Consider insurance options
When it comes to home insurance - don’t wait to read the fine print
Don’t wait until the next earthquake or once-ina-hundred years flood to read the fine print of your house insurance policy.
With many insurance companies reviewing the way they insure and what they charge as premiums, it’s important to think carefully about your insurance options and check the conditions of existing policies, Real Estate Authority chief executive Kevin Lampen-smith says.
He cites as an example companies that are reassessing how they cover coastal or clifftop properties due to environmental damage.
"As the risk changes, the cost of premiums may increase, exclusions may be added, or insurance cover may be withdrawn for some properties."
Finding out about a property’s ‘insurability’ starts with arranging quotes from different insurance companies. An insurance broker - an independent insurance expert who doesn’t work for any particular insurance company - will provide an independent overview of the best or most competitive policies.
Alternatively, if you haven’t owned a property before but have contents insurance, contact your insurance company as an existing relationship with an insurer can help show others that you’re a ‘good risk’.
An insurer will want to know details about the property, like its address, age, condition and what it’s built from, Lampen-smith says,
"If there’s a licensed real estate agent selling the property, they can help you with this information.
"You can also ask if the property is currently insured and whether there have been any incidents at the property that could affect its chances of being reinsured in the future."
He recommends asking whether the property has been subject to an Earthquake Commission (EQC) claim; if it has, request more information and seek legal advice.
The most common type of insurance cover is ‘sum insured’: you decide how much cover you want, based on what it would cost to completely rebuild the property.
"It’s important to get this number right. Set it too high and you could be paying for insurance you don’t need, but set it too low and the payout may not be enough to rebuild the home."
While earthquake damage is covered by EQC, to qualify you must have valid private home and/or contents insurance that includes fire insurance.
"If you do find a place that an insurer is happy to cover, make sure you read and understand the policy."
If the insurer agrees to cover the property, and your offer is accepted, let your lender know immediately. You will need the insurance to start on settlement day.
For independent advice property advice, visit settled.govt.nz.