The Insurance Council of New Zealand – Te Kāhui Inihua o Aotearoa – has issued a reminder to homeowners to check whether their homes are sufficiently insured, differentiating between a replacement policy – where insurers take the risk of meeting all costs associated with rebuilding – and a policy for a sum insured.
The ICNZ pointed out that most insurers have moved to policies for sums insured following the Christchurch and Kaikoura earthquakes. Replacement policies are generally available only for fire and floods but not for earthquake damages, the council warned.
In effect, homeowners may unwittingly have only half their homes covered, with prices continuing to rise and homeowners neglecting to “dive into the detail” of their insurance policies at renewal time.
To address this, the council said that the Cordell Sum Sure Calculator is an easy-to-find online tool which helps estimate the cost of rebuilding a home. Most homeowners would find that the current cost of rebuilding their properties dwarfs the fixed value of policies closed years ago.
The council said that increasing the sum of one’s policy to sufficiently cover their property again is easy to do, considering “there are many more elements than just the total loss risk” that make up all insurance premiums. “It always pays to shop around,” the council said.
