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Is your house properly insured - to take into account the rising costs of building in New Zealand?

Is your house properly insured - to take into account the rising costs of building in New Zealand?

Covid has seen many industries impacted by shortages - both of clients (tourist businesses), supplies and labour.  Finding a builder these days can be quite tricky, with long wait periods - because of labour shortages, but there are also materials shortages, because of shipping routes and global demand for building materials.

It is easy to ignore this if you aren't planning on building or renovating (or going back to the drawing board if you are and the cost and time delays are too much), but it directly impacts on every house owner.

This was well illustrated in this Stuff article - which I recommend that you read, about a home owner who had just renovated her home and then saw it burn down due to a faulty clothes drier catching on fire.  When she went to claim on her insurance, there was nowhere near enough money.  Not adding the GST on is something that a good insurance broker should pick up for you, but with a direct online insurer, they are transaction based, and are unlikely to give you any advice around the topic.

Homeowner warning: Insurance cover may not be enough as building costs soar [Stuff]

I discussed this with Chris Rolfe at Bridges Insurances (which is our insurance broker, and where we refer clients looking for good and conscientious service). 
The first thing that Chris pointed out is that it looked like she hadn't added on the GST to the rebuild costs when working out her insurance amount.

We agreed that it is good project this year to make sure that your renewal sum insured is close enough to make sure that you can rebuild your home without being too much out of pocket if the worst happened.

Chris made the following suggestions:
1. Use an online building calculator.  They all use the same company for data (Core Logic), but he finds that the NZI calculator is the most user friendly.
2. If you want to be more accurate, get an updated valuation.  This could be called an Insurance Valuation, Quantity Surveyor reports, Construction cost consultants, Builders costs (but remember to make sure that the GST is added on.)

I have taken up Chris's recommendation and engaged Construction Cost Consultants to do an updated valuation of our property before our Fire & General insurance review.  I recommend that you consider doing the same - or at least one of these options.

You can find this firm at https://www.costconsultants.co.nz/.

Think about it, there will be enough stress if your house is burned down, or buried in a slip or ruined in an earthquake, without ending up being hundreds of thousands of dollars short on insurance payouts. 



 

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