Learning the hard way - what happens when you're not properly insured?

Learning the hard way - what happens when you're not properly insured?

Learning the hard way – what happens when you’re not properly insured

Remember when we talked about the importance of having the right level of cover for your home?

It’s easy to list all the things you need to do to get your level of cover right. But what actually happens when you’re under-insured and it all goes wrong?

Jacquelyn Wilson from Ando Insurance Group Limited notes that homes are often under-insured when it comes to natural disasters, including in areas that are prone to earthquakes, floods and other severe weather-related events. In one recent case, a policyholder lost their home in an accidental fire. The cost to rebuild their house was close to $1.1million and, luckily, they were fully insured. But it was a different story with their natural disaster insurance. Had their loss had been as a result of an earthquake, flood or storm, they would have only received their sum insured amount of $650,000, leaving them with a significant shortfall in their rebuild.

Jacquelyn says what many people don’t realise is that increasing the natural disaster sum insured would not result in a huge increase in premium. For the family above, increasing the sum insured to $1.1 million meant they paid an additional $192 – a small price to pay for peace of mind.

For more information on calculating the correct sum insured for your home, talk to your broker.

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

Home Insurance

For most New Zealanders the family home is the largest asset they’ll ever own. This means it’s essential to protect it now with the right insurance cover. After all, no one wants to discover they’re inadequately insured when it’s too late.

Home Insurance

What is Home & Contents Insurance?

For most New Zealanders, the family home is one of our most prized possessions and the largest asset most people will ever own, so it’s worth protecting with the right insurance cover.

Home insurance covers physical loss and/or damage to your house from events such as fire, lightning, explosion, destruction or damage caused by aerial devices, as well as weather-related loss such as storms, floods, cyclones, wind, hail and snow, and natural disaster events like earthquake and Tsunami.

Why is Home & Contents Insurance Important?

There’s a multitude of reasons why buying home insurance is important. The primary reason is that home insurance provides financial protection if your house sustains loss and/or damage or destruction. Insurance will cover the cost of repair or rebuild. Home insurance is often required by banks and lending institutions when taking out a mortgage. The insurance serves as security for the mortgage lender, protecting their financial interest in the property.

What does Home Insurance Cover?

A comprehensive home insurance policy protects you against a number of insured risks, such as:

Fire
Explosion
Flood, storm, lightening and other weather events
Natural disasters such as Earthquake and Tsunami
Theft, Burglary, and Vandalism

Other insurance companies offer more than the standard cover – for example, accidental damage, motor burnout, and artwork or valuables taken outside the home. It’s also important to compare insurance policies as they vary considerably. Some cover damage to retaining walls, landscaping, and flood and water leaks, while others don’t.

Checking and understanding what is covered and what isn’t (often called an 'exclusion’) is key to understanding the insurance you purchase. Some items also have limits – for example, jewellery may only be covered up to $1,000 per claim, unless items are specifically listed.

At Insurance Advisernet, we can source the market and provide an affordable home insurance package that will protect your most cherished asset. Talk to an authorised representative today.

Frequently Asked Questions

How much is home & contents insurance in New Zealand?

The cost of home insurance depends on multiple factors like type, size and age of the dwelling, construction, its features, location, occupancy and the extent of coverage required, and previous claims history.

How do I know how much homeowner’s insurance I need?

When taking out a home insurance policy, you need to know the details of the home to ensure you have the right replacement value sum insured to rebuild your home in the event of loss, damage, or total destruction. There are several ways a replacement value sum insured can be calculated for your home. This can be provided by either a valuation from a registered valuer or by an estimate using specific industry calculators. It is important to have the right sum insured calculated to ensure you have adequate cover to rebuild or repair your home to the size and quality it was. The sum insured should factor in other costs such as materials, demolition, labour consents and fees that are required with rebuilding.

What areas are covered in a typical Home & Contents Policy?

There are typically three areas covered by a homeowner’s insurance plan:

Building – covers the house and any carports or garages, as well as the fixtures and fittings, like pipes and carpets. Basically, this is for anything that you wouldn’t take with you when you sell the home. Some policies cover any type of accidental damage, while others more limited (and cheaper) cover for fire and listed perils, including wind, rainwater and storm damage.
Contents – covers anything you would take with you when you leave, such as rugs, furniture, beds and sporting equipment.
Valuables – generally only provides very limited cover for jewellery, bikes that are taken away from the home, and artwork. So, it is important to understand the difference between insurance policies and what suits you.