didn't realise that you didn't need to fail a breath test or be convicted of drink driving for your claim to be declined for driving under the influence of alcohol, said the Insurance Council of New Zealand's insurance manager, John Lucas.

Insurers can use experts to extrapolate whether your driving is affected by alcohol at the time of an accident and refuse to pay out on those grounds.

Every year, a number of these cases are taken to the Insurance and Savings Ombudsman but many complainants are unsuccessful in having the claim paid out because insurers are within their rights to decline.

Drink-driving convictions are likely to become more common with the lowering of the limits next year to zero for drivers under the age of 20 and recidivist drink drivers.

The changes will almost certainly lead to a greater number of motor vehicle claims being declined.

If the limit became zero, said Lucas, then you could be deemed to be driving "under the influence" of alcohol after a mouthful of alcoholic beverage.

Where insurers and police will draw the line is still to be determined.

Parents will need to be more circumspect about lending their cars to teenage children once the new drink-drive limits come into force. If young Jarrod had even one drink while driving his parents' car and then crashed it, the parents' insurer would be unlikely to pay out, said Lucas.

Another stumbling block was that failing to declare a drink-driving conviction to your insurer when it occurred meant you wouldn't be covered for any claims, whether or not they involved alcohol.

What's more, even if someone else was driving the claim could still be declined for "non disclosure".

That's because there is a duty to disclose "material facts" - if you don't declare convictions, including new ones, you're paying your premium but not getting any cover. Insurers argue that if they had been given the full facts they would not have insured the person in the first place or would have imposed conditions or an additional premium.

Another fishhook, which Insurance Ombudsman Karen Stevens saw all too often, was claims being declined because drivers lied about their drinking.

"If you say you haven't been drinking and you've had a couple of drinks that is grounds for the insurer to decline the claim."

Keep your insurer updated

When Caroline* insured her car, her son Aaron wasn't yet a driver. He started driving four years later and within a year had clocked up several significant traffic convictions, including two for drink driving, which resulted in his car being confiscated.

When Aaron got his licence back he had no car, so started using his mother's vehicle.

She failed to realise that she needed to tell her insurance company about these convictions when the policy was renewed.

Seven months later, Aaron crashed Caroline's car but the insurance company refused to pay out. The insurer's argument was that Caroline had an ongoing responsibility to let it know of any circumstances which might be relevant to the renewal of the policy.

* Name has been changed

Ways to safeguard yourself

* Use an insurance broker. They know what to declare and can argue your case at claim time.

* Be truthful when you take the policy out. If you've got convictions, the vehicle has been modified, or if your children are going to be driving the vehicle, admit all.

* Make sure everything you tell your insurer is noted in the policy proposal.

* Every renewal, declare any new convictions and any changes of regular drivers.

* Get everything in writing. If you speak to the company's helpline, follow up with an email or letter confirming what was spoken about.

* Record conversations regarding claims so there is no confusion.