Are You Under Insured?

Are You Under Insured?

under-insuredSince the Canterbury earthquakes, Christchurch has seen hundreds of drawn-out discussions between insurance companies and home-owners, over how much the owners will be paid to replace their homes.

In many cases, the situation is tragic – more than one-third of all homes are believed to be under-insured by as much as 20% to 50%!
Insurance companies put the onus on home-owners to establish the amount their property would be covered for – known as “the sum insured”, which is “the cheque you will receive”, should your home be completely destroyed tomorrow – for example, by fire or earthquake.

Where home-owners have been under-insured, they are left with the choice of either “down-sizing”, or building a home of a lesser quality.

To work out the cost to rebuild, some home-owners have used insurance companies online calculators. This puts a huge responsibility onto the home-owner, and often the result is not what the property will actually cost to rebuild.

So are you sufficiently covered – and have essential factors been taken into account, such as:

  • an accurate basic build cost?
  • demolition cost?
  • professional fees?
  • decks?
  • paths?
  • patios?
  • retaining walls?
  • driveways?
  • fencing?
  • in-ground swimming/spa pool?

On-line calculators are helpful, but unless the correct “industry build rate” per square metre is used for assessing the correct “sum insured” for your property, you may be significantly under insured!

We have clients who asked us carry out insurance valuations of their properties, and in some cases, they found themselves to be hundreds of thousands of dollars short of a realistic rebuild cost for their existing home.

An insurance valuation is usually a one-off cost (provided the home has not be altered), and the insurance companies will adjust subsequent premiums based upon their in-house market and inflationary consideration.

If you would like assistance with your home insurance valuation, please call or email us.