By Kay Keam - 7 Aug 2013
- 1 comment
International re-insurers have been feeling the pinch from the
fallout of the Christchurch earthquake. They now see New Zealand as
a riskier bet and want to more accurately assess their future
liability in the event of further natural disasters. So, gone is
the golden era of open ended replacement insurance and in are the
days of Sum Insured policies. Replacement policies are based on the
size of the property. Sum Insured policies are for a specific
sum.
Most homes insured in New Zealand currently have a total
replacement policy. This means that if your home is totally
destroyed by fire or an earthquake, the insurer is responsible for
demolishing the wrecked building and constructing a new house to
the same size and specification as the previous one, with no limit
to the amount they have to pay.
A Sum Insured policy on the other hand sets out a maximum amount
the insurer will spend if a house needs to be rebuilt.
Within the next couple of months, most new home insurance
policies provided by the majority of insurance companies in New
Zealand will be on a Sum Insured basis. Existing policies will
automatically move across to Sum Insured on their next renewal
date. Homeowners are going to be asked to state the dollar amount
they want to insure their home for, in much the same way as they
would insure their contents.
It is therefore critical that you are aware of the cost of
rebuilding your home. There are online calculators that can help
assist with this, but be wary! While the online calculators
helpfully take into account inflation, they begin to show their
flaws when used to calculate rebuilding high value homes with
unique features (think granite bench tops or gold taps). Other
issues should be carefully considered, such as the cost of
demolishing any damaged structure, and the expenditure associated
with applying for a building/resource consent for a replacement
dwelling. It is also the home owner's responsibility to update the
Sum Insured amount to take into account the cost of rebuilding any
new additions or alterations that may be carried out on the
home.
If you have a particularly complicated house or one with
expensive fixtures and fittings, you may want to get a quantity
surveyor, registered valuer or certified builder to help calculate
the Sum Insured.
Contacts
Elise
Markwick