How much is house insurance in New Zealand?

The cost of house insurance in New Zealand depends on the age and size of your house, as well as things like construction materials, general condition and where it’s located. Premiums vary between insurance companies, as do the benefits offered by each insurer. The only way to get a clear picture of the cost landscape is to talk to an insurance adviser or go direct to a range of insurers. It helps to provide them all with the same set of facts about your home.

Why get house insurance in New Zealand?

A house is a significant asset, so getting insurance protection is a no-brainer. Also, it’s likely your home loan provider will need to see evidence that you have house cover before they make your loan available.

House insurance protects you, the homeowner, from serious financial impacts if your home is damaged or completely destroyed due to an accident or disaster. Housing accidents are typically things like fire, or a tree or car crashing into your property. Disasters include natural events such as floods, earthquakes and tornados.

Do I need house insurance?

Whether you personally need house insurance depends on your financial situation. If you could easily afford to repair or rebuild your home following an accident or disaster, maybe you don’t need cover. Only a small percentage of New Zealanders fall into this category. Most of us need to protect our biggest asset with insurance. And, as we mentioned above, insurance is essential if you have a home loan. Your bank will insist on it.

Is my house insurable?

You can’t just assume that an insurance company will offer you cover. Some properties in New Zealand are just too risky – due to their age, condition or location. Before you buy a property, ask your real estate agent to confirm that the existing owners have house insurance. For example, insurance could be difficult to get if the house is in a flood-prone area or if it’s too close to the high-tide mark. Talking to an insurance adviser about the property you want to buy before you make an offer is an excellent way to check that the home is insurable.

How much should I insure my house for?

The amount your house is insured for is called the ‘sum insured’, unless you have a full replacement policy (more about that below). Getting it right is really important, or you could end up seriously out-of-pocket in the event of a claim. You need enough cover to pay the cost of a total rebuild, if it’s ever required. Things like demolition costs, consents, fees and architectural drawings are all part of a rebuild. Construction costs are influenced by inflation and other factors (i.e. materials shortages), so your sum insured should ideally be reviewed every year.

Determining your sum insured is a fact-based process, not a guessing game. You can use a free online calculator provided by your insurer or pay for a report by a valuer or quantity surveyor. If your home is unique, in a remote location or on a steep section, working with an expert will yield a more accurate result. When establishing your sum insured, remember the number doesn’t include the value of the land.

Full replacement or sum insured?

To avoid the nuisance (and potential cost) of reviewing your sum insured every year, some home owners prefer ‘full replacement’ cover. With this type of cover the insurer will pay the reasonable cost to repair or rebuild your home (to the condition it was in before the event), if your claim is accepted. This type of cover is only available from a few insurance companies, because many stopped offering full replacement cover following the Christchurch earthquakes. Depending on your insurer, if might be possible to get cover that offers full replacement for specified disasters and sum insured for other risks.

How much does house insurance cost?

The average cost of house insurance varies around the country, because it’s affected by the risk of natural events like earthquakes, floods, tropical cyclones and volcanic eruption. A market scan in 2021 put the average cost of house insurance at $1,200 for Auckland; $2,000 for Wellington; and $1,600 for Christchurch.

However, this is just a ballpark indication of cost. The true cost of insuring your home can only be established by talking to a range of insurance companies. When you’re comparing costs, be sure to also consider the benefits they’re offering.

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute an insurance advice service. It is only intended to provide education about the New Zealand insurances sector. Nothing in this article constitutes a recommendation that any type of insurance cover is suitable for any specific person. We cannot assess anything about your personal circumstances, all of which are unique to you. Before making insurance decisions, we recommend you seek assistance from an insurance adviser or expert.

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