Insurance companies are reassessing how they cover coastal or clifftop properties or properties in low-lying areas that may suffer from seawater inundation.

THE MOVE to heftier, risk-based insurance premiums in Wellington and the Wairarapa means it’s crucial to lock in insurance before buying a house.

Insurance companies are reassessing how they cover coastal or clifftop properties or properties in low-lying areas that may suffer from seawater inundation due to the increasing risk of environ mental damage or rising sea levels.

This means that the cost of premiums may increase, exclusions may be added, or insurance cover may be withdrawn for some properties as the risk changes.

‘‘Adding ‘insurance’ near the top of your checklist when hunting for a house is now very important as the insurance market is changing,’’ Real Estate Authority chief executive Kevin Lampen Smith, says.

‘‘A bank or lender will want proof that you have arranged property insurance before settlement, even if you have conditional pre-approval with your finances.’’

To work out if a property can be

insured against natural disaster, fire or any other accidental events, contact different insurance companies to get a quote.

‘‘If you already have contents insurance, get in touch with your insurer first to see if they’ll offer you property insurance,’’ Lampen Smith says.

Also seek independent advice from an insurance broker, who will identify risks and recommend cost-effective solutions.

Insurers often ask personal insurance history and whether anyone who will be living at the property has criminal convictions.

‘‘This is because they want to be sure that you are a ‘good risk’, especially if this will be your first home,’’ Lampen-Smith says.

‘‘Having an existing relationship with an insurer means that you have already been assessed in this way.’’

An insurer will want to know as much as possible about the property you want to buy, including its address, age, condition, size and construction materials.

Lampen-Smith says if a licensed real estate agent is selling the house, they should be able to provide this information.

‘‘You can ask the agent if the property is currently insured and whether there have been any issues with the property that could affect its chances of being reinsured in the future.

‘‘If you are aware of other risks to the property that an insurer is unlikely to know about, such as landslip issues - even if there has not been any damage to the home yet - you need to tell the insurer when applying for a quote or for cover.

‘‘For example, if the house is in an area that has been flooded before, an insurer may limit or exclude any cover for flood damage. If this is the case, it’s better to know as early as possible.’’

He recommends contacting the Earthquake Commission (EQC) to see if they have information on record regarding potential damage to the property from natural disasters.

‘‘I also suggest seeking legal advice before signing a sale and purchase agreement as you may need to make confirmation of insurance an important condition of your offer.’’

He points out EQC doesn’t cover damage to land from coastal erosion only storm and flood damage to land - or damage to residential structures or contents from storms, floods or coastal erosion.

‘‘While earthquake damage is covered by EQC, you must have private home insurance first to qualify for it,’’ Lampen Smith says.

The premium you pay includes EQC and Fire and Emergency NZ levies.

But as of last month, EQC no longer covers contents. This will affect policy holders on the anniversary date of their policy, which is generally the annual renewal date, or if they take out a new policy.

‘‘If an insurer agrees to cover a property you wish to buy, let your lender know immediately,’’ Lampen-Smith says.

‘‘You will need the insurance to start on settlement day, when the property officially becomes yours, even if you aren’t moving in that day.

‘‘In most cases you can set the insurance up around six-to-eight weeks before you settle - arranging it early means one less thing to do close to your settlement day.

‘‘If you can’t find an insurer willing to insure the house you are keen to buy, it may be safer to walk away.

‘‘If you do find an insurer for the property, make sure you read and understand the policy.

‘‘And don’t leave any insurance matters to the last minute or fail to read the fine details in documents the insurer sends you once cover has been arranged.’’

For independent guidance and information on buying or selling, check out settled.govt.nz.