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Insurers refusing new insurance in certain locations

A client of ours in Wellington has been/is going through the exhausting and stressful process of claiming for the damage caused to his house by the Kaikoura earthquakes in November 2016.

The latest event is that he wanted to make sure that his heritage home was properly insured, and wanted to increase the cover, in the event of any other event.

His application to increase his insurance was declined by the insurer with the following explanation:

 

In the past insurance companies have generally worked out the insurance premiums based on the quality and size of someones home. In reality this meant that some areas in New Zealand were subsiding other more risky areas (such as Hamilton being a low risk area and Wellington being a high risk area - yet premiums were quoted in the same way).
With this model, in recent times insurance companies that provide nationwide cover to their clients have suffered. This is due to an insurance company who may only insure properties in say, Hamilton (and not having the risk of insuring Wellington or Christchurch properties) being able to provide cheaper premiums.
As a result nationwide insurance companies are now looking at region by region when providing insurance quotes. This way they can remain competitive when quoting premiums in areas such as Auckland or Hamilton. The downside is that areas such as Wellington have seen large increases in their premiums.

The other factor is that insurance companies also now have limits in relation to the total risk they are willing to take in any one particular region. Unfortunately NZI is an example of an insurance company that has reached their capacity in the Wellington area and will not provide any new cover in Wellington at the present time (Unless existing policies they hold are cancelled allowing for more new business to be taken on board).

Things become more tricky if there is an existing claim in place (as was the situation with this client), as it will limit the ability to move insurers.
Again, we can't stress it enough - know what insurance cover you have in place, how it works and whether you are properly insured.  If you would like a referral to our professional Fire and General Insurance broker, let us know by emailing us here - contact@moneyworks.co.nz


 

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