FMG retains Full Replacement cover

As insurers move to drop full replacement cover, FMG proudly swims against the insurance tide, writes David Broome

The recent spate of earthquakes, which struck the top of the South Island and the Lower North Island, has put many farmers on edge. While many will be checking their farm preparedness, one area that demands vigilance is insurance cover with big changes coming to the way houses and farm buildings are covered.

"New Zealand isn't known by Australians as the 'Shaky Isles' for nothing," points out Katie Milne, Federated Farmers adverse events spokesperson.

"When the shaking calms many farmers should be aware full replacement cover is being phased out by almost all insurers but not by rural insurer FMG."

What this means in practice is, if your farm buildings and house are not covered by FMG, but another insurer instead, then you will most likely be changed to a Nominated Replacement. This type of policy is better known as 'sum insured' and means a policy-holder will need to nominate a dollar amount that your home and outbuildings will be insured up to.

"Of course if you have your insurance with FMG then Full Replacement cover remains," Ms Milne points out.

"Our philosophy is to get a better deal for rural New Zealand," says Mike Lange, FMG's General manager of product and services.

"We do this in a number of ways, which includes offering a diverse range of insurance options - Full Replacement being just one of those."

FMG was able to maintain Full Replacement cover due to its strong financial position as well as having a rural client base, which was diverse and geographically spread across the country. It does not have the same urban risk concentration as other insurers.

"We're proud to still be able to offer most clients the choice of either Full Replacement or Nominated Cover as we always have," Mr Lange added.

"As a Mutual we're owned by the people we insure, so it's vitally important to us that we work hard to bring them market-leading products designed to give them the protection needed to take risks and achieve their goals.

"As always, Full Replacement availability will be assessed on a case-by-case basis and will need to meet our underwriting criteria. Cover is focused on rural locations - therefore there are restrictions around cover in metro locations such as Auckland, Wellington and Christchurch. If people want to know more, then I encourage them to call us on 0800366466 and not just ask about Full Replacement, but how FMG is different to other insurers," Mr Lange said.

Such a stance is openly welcomed by Federated Farmers.

"FMG announced their decision to swim against the insurance tide at our National Conference last month and that got a spontaneous response. Insurance is a business decision for farmers but there is only one rural insurer who 'gets' what farming is about," Ms Milne observed.