Steep cost of peace of mind

Wairarapa News - - FRONT PAGE -

looks at the stag­ger­ing rise in the cost of in­sur­ing the fam­ily home, in­clud­ing his own.

House in­surance has bal­looned as much as 300 per cent in a decade, and for many, it is a cost they are strug­gling to af­ford.

Home­own­ers are fac­ing the per­fect storm of hikes in Gov­ern­ment levies and in­creased in­surance costs due to nat­u­ral dis­as­ters and metham­phetamine con­tam­i­na­tion

NZBro­kers col­lec­tive chief ex­ec­u­tive Jo Ma­son said con­sumers would be hit hard by an­other price hike and she wished the Gov­ern­ment and in­surance rep­re­sen­ta­tives could work to­gether to spread the bur­den.

‘‘Why can’t they de­vise a way so that it goes up in­cre­men­tally ev­ery year, rather than ab­so­lutely slap­ping peo­ple at a time when they’re strug­gling to get into a house,’’ she said.

In­sur­ers are start­ing to put an ex­tra cost on ten­anted prop­er­ties be­cause of the risk of metham­phetamine con­tam­i­na­tion, which could see own­ers pay­ing as much as $180 more a year.

Long con­sid­ered a ne­ces­sity for re­spon­si­ble home­own­ers, some prop­erty own­ers are opt­ing to take the risk of not hav­ing in­surance. Re­cent flood­ing in Edge­cumbe saw 20 home­own­ers fac­ing heav­ily losses be­cause they were unin­sured.

‘‘The peo­ple that owned them, their lives are com­pletely dev­as­tated. Their big­gest as­set has gone. If peo­ple are not see­ing the value of in­surance, that’s a re­ally dan­ger­ous sit­u­a­tion to be in,’’ Ma­son said.

New Zealand In­surance Coun­cil chief ex­ec­u­tive Tim Grafton said though they were not aware of an in­crease in non­in­sur­ance be­cause of un­af­ford­abil­ity, many home own­ers strug­gling to pay for house in­surance may be opt­ing to un­der­in­sure.

‘‘We want to see in­surance avail­able and af­ford­able for peo­ple so that is a con­cern.’’

Even though the risks may not have changed greatly in the past decade, the un­der­stand­ing of the risks prop­er­ties faced, par­tic­u­larly around earth­quakes, had in­creased sig­nif­i­cantly.

‘‘Prior to the Can­ter­bury earth­quakes, the mod­elling­sug­gested max­i­mum loss in Christchurch was about $16 bil­lion ... it turned out to be more than dou­ble that,’’ he said.

Prop­erty own­ers in the greater Welling­ton, Kaik­oura and Christchurch ar­eas pay more be­cause of the height­ened earthquake risk.

In 2012-13 house in­surance jumped dra­mat­i­cally as rein­sur­ers re­alised they had to charge New Zealand in­surance com­pa­nies more be­cause of the losses from Can­ter­bury quakes and un­der­stand­ing in­creased.

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