COVID-19 response

If you are looking for the latest legal information relating current Coronavirus laws in New Zealand, check out our Coronavirus and the Law section.

Communtity Law Manual | Credit & debt | Credit-related insurance

Your rights and obligations: When you can cancel a credit contract

Credit-related insurance

Credit Contracts and Consumer Finance Act 2003, ss 69, 70, 94(1)(cb)

Lenders can’t unreasonably require you to sign up for:

  • credit-related insurance (for example, to insure any property you’ve put up as security), or
  • a repayment waiver (this is where you pay an extra charge so that you don’t have to repay the debt if you become sick or injured or lose your job), or
  • an extended warranty for goods you buy on hire purchase (“credit sale”).

If the lender does force you to do this, the courts can order them to refund you some or all of the premiums or other amounts you’ve paid, and/or the courts can cancel the insurance, waiver or warranty.

It will be unreasonable for a lender to require you to sign up for insurance, a repayment waiver or an extended warranty if this isn’t reasonably necessary to protect the lender, or if it’s not reasonably justifiable given the risks you and the lender are taking. For example, a lender can’t force you to sign up for income-protection insurance if you’re unemployed, and they can’t require you to buy an extended warranty that doesn’t provide additional rights to those you already have under the law.

If a credit contract involves insurance, a repayment waiver or an extended warranty, the lender must give you a copy of the specific terms of the insurance, waiver or warranty before they arrange it. These warranties don’t override the protections you get though the Consumer Guarantees Act.

Next Section | If things go wrong
back to top

Check out Frequently Asked Questions and Answers related to COVID-19 on our website here.

Community Law Centres across Aotearoa are operating remotely. Please contact them via the phone number or email displayed on the Centre’s page.

Find the contact details of your nearest Community Law Centre here.

Page Reader Press Enter to Read Page Content Out Loud Press Enter to Pause or Restart Reading Page Content Out Loud Press Enter to Stop Reading Page Content Out Loud Screen Reader Support