The New Zealand Herald reported today that “nearly one in three Kiwi homes could be under-insured, putting thousands of homeowners at financial risk should their single biggest asset be destroyed.” Even though the changes to sum-insured policies have been in affect for well over a year.
The Herald also reported that “Massey University insurance expert Dr Michael Naylor said up to 50 per cent of New Zealand homes might be under-insured. Default sums were often inadequate and online calculators promoted by insurance companies did not provide accurate estimates based on New Zealand building codes and material costs.”
Prendos has been reporting on the pit-falls of the changes to the insurance market for some time, and recently appeared in Consumer Magazine and One News in regards to the issue. You can read more about the consumer magazine results in Rebuild Valuation for Insurance – Consumer Insurance Article which also details Prendos Director and Registered Valuer Gordon Edginton’s insight into homeowners responsibilities regarding their insurance policies.
The take away from all the media hype is that the risk of under insurance on most home owners key asset is too great to avoid. To leave the insurance estimate to a simple default figure provided by the insurance company is high risk and home owners run the gambit of being under insured. It is essential there is sufficient cover so there is no shortfall in an event.
What is often left out of the media coverage is that we have found the increase in insurance premium is extremely small for an additional $100,000 of cover on an asset. For example, in our experience, changing the insurance cover from a default figure of $400,000 provided by the insurer to a total sum insured of $550,000 may only cost an extra $20 to $40 per annum in increased premium. “Small beer” when compared to the potential of under insurance where many thousands of dollars could be at risk.
We refer you to other articles on our website detailing changes and implications to these insurance issues:
Replacement vs Set Sum – Changes to Insurance Policies
Insurance Valuations – QS or Valuer?
Set Sum Insurance changes set new traps for owners
How much insurance cover do I need to rebuild my home?
You can follow these links to read more on how Prendos can assist with your insurance needs, via our valuers Insurance Valuations or quantity surveyors Rebuild Estimate for Insurance services. Or contact us to request a quote for your insurance valuation today –