House insurance – don’t be underinsured

December 3, 2014

in Property

Property: HousingWe have previously advised in an article last year about the risks of underinsuring your property.  Now that ‘Total Sum Insured’ policies as opposed to ‘Total Replacement Policies’ have been in place for some time, it is timely to remind you of the importance of making sure you have adequate insurance cover in place in the event your property was destroyed.

Total Sum Insured policies are just that; you will only be paid up to the total sum insured regardless of the cost of rebuilding your property.

We are seeing more and more situations where clients are not putting adequate cover in place.  Whether you are purchasing a property or renewing your house insurance policy, you need to give careful consideration to the Total Sum Insured amount to ensure you are adequately covered.

It is not safe to rely on estimates provided by your insurance company or to be guessing the amount you think you should be covered for.  You need to carefully consider the particular characteristics of your house.  Considerations such as whether your house has been architecturally designed, the contour of the site (whether it is steep, flat, has difficult access for rebuilding), quality of the materials used in the construction of your house, quality of the fixtures and fittings, what building consents and / or resource consents would be required for any rebuild and the cost of such consents, all need to be taken into account.  There are online calculators which will assist in obtaining a more accurate valuation for insurance purposes however, the most accurate option would be to obtain a valuation for insurance purposes from either a registered valuer or quantity surveyor.  Although there will be additional costs involved in these two options, the costs compared to underinsuring your property are minimal.

Interestingly, one of the main insurance companies has recently reverted back to providing a Total Replacement Policy as opposed to a Specified Sum Insured policy in the event the property is destroyed by fire.  However, this will still require a Specified Sum to be nominated in the event of destruction other than by fire.  It will be interesting to see whether other insurance companies will follow with a similar policy.

We cannot stress enough the importance of ensuring that you have adequate cover in place as the consequences of underinsuring your property could be very costly indeed.

We are very experienced in all aspects of property law, acting for both vendors and purchasers across all areas of both residential and commercial transactions throughout New Zealand.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Simon Milne

09 379 0055 or 03 477 8870


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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