Insurance Type and Cost Changes

[DazRaz]

DazRaz - what is the wording/clause that is used in the policy for this 'customer carries some of the risk' situation? We then need to see if it appears in the new policies.

All I'm saying is that you need to be very sure of the implications if you chose to under insure. Have a look at your own policy. I can't do it for you.

[Nice]

All I'm saying is that you need to be very sure of the implications if you chose to under insure. Have a look at your own policy. I can't do it for you.

And not only if you under insure, but also if you choose to use an uninformed or unqualified methodology of determining the value of cover you require. Guess at it yourself, or take the advice from a generalist website, and you could be opening a can of worms at any point of claim, with little or nothing to back your view. You can be sure that the insurer will argue every dollar off the claim they can, this has been proven in Christchurch (in general), and their lawyers are bigger than yours.

I'm not a valuer, or in any way connected, but have decided that with 6 houses, I cannot afford to be wrong if there is a disaster, so am paying for professional advice in this area at the outset. I might still be wrong, but I will have taken all the advice I can on the matter.

[kapitibeanman]

And not only if you under insure, but also if you choose to use an uninformed or unqualified methodology of determining the value of cover you require. Guess at it yourself, or take the advice from a generalist website, and you could be opening a can of worms at any point of claim, with little or nothing to back your view. You can be sure that the insurer will argue every dollar off the claim they can, this has been proven in Christchurch (in general), and their lawyers are bigger than yours.

I'm not a valuer, or in any way connected, but have decided that with 6 houses, I cannot afford to be wrong if there is a disaster, so am paying for professional advice in this area at the outset. I might still be wrong, but I will have taken all the advice I can on the matter.

I think yours is the safest approach. Then you might feel able to use the figures so obtained as a base
and adjust off that for a few years.

I wonder why the insurance companies don't offer to do it for a fee. A cynic might say that they know
it's too hard to get right, so they just let the customer suck up the risk.

One wheeze occurs: Accept a higher excess, so you can afford to overshoot with the sum assured.

[speights boy]

Surely the banks will become involved in this process as well.
Will they require annual proof that adequate fixed sum insurance remains in place to cover the loan ?

[Maccachic]

2.12 Co-insurance Clauses

Co-insurance clauses provide that, if at the time ofthe loss the value of the property insured exceedsthe amount of cover, the insured is consideredto be self-insuring for the difference in value andtherefore bears a rateable proportion of any loss(including a partial loss). This process of sharing arateable proportion of the loss is also referred to as

averaging.

http://www.fire.org.nz/About-Us/NZFS...ce-Note-13.pdf

Might have to move to FMG are they still offering full replacement insurance?

[speights boy]

DazRaz - what is the wording/clause that is used in the policy for this 'customer carries some of the risk' situation? We then need to see if it appears in the new policies.

Thanks Daz and KBM for bringing this to the forefront.

However it appears the law was changed in 1985.
Is your experience pre or post 1985?

16 Disclosure of pro rata condition of average

(1) Where a contract of insurance (not being a contract to which section 15 of this Act applies or a contract of marine insurance within the meaning of section 3 of the Marine Insurance Act 1908,) contains a pro rata condition of average, the condition shall be of no effect unless, before that contract is entered into, the insurer clearly informs the insured in writing of the nature and effect of the condition.

Prohibition on inclusion of pro rata condition of average in contract of insurance relating to dwellinghouse

• (1) No contract of insurance relating to a dwellinghouse or to any of the contents thereof or to both shall contain a pro rata condition of average.
  
  (2) Any provision of any contract of insurance that contravenes subsection (1) shall be of no effect.
  
  (3) In this section dwellinghouse means a building or part of a building occupied or intended to be occupied as a separate dwelling; and includes any outbuildings used primarily for domestic or residential purposes.
  
  (4) The application of this section to any contract of insurance relating to a dwellinghouse shall not be excluded by reason only that part of the premises is used as a shop or office or for business, trade, or professional purposes.

www.legislation.govt.nz/act/public/1985/0117/latest/DLM76614.html

[Bob Kane]

All I'm saying is that you need to be very sure of the implications if you chose to under insure. Have a look at your own policy. I can't do it for you.

I've had a look at a number of new policies on the AMI website and I can't find any mention of co-insurance or averaging or anything like that.
Are you sure of what you learnt about 25 years ago is still relevant?
AMI do have two types of policy, sum insured or market value, and you can choose which one you want.

[kapitibeanman]

I've had a look at a number of new policies on the AMI website and I can't find any mention of co-insurance or averaging or anything like that.
Are you sure of what you learnt about 25 years ago is still relevant?
AMI do have two types of policy, sum insured or market value, and you can choose which one you want.

You get to find out at claim time.

I'd be amazed to find even one fire & general policy that makes it clear.
These guys are the masters of fine print.

[Perry]

These guys are the masters of fine print.

Even accepting that, it would be interesting
to see how the fine print people get round
SB's quoted reference to the Insurance Law
Reform Act 1985.

[DazRaz]

However it appears the law was changed in 1985.
Is your experience pre or post 1985?

I was doing exams in 1987 or 1988. I worked in the insurance industry from 1983 until 1991. I wasn't working with claims. It's possible that the study material hadn't been altered to reflect law changes.

Still, the difference in premuim should not be large, so it is hard to see that under insuring is worth the risk.

[Maccachic]

It was definiltely in my IAG policy - had a quick look over the weekend need to look at it further, but interesting re the above legislation.

[speights boy]

Which IAG company ?
Can you cut and paste please?

[Maccachic]

Its at home will try and remember its via BNZ - Premier care.

[Maccachic]

My bad went back through the documents and couldn't find it any where must have been dreaming. Apoligies. However I will ring and double check.

[essence]

Insurance changes

Okay folks, a word of warning.

The insurance companies have/are changing their insurance policies. MOST of them aren't making a big deal about it because they don't want you aware of what they've done ........ until you make a claim.

They are arbitrarily changing the policies from "actual replacement" to "sum insured replacement", the amount the insurance company says your house is worth. What this means is -

...in the event of major loss (e.g. house fire) your home will be rebuilt or repaired up to your "Total Sum Insured" amount (subject to the terms of the policy document). Your "Total Sum Insured" amount should include the estimated cost of rebuilding your home.

Bold highlighting is mine.

If you're like many people and have no idea what your property is worth, check out www.need2know.org.nz/state that'll give you some idea of what your property should be insured for.

Check out your policies, you'll be gobsmacked at what they're not insuring you for.