How much home insurance do you need?

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protecting house

Homes come in many shapes and sizes – from one-bedroom apartments to multi-million dollar mansions. Regardless of grandeur, or lack of, it’s still ‘Home Sweet Home’ and is likely to be a disaster if we have the misfortune to lose it without insurance as a back-up. But how to put a price on your home for insurance reasons?

If we are honest, some of us probably gravitate towards the “no idea” answer when it comes to estimating how much it would cost us to rebuild in the event of total destruction at the hands of Mother Nature – although many Auckland residents probably have a better idea than some.

While the value of each property will be different, here are a few general tips on some of the important things to think about when working out how much to insure your home for.

First up, start with the basics. Is the land flat or difficult to access? What style and age is the building? Is it predominantly timber, brick veneer, full brick or something else?  How many levels are there? What is the quality of the finish – standard right up to prestigious? Does it have any glamour areas such as marble floors? Is it air conditioned or solar powered? Does it have a spa, swimming pool or tennis court? Does it have garages, extensions, verandas?

If you ever need to rebuild your house, you not only have to pay the costs of labour and materials but will also be faced with a range of extra or ‘supplementary’ costs. Points to keep in mind include:

  • Estimating the cost of rebuilding your house today, rather than when you originally built the home.
  • Looking at the style, materials used, structure and finishes, particularly the quality of internal finishes.
  • Considering cost of professionals like an architect, engineer, surveyor, as well as legal costs.
  • Factoring in approval plans and fees.
  • Keeping in mind regional differences – building in some regions may be cheaper than building in others.
  • Checking if your policy covers demolition, debris removal, leveling/landscaping.
  • Seeing if your insurer will pay for temporary accommodation while building is in process – not unreasonable considering how long the building process might take.

Insurance calculators: not always the same

Some insurers have online calculators on their websites to help you work out the ‘sum insured’ (the amount of cover you need in dollars) for your home. These calculators can be useful for working out how much cover you need, but not all calculators are the same.

Irrespective, you should always treat an insurance calculator as a very general estimate of your needs and not a detailed or personalised assessment.

Armed with your own personal knowledge and detailed inventory of what really does make up the home you live in, the next step is to jump online and compare home insurance policies in terms of price and features; you can compare how New Zealanders rated home insurance providers in terms of customer satisfaction here.

When it comes time to renew your home insurance, shop around and you might be able to get more cover – or more feature – for the same price.

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