Steep cost of peace of mind
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.