Insurance Companies Are Changing The Way Homes Are Insured
Homes used to be insured by the floor area of a property. From mid 2013 homes will have to have a sum insured specified.
This is a very important change and could mean a substantial shortfall in any claim situation if you do not take appropriate steps to protect one of your most valuable assets.
In The Past
Previously a home would be insured based on its size i.e. replacement up to the square metre area declared in the policy schedule.
In a claim situation this meant that the insurance company would repair or replace your home up to the maximum square metre size declared in your policy.
There was no limit as to the amount that would be spent on any claim.
Replacement home insurance will now be based on a Sum Insured. The Sum Insured is the maximum amount that will be paid in respect of damage or loss to your home.
If you make a claim, your home will be repaired or replaced only up to the Sum Insured declared in your policy schedule.
What Needs To Be Done?
A Sum Insured that is adequate for completely rebuilding your home and the other features around your property needs to determined.
Ultimately, the responsibility falls on YOU as the owner and the insured to determine the Sum Insured.
How Best To Determine The Replacement Sum Insured?
Seek professional advice from one or more of the following:
- quantity surveyor
- valuer (ensure the valuation is for insurance purposes and does not include any market value component or land value); and/or
Use an online calculator tool to provide estimated building costs for homes (based on the information you supply) by visiting:
Refer to the checklist below, which lists many of the items you need to consider when you assess the cost of rebuilding your home using these online calculators.
We Have Negotiated A Good Price For A Valuation
All Paramount Insurance clients, with standard one or two storey homes in Auckland, are able to get a 15% discount off the standard price of a valuation for Insurance purposes.
The standard price is $ 400 plus GST. Paramount clients will only pay $340 plus GST.
If your home is of a more complex construction then the cost may be higher but the discount factor will apply. Contact Dan McAuliffe of Eyles McGough on 09 915 3487 or 021 555 786.
What Will Happen If You Do Nothing?
If we have not received your replacement Sum Insured before your policy expires a default sum insured for your home will be calculated.
The insurance company’s default sum insured will be based on $2,000 for each square metre you previously declared.
The insurer’s default sum insured is not likely to meet your needs, as it does not take into consideration:
- the materials of construction,
- quality of home,
- other improvements specific to your home.
You will be able to change the sum insured at any time by contacting us.
We encourage you to investigate the cost to rebuild your home and select a Sum Insured that ensures you have adequate insurance cover.
Home Sum Insured Checklist
The list below is one used by an insurer as a checklist only and may help you identify the improvements that are specific to your situation.
We do not recommend that you rely on this checklist alone.
We recommend that you seek professional advice and obtain a written valuation or estimate to replace your home.
Below is a quick checklist that may help you establish the cost to rebuild your home.
- Square metres of home.
- Cost per square metre to rebuild your home
- Any Additional Units
- Garages / carports
- Greenhouses / garden sheds
- Decks, patios, pergolas and built in furniture
- Aerials, satellite dishes
- Fixed floor coverings (if not included in the total cost above)
- Fixed light fittings (if not included in the total cost above)
- Letter box, exterior awnings, clothesline, built in barbeque
- Septic tank, heating oil tanks, water tanks, pumps
- Permanent spa and swimming pools and covers
- Walls, fences and gates
- Driveways, bridges, paving and tennis courts
- Private road, lane, right of way, access way or bridge
- Fish ponds & ornamental water features (permanently installed)
- Sculptures and artwork (permanently affixed to home or land)
- Removal of debris/Site clearance/Demolition
- Architects fees/Surveyors and other consultants
- Council fees
- Cost escalation due to a wide scale event such as a natural disaster
The actual builders cost per square metre and will depend on the quality, style, fittings and specifications of the home or any extra units
If you have any questions about your home insurance, please do not hesitate to call us on 09 360 3292.
This information is general in nature only. It does not constitute a recommendation, opinion or guidance as to the sum insured figure that is appropriate for your individual circumstances. It does not constitute a recommendation, opinion or guidance as to the relative merits of the current replacement cost insurance cover versus the new maximum sum insured insurance cover.
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This content is maintained by Paramount. Content is copyright its respective owners and is published for non profit educational use only. All original content is copyright Paramount Insurance © 2017. Paramount accept no responsibility or give warranty for the accuracy authenticity or correctness of content.