As part of Money Week, IAG New Zealand is encouraging homeowners to check their sum insured as often as possible – something that brokers could remind their clients of too.
Many homeowners are struggling to rebuild their homes either due to miscalculating the actual rebuilding cost or setting the incorrect sum insured on their home insurance policy.
Brendan McGillicuddy, home and contents portfolio manager at IAG, said factors that could result in miscalculation include the rising cost of building materials and prohibiting demolition costs even if the home can’t be repaired.
“We’re finding that homeowners are being caught out by the cost of meeting new regulations and compliance requirements, usually introduced sometime after the home was originally built,” McGillicuddy said.
He advised customers to check their sum insured as often as possible, especially when they have made significant changes to their property.
“We would recommend homeowners take the time to consider their sum insured not just when they take out a policy or at renewal time, but whenever there are significant changes made to their home,” McGillicuddy said.
“We’ve heard homeowners won’t regularly review their sum insured as they mistakenly believe increasing cover will result in dramatically higher insurance premiums. We want to debunk this myth and let Kiwis know that this is not the case. For example, adding an extra $100,000 to your sum insured will result in an increased premium, but not as high as homeowners may fear.”
He added that the most accurate way to make sure that the property is insured for the right amount is to get it professionally valued.
“It’s time well spent to understand what you are covered for and what your sum insured includes so homeowners can be adequately covered if the worst was to happen,” McGillicuddy concluded.