To say it has been a turbulent past few years is certainly an understatement. There have been a number of natural disasters worldwide. In our own region, Christchurch was devastated by the earthquakes, Japan had an earthquake and tsunami, and there was flooding in Thailand as well as in Australia.
So the question we should all be asking ourselves on a regular basis is - do I have sufficient cover onmy homes or commercial/industrial buildings to ensure they can be replaced in the event of a total loss?
Youmay answer yes to that question, but the Christchurch earthquakes demonstrated that many people were under-insured, and many continue to be, across New Zealand.
For the majority of us, our homes are our single largest asset - it's important then to make sure we fully protect them but the insurance industry is changing. Most of us get a policy and never think about it again unless something happens. So, why should you worry about it now?
International reinsurance companies (the companies used by insurance providers to reduce some of their claims risk) have increased the price to local insurers to recoup losses and reduce risk. In turn, local insurers are passing these increased costs on to the consumer through higher premiums and the type of cover offered. Some apartment owners have seen a sharp rise in their premiums and insurers are requiring increased deductibles and applying additional policy restrictions.
This means you should consider a range of strategies to minimise premium increases at the same time as having appropriate cover on your property.
This includes completing an insurance review of your property. It should be done on a regular basis and it would pay to seek advice. This will give you peace of mind and ensure you have the right type and level of cover suited for your property. An insurance broker or adviser is well placed to assist you to make sure you have the right inclusions and exclusions as well as conditions are applied to your policy.
In the past, insurance cover has generally been based on the floor area of the house. Most houses were covered for full replacement to the area specified and no limit on the sum insured value. However, a growing number of insurers are requiring the property owner to provide them with the sum insured, which is the amount to rebuild. This is the maximum the insurer will pay out in the event of a total loss.
If requested to provide this information, a valuer can assist. Most of us think of registered valuers as people we use to provide market valuation advice when we are selling or buying a home and/or requiring finance from our bank.
AQV registered valuers can provide you with valuations for replacement insurance purposes. They will value all items to be included within that policy - this in addition to the home may include outbuildings, swimming pools, driveways etc.
And while we are talking about making sure you have sufficient cover on your home, make sure you don't forget to review the cover you have on your contents - you'll be surprised just how these add up. On a personal note I recently went around my home taking digital photos in every room to show what contents we have and noted own all major items. I know, in the event of a loss, that there is no way I could list all the contents of our home from memory.
* Kerry Stewart is operations manager and registered valuer at QV