Ever since the first major Christchurch earthquake, homeowners’ insurance has never been far from the headlines – and, nearly nine years down the track, householders need to be right across the fact the goalposts are still moving.

One of the latest developments is insurance companies increasingly preferring “risk-based” pricing – a move that’s bringing some pretty high-voltage bill shock for those in certain areas, or with particular properties.

Around the country, we’re seeing stories of insurance proving cost-prohibitive for some. We’ve already had clients here, staggered that the new property they’re looking at buying will cost many times more to cover insurance-wise than what they’ve been used to stumping up.

Is it in your budget?

In this new “risk-based” pricing era, if you’re looking at buying a new property, you want to know before you’re fully committed to the purchase whether or not you can stomach the premiums.

Give yourself the space to make an informed decision. Consider including a condition in the sale and purchase agreement that allows you to confirm insurance – on terms and conditions and at a price that are acceptable to you – before committing to finalising the sale. 

Older property?

Risk-based pricing aside, don’t assume arranging insurance is a quick phone call, handing over the property details, job done.

Particularly with pre-1945 dwellings, insurers tend to have a list of checks and balances before offering cover, including seeking confirmation the likes of electrical switchboards, wiring, roofing, plumbing and wall linings are up to scratch. Case in point: just recently we had a situation where a client’s insurer wouldn’t even consider the property until an electrician, plumber and builder had provided professional reassurances – all at the potential buyer’s expense.

Are you absolutely, fully covered?

Given my line of work, it’s probably not surprising I’m particularly alive to the vagaries of insurance. Seeing what I’ve seen over the years, I apply the finest of fine-tooth combs when arranging and checking my own cover. Not so long ago, my eyes shot open at about 3am. Note to self in the wee, small hours: DO NOT FORGET to recalculate the sum insured on our house insurance before renewing it. Renewal was still some three-odd months away but, still, the consequences of having that one slip off the radar aren’t even worth thinking about.

If, like me, you have “agreed value” insurance – as opposed to “full replacement” cover – to avoid ending up inadvertently under-insured, it’s imperative you carefully recalculate the sum insured each year. 

It pains me the number of people who just let it roll over year to year. What many homeowners don’t appreciate, until claim time, is that building costs can rise sharply over a relatively short period. 

Another common oversight sees homeowners fail to take into account costs like clearing a damaged home from the site, leaving an often-painful deficit in the rebuild kitty. So, don’t just take a vague stab at a figure when you recalculate the sum insured. Do your homework and arrive at a relevant and realistic figure. Your ability to replace your home, should the worst happen, might just depend on it. 

Feedback, comments and questions are always welcomed – please feel free to e-mail me on [email protected].

T: 03 443 0900

W: www.aspiringlaw.co.nz

Janice Hughes is a Director of, and senior legal adviser at, Aspiring Law. Please remember, this information is designed as a general guide, and should not replace specific legal advice on a particular issue.