Make sure you know exactly what you are insured for

INSURANCE should put you back to where you were before disaster struck. But among the thousands making claims in the wake of a natural catastrophe, many hundreds will either have underinsured their home, not insured valuable items or overlooked something in their policies.

Not knowing what your policy says creates disputes with your insurer and the Insurance Council is aware of people who had their expectations dashed because they did not know what their policy covered.

Some contents policies will cover replacement while others will cover actual cash value, which is the replacement cost minus depreciation.

If you have especially valuable items, you may want to consider specifying the sum you are insuring them for in your policy.

Most insurers have limits for claims on items more than $3000 (or thereabouts) unless the items are specified in the policy.

It’s also a good idea to take photos or a video of the contents in your rooms and keep receipts.

If you do this, then the ideal thing would be to store the information in a safe place off-site. We recommend snap.org.nz which is a safe iGovt website recommended by police.

You should also add to this a list of insurance policies, bank documents, passport numbers and investment details.

These can be scanned on to the Snap database.

Safe-deposit boxes or cloud storage are options to consider.

With house coverage, check what your policy says and, if you feel you need to, supplement the coverage you have.

With the move to sum insured being introduced, remember the sum you should insure your property for is the rebuild cost, not the market or rateable value of your home.

If your home is on a hillside or built using high-quality materials or an unusual design, then the rebuild costs will be higher than the average costs that online calculators use for estimates.

A quantity surveyor may provide a more accurate estimate and can check whether you are covering things such as site clearance costs, retaining-walls and underground services on your property.

Insurers do not insure your land. The Earthquake Commission does that – to certain limits.

If you are undertaking renovation work, then you should obtain builders-risk insurance coverage with the same insurer that provides your house insurance. Remember earthquake cover as it can be treated as an option.

If you are a tenant in a house or an apartment block, then your landlord is responsible for taking out building coverage but they will not cover your contents. However, if your apartment block cannot be lived in or accessed, you should check whether your tenancy agreements may leave you liable for rental payments.

You should also prepare your home against the threats you are likely to face. Earthquake preparedness includes securing objects that may fall and break by securing them to walls and sticking them to shelves.

If you have a brick chimney, consider having it removed as these are vulnerable to collapse and cause major damage to homes as well as posing a risk to life.

It would pay to get a builder or engineer to inspect your property to advise of other things you could do.

If you have a water tank in the ceiling that was dislodged, it could send a couple hundred litres of water through the house. You may need to consider reinforcing your foundation piles.

Homes vulnerable to fire should ensure enough clearance between themselves and surrounding bush or trees. Those in low-lying, flood-prone areas, need to think about what personal property they keep in the basement or lower reaches of the house.

Although Wellington is regarded as most vulnerable to earthquakes, anywhere in New Zealand is.

Canterbury demonstrated how a seismically quiet area of the country can suddenly erupt in a devastating way and, arguably, the 1989 Newcastle, New South Wales, earthquake should tell Aucklanders to avoid complacency.

Tim Grafton is chief executive of the Insurance Council.