Autumn 21

Many home buyers leave organising insurance until last in their buying process, but depending on the age, type, location, and condition of the property you’re buying, it can take longer than you think.

The best time to start thinking about insurance is as soon as you find a house you’re interested in – here are our tips for things to think about.

1. Find out about the property’s insurance history.

When you find a property that you’re interested in buying, find out everything you can about things that might affect insuring it.

The property’s size, age, condition, location, and the materials it’s made from are all things that might affect the availability and the cost of insurance.

It’s also a good idea to find out from the vendor which company the house is currently insured with, whether the insurer has imposed any special terms, how much the premiums are, and any claims history, especially if it’s suffered major damage in the past.

2. Research your insurance options.

If you’ve found a property that you’d like to make an offer for, start thinking early about the type of insurance that suits your needs.

Start by checking that you can even get insurance on the property you’re looking at.

You might want to add an insurance condition to your sale and purchase agreement, along with any other conditions, like finance or building reports. That way you won’t get stuck purchasing a dud that you can’t get cover for.

3. Organise your insurance early.

Shop around to first make sure that you can get cover and second, that you’ll be able to afford both your mortgage and the insurance premiums.

If your insurance needs are complex, you might want to get advice from an insurance broker or adviser to find out what you need to know to get the best cover for you.

Banks will usually make house insurance a condition of your home loan, so if you’re taking out a mortgage, you’ll need to get your insurance sorted before you can settle.

It’s important that your insurance comes into effect from the day the property becomes yours (settlement day), even if you aren’t planning to move in straight away. This way you won’t be stuck footing the bill for something that happens before you’ve moved in.

4. Get your sum insured right.

Most house insurance in New Zealand is sold on a ‘sum insured’ basis - meaning the most you’d get paid out if your home is damaged is the amount you’ve specified on your policy.

It’s important to get your sum insured right, because if it’s too high you’ll be paying for insurance you don’t need, and if it’s too low your insurance might not cover the cost of rebuilding your home if it’s destroyed.

The sum insured should reflect what it would cost to fully rebuild your home. Include the cost of additional structures on the property like the deck and driveway, along with additional costs like demolition and debris removal, legal and professional fees.

There are several ways to calculate your sum insured including using a tool like the Cordell Calculator, which will give you a rough idea of how much your house might cost to rebuild.

Or you could get a registered valuer or quantity surveyor to give you a rebuild estimate and use that to set your sum insured. This is especially helpful if your home has special features or is an architecturally designed one-off.

Cut out the hassles

Buying or moving into a new home can be an exciting milestone.

With a bit of planning, you can make sure the process runs smoothly, so you’re not caught out by a last-minute hassle to get insurance cover before can get the keys.

You’ll have the confidence of knowing that you’ve taken steps to help avoid life’s little disasters that could leave you out of pocket.

If you’d like to check your insurance or talk to someone about home insurance, you can find a broker near you on the Vero site, www.vero.co.nz.

Richard Godman is the Manager, Technical Underwriting, Consumer Insurance for Vero.