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?
Is my house 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?
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.