house under an umbrella representing insurance coverage and protection

Protecting Your Biggest Asset: Home Insurance 101

Paula Barnett

May 27, 2024

Your home is more than just a place to live – it’s your sanctuary, your haven, and quite possibly your biggest asset. But are you adequately protecting it? In New Zealand, insuring your house for the right amount has become a pressing concern, with many homeowners finding themselves underinsured when disaster strikes.

So, how do you ensure your home is fully covered? Let’s delve into the essential steps to safeguarding your sanctuary.

1. Understanding your coverage needs

The first step to securing the right insurance is understanding what to include when determining the size of your house and calculating the sum insured. Whether you enlist the help of a professional or use online tools like Cordell Sum Sure or My Rebuild, accuracy is paramount.

While these tools provide a good starting point, they may not account for special features or unique circumstances, such as steep slopes or extensive renovations. That’s where expert advice can make all the difference.

2. Regular Reviews for Peace of Mind

Insurance isn’t a set-it-and-forget-it deal. It requires regular reviews to ensure your coverage remains adequate, especially after renovations or changes to your property. While insurers typically adjust your sum insured annually based on the CPI index, relying solely on this generic increase may leave you underinsured. Taking matters into your own hands by reassessing your coverage annually ensures your policy aligns with your specific needs.

3. Differentiating Market Value from Insurance Value

A common source of confusion is the difference between a property’s market value and its insurance value. Remember, your insurance policy only covers the buildings, not the land. Therefore, the sum insured for insurance purposes may differ significantly from market value. Understanding this distinction is crucial when determining your coverages needs.

4. Consolidating Policies for Added Benefits

Combining your house and contents insurance with the same insurer offers several benefits, including multi-policy discounts and streamlined claims processing. With a single insurer handling both policies, you’ll enjoy the convenience of one point of contact and a unified approach to claims management.

5. Due Diligence for Homebuyers

If your in the market for a new home, conducting thorough due diligence is essential to avoid insurance headaches down the road. When evaluating properties, inquire about any history of flooding, natural disasters, or unconsented renovations. Additionally, request official documentation regarding earthquake claims and the property’s hazard status. Being proactive in your research can save you from potential insurance obstacles later on.

Top Tips for Stress-Free Insurance

Here are some additional tips to ensure a smooth insurance process:

  • Research the property and its location early on, paying attention to hazard maps and natural disaster risks.
  • Utilise online rebuild calculators to estimate rebuilding costs and factor in location-specific insurance premiums.
  • Disclose any hazards or adverse history upfront to avoid complications during the insurance application.
  • Communicate any unusual aspects of the property, such as unconsented renovations or repairs needed
  • Above all, don’t procrastinate when ti comes to organising your insurance – early preparation is key to a stress-free experience

Your home is more than just a structure – it’s a foundation of your life and livelihood. By understanding your insurance needs, conducting thorough research, and staying proactive, you can ensure that your biggest asset remains protected. Don’t leave the safety of your sanctuary to chance – invest in comprehensive home insurance.

Contact Paula Barnett - Your Insurance Adviser

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