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Home insurance changes you should know about

Kevin reveals an insurance change you owe it to yourself to find out about.

By Kevin Milne
Home insurance changes you should know about

What do you think is the biggest consumer concern for homeowners heading into 2013?

In my view, the biggest consumer issue that faces homeowners this year is the hugely significant change flagged for home insurance. Most major insurers have already announced that so-called “full replacement” house policies will end and be replaced by “fixed value” insurance. This means you will no longer simply be able to insure your property for whatever it costs to replace it. You will now have to work out exactly what your property is worth and exactly how much it will cost to re-build it at some time in the future, and negotiate with an insurer to cover it for that.

It may even mean you will need to employ an expert, such as a quantity surveyor, to work out how much your house is worth and how much it will cost to replace it. There are always nasty surprises when it comes to rebuilding costs so consumers may find themselves on a bit of a hiding to nothing.

Why this change? Since the Christchurch earthquake, re-insurers – those who insure the insurers – have demanded to know precisely how many dollars they are in the gun for if they have to fully replace a house. “Whatever it costs to replace with the same” is not specific enough any more.

My concern is, will homeowners take the time to work through what their house would be worth, precisely, to replace? It’s a real concern and a huge consumer issue that needs
of media attention.

Do you have a consumer question for Kevin? Email, or post to Weekly Consumer, PO Box 90119, Victoria St West, Auckland 1142.

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