Bo-Jangles

This is a new one on me regarding limits on rebuild costs, just seen it advertised on TV. I guess ultimately we get to pay more for the privilege of them providing the flashy advertising and kindly helping us to understand the changes.

http://need2know.org.nz/

Genesis

Apparently as a result of the Chch EQs insurance companies are going to 'ask' us to 'work out' the replacement cost of our NZ houses rather than what they currently do which is to ask us what the sq mt area is and then work out a replacement cost OR offer you a total rebuild with no limit.

You can take a punt on what you reckon it will cost to rebuild but like me if you did that you would probably be way out.

That is because we are not Q surveyors. I heard that the average cost for this service to get a rebuild cost on your house will be c $1500. So yet another cost we will have to factor in if we want to insure our houses as the insurance companies are wanting us to and we want to be accurate.

And one imagines if we wish to be prudent this will need updating over the years.

Life just keeps getting more and more expensive eh?

Charismatic

I agree with Jenny, it's going to be difficult to work out the sum to insure for.

Additionally "sum insured" could leave you with a read head ache since insurers can turn around and question your valuation after the event (which is what I'd do if it delayed or avoid making an expensive payout). With replacement at least it's fairly straight forward exactly what the outcome will be.

One of the biggest problems with sum insured is that the value of replacing a build isn't a constant. In an earthquake, flood, wildfire (etc.) type situation where many houses are damaged it will usually create a demand surge afterwards where the prices of goods and services in high demand increase significantly. For this reason in most countries you are encouraged to go for a total or extended replacement policy, which leads us back to square one of insuring for replacement .

A lot of people may well look at switching providers if they are cornered on the sum insured v.s. replacement issue so I think it'll be worth a shop around.

At the very least don't be talked into the idea that sum insured is a perfect substitute for replacement. This mitigates risk for insurers but only by passing it on to their clients.

BEVS

As per the title.

Just how much will you be insuring yourselves for a total house rebuild.

What method will you use?

Charismatic

I wrote a bit here arguing it was like asking "How long it a piece of string?" It's simply not possible to anticipate the rebuild cost without defining the type and scale of the event.

BEVS

Flip Missed it.

I agree. I can't begin to think how one can adequately assess this.

I'll merge the threads. When all said and done , it is a serious issue.


note:

Bo-J started the subject on an earlier thread.
I started one on the same subject yesterday adding a poll.
So - I have merged the threads.

Charismatic

Well all those little extras add up, like clearing the section alone can be surprisingly expensive. I foresee many people ending up under insured.

There will be some insurers still offering replacement but it'll be called a "replacement policy", the the fine print it will be to replace the house with one of the same floor area rather than a total replacement. It's at least preferable to sum insured for a slightly increased premium in my view.

At a reasonable price it seems like the least worst option until total replacement is reintroduced eventually.

Mark Smith

Also think about the extra building costs if on a hill (and demolition as mentioned above), retaining walls around the section, build quality, sheds, conservatories, driveways etc.
Having bought our little pad for 395k 6 months ago, I was very miffed when the rebuild cost came up around 450k (land not included). Looks like another rodding coming up. This will be another shark frenzy, as happened when the stupid HIPS packs came out in the UK.

scrubbedexpat094

Although we all like to knock insurance companies, this has come about from a stipulation from the companies who insure the insurance companies. If NZ insurance companies don't comply with this, then the plug would be pulled by the Daddy insurers.

Personally I don't have a problem with it as I'd rather make sure I'm properly insured should the worst happen. I understand that this is an huge issue for those on low incomes. Let's face it, insurance is another of those boring costs in life like taxes & rates.

I guess I've had a long time to get used to this as OH works for an insurance company (though he's at pains to point out that he doesn't work in insurance!!!) & he mentioned this at least 18 months ago.

We shall get a proper valuation done by a surveyor.