Figures in the New Zealand Herald’s story: Insurance: is your home fully covered? published yesterday (1 October 2014) suggest that one in three Kiwi homes could be under-insured.
Research carried out by the New Zealand Bankers’ Association based on international comparisons says that up to 30% of New Zealand homes would likely have insufficient cover should they need to be rebuilt following a catastrophe. The Insurance Council New Zealand says that about two-thirds of Kiwis are confident that they have enough cover. Underinsurance is difficult to pin down and such figures should be viewed carefully.
IAG NZ’s own research produces a similar figure, but this does not necessarily mean that homeowners won’t be able to rebuild. Small shortfalls can be accommodated in a rebuild; larger shortfalls may require the rebuild of a smaller or different home. Very few homeowners would be left unable to rebuild.
We agree with Insurance Council New Zealand, that the person best positioned to find out the value of their home is its owner. IAG NZ’s own findings collated in June from an online survey of 939 State and AMI home insurance renewal customers showed although 93% were aware of the changes to home insurance, more than a third (37%) had not actively reviewed their sum insured amount.
Of most concern is that 15% say they haven’t reviewed their sum insured and won’t do so next year. Homeowners who choose to reduce their default sum insured are at most risk of under insurance. Read the full article here.