Many New Zealand homeowners will soon be facing changes to their home insurance. The change involves a move by insurers away from unspecified replacement cost policies. There is the possibility this change will add to pressure on households, so while the change itself won’t necessarily result in people facing premium increases, it adds complexity and therefore it is worth taking some time to understand.
Recent research undertaken by IAG shows that two-thirds of homeowners are still not aware that home insurance is changing and that they will be responsible for calculating the likely cost of rebuilding their home.
These findings have prompted IAG to create a public awareness and education campaign aimed at all of New Zealand not just its policyholders. To support customers, and homeowners in general, IAG launched a comprehensive public information campaign built around the website www.need2know.org.nz
The website features informative videos from building consultant John ‘Cocksy’ Cocks, well-known from TV appearances on My House My Castle, Hot Property, Groundforce, Changing Rooms and April’s Angels.
It also includes an online calculator that can help homeowners by estimating a likely rebuild cost for a home based on information such as its age, size, location, slope of the property it is built on and quality of fixtures and fittings.
The www.need2know.org.nz website will be supported by a wider campaign including television, radio and press advertising as well as digital activity.
IAG brands include State, AMI and NZI, while IAG provides home insurance products also for BNZ, ASB, and The Co-operative Bank.
Full results of the IAG insurance monitor are below:
- A third (33%) of home-owners are aware of the upcoming changes to home insurance policies.
Two-thirds aren’t aware – which is why we believe more needs to be done to communicate with homeowners and to help them understand the change and its potential impact.
This reinforces our early insights (July 2012) when IAG decided it had a responsibility to lead through this change in order to help not only its customers, but other homeowners.
- The majority (97%) of those who own a home have home insurance, but of these, only 70% feel adequately insured.
While insurance penetration is very good, confidence in the level of cover is not universal, even with unspecified replacement policies being the norm. There is an opportunity with this change both for homeowners to learn more about their homes and their policies, and, through that, to achieve greater confidence in their level of cover.
- Only 22% of homeowners surveyed were very well aware of all the details their insurance policy covered.
Intuitively this seems about right as we know from our research there are customers who do take their finances and insuring their assets very seriously. There is the potential for people to rate themselves as being very well aware, however, when there are still things they don’t know.
- While almost all home insurance policy holders (93%) feel at least somewhat aware (somewhat aware plus very aware) of all the details of the cover provided, 42% are not sure to what extent their policy covers the cost of reinstating damage to features outside the home such as retaining walls.
The cost of reinstating features such driveways and/or retaining walls can have a significant impact on the rebuild cost of any home, and it seems as though the level of knowledge around the detail and extent of such cover is not what it should be.
- Two thirds (65%) do not know how much it would cost to rebuild their home, but only 41% would seek help from a professional to calculate these costs.
This is the change challenge and why we are going to considerable lengths to provide information and tools to support customers.
- Four in 10 policy owners have checked the details of their policy in the last 12 months or less (41%), while 15% have left it for at least 10 years before checking.
A reflection perhaps on one of consequences of the unspecified replacement cost policy – homeowners falling into the mode of “setting and forgetting” – perhaps reviewing only at the stage of buying or selling their home.
IAG Home Insurance Monitor Survey Methodology
Research company Perspective conducted the nationwide online survey among a sub-sample (from the 1,000 people originally surveyed) of 632 homeowners, 612 of whom had a home insurance policy.