Just a reminder to all our Tauranga home owners that now is the time to start looking at your home insurance cover, if you haven’t already done this.
As you may or may not be aware, home insurance changes are currently taking place in New Zealand as a result of the fallout from the Christchurch earthquake. After the earthquake there was pressure on insurance companies from international reinsurers to switch from ‘open ended’ home replacement policies to capped ‘sum insured’ policies. These changes affect all homeowners in New Zealand, including rental properties.
To better explain – previously insurance cover was calculated using a per-square meter formula and was known as ‘open-ended’ home replacement. The new capped or ‘sum insured’ method of insurance should cover the ‘actual cost’ of rebuilding your home or rental property. This is a bit like content insurance, where you calculate the total value of your belongings, as a homeowner you are now expected to know the total value of your home or rental property if it were to be rebuilt.
For you the homeowner it means sitting down and seriously considering the value of your home and your rental properties, as you now hold the responsibility to get this evaluation correct. If you choose to over value your home/s you will pay more insurance, if you under value you will not be able to afford to rebuild.
You will also need to include any renovations in your calculations, and every time you make a change to your home/s you will need to reassess the value of that home with your insurer. Another important note is to make sure you don’t just use the market value of your home/s to calculate the value, as it is the actual cost of rebuild including all building supplies and inflation that should be considered.
There are free online calculators made available by insurance companies, to assist you with your calculations. However, some insurers disclaim any liability for the sum you calculate. To be safe, if you own a large home with special features you should use a professional quantity surveyor, if you own a standard home/s you could get away with using the online calculators.
We recommend you talk through these changes with your insurer.