Ensure Your Cover Is Correct

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Insurance (noun) – indemnifying property, life or person against loss or harm arising in specific contingencies as fire, accident, death with a payment proportionate to the risk involved.
 
Most people readily understand this in simple terms. However events since the Christchurch earthquakes have meant a complete overhaul of insurance terms worldwide and it now falls on the property owner to calculate the replacement value of their biggest asset, their home and contents. Nowadays property owners need a much greater awareness of the replacement costs of their chattels, be it home, car or personal effects such as jewellery and paintings, if they are to recoup anything like the true value in a worst-case scenario.

The cost of building ie materials, labour, is rising by the year and your policy needs to reflect that. Your home – your single greatest asset – is only part of the equation in the event of fire or flood. A standard house on a flat section is one thing but most have varying degrees of slope which may involve expensive ground retention work such as retaining walls. In some cases these could almost match the house cost. Then there’s garden sheds, landscaping and the pool, not to mention interior fittings and furnishings.

“It becomes a complicated equation that most people barely understand,” says Les Holsted.

Mangawhai people are fortunate to have the services of Les Holsted of Trustlife Insurance Advisors, an insurance advisor of over 30 years standing, who has literally ‘seen it all.’

“Many people are still of the mindset that it won’t happen to them,” says Les, “but the Christchurch earthquakes, recent hundred year floods and now the quakes in Wellington have given people a wakeup call.”

This, along with the fact that the onus is now squarely on the homeowner to get a true valuation of their most important asset, has changed attitudes.

Les warns that different insurers may have different definitions of some clauses so he advises: “Read your policy and ask questions of your agent until you are satisfied you are suitably covered.” Modern technology also allows easy photography and recording of jewellery, paintings and valued keepsakes in case verification is required to process a claim.

Registered valuer assessment
For an accurate assessment of the cost to rebuild your home, our local Registered Valuer – Scott Morison from Sheldons is best placed to assist. Based in The Hub at Mangawhai Village and part of Auckland’s largest valuation firm, Scott has access to a vast amount of up-to-date construction cost data, and can provide a comprehensive insurance valuation report to meet these new changes. Sheldons extensive building cost database is a result of 30 valuers throughout greater Auckland continually collating and analysing actual building contracts for a wide range of projects – the information typically provided to us by clients as part of a mortgage application.

“By all means have a go with the on-line calculator, which is a free alternative,” says Scott but he points out that there will be a number of areas which will require clarification, and quite significant inaccuracies become apparent for anything other than a standard dwelling. A quantity surveyor is also able to give an assessment.

Besides calculating the cost to rebuild today, you also need to project what the cost will be in the future. For example, you are about to renew your cover for 12 months. In a worse case scenario, the house could burn down on the last day of the year. By the time the site has been cleared, consents have been obtained and the home erected, 18-24 months could have passed by from today. So you need to calculate now what the cost will be then. Sound complicated? Furthermore, you have to be an expert in demolition costs as a building gutted by fire needs to be removed from the site prior to constructing anew. This item was significantly underestimated in Christchurch.

Of course there is a cost involved in Scott’s service but a registered valuation may be required for the confirmation of building contracts, when purchasing a home, or re-financing. Duplication can be a cost-saver if undertaking a market valuation and insurance valuation concurrently. 

“What you paid for your home or the government valuation is completely irrelevant nowadays,” he says. “It’s all about the replacement cost, PLUS a detailed report from an independent third party limits any argument between owner and insurer at the time of a claim.”

There are also a number of premium ‘softeners’ available such as multi-policy discounts, age discounts and even a secure recognised alarm system may attract premium relief but your local companies have a vested interest in providing a service of up to date advice and protection to lessen the inconvenience or stress in a time of need.
 

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