Good news item re. using valuers for insurance calculation

[donna]

Hi All,

I read this article on NZH re. the rise in new businesses offering valuations for calculating insurance premiums.

Homeowners are being forced to pay hundreds of dollars to have their homes valued on top of insurance bills because of changes to the way premiums and payouts are calculated.

Even if you just accept the default value the insurance company offers you stand to have at least $150 + added to your premiums - times that by the number of properties you have - it's enough to make many of us cry.

In that news item it mentions a lady paying $750 for a valuation to be told she needs to add $230,000 to the cost to rebuild and that her premiums will go up by $335. The cost to rebuild being more than the CV too. There must be a tipping point where you could end up over-insuring your property aye.

It's a tough call in some cases.

cheers,

Donna

P.S. you can see the scammers jumping in - conning little old ladies out of $$ saying they need to get a valuation done and it will cost them $700 etc aye.

[Rosco]

I'm curious how a valuer can calculate this?

A valuer, values the value of the property as at now. They don't know the costs to build it.

Wouldn't a builder or a quantity surveyor be a little bit better? I think investors who do get a value, need to make sure it is actually done by the right expert who can calculate the cost to demolish and rebuild.

Ross

[Leftette]

If you think there are tears now, just give it a year or three and wait for the stories of the people who lose their house in a fire then discover either through lack of updating the value or because they accepted the insurance company's estimate (and let's face it - a LOT of people will do this) that their new re-built home is 1/2 the size of the previous one. There will be some very upset and angry people.

[Maccachic]

Our Valuers have been carrying out these for Commercial buildings for years its not new, just new to residential, we also have QS's in the same office who carry them out as well.

[speights boy]

There will be some very upset and angry people.

Who will they be upset and angry with ?

[Leftette]

Who do you think? And I'd like to see you say that to the face of the person crying over their charred home's remains.

[speights boy]

Well I wouldn't, as I am not wanting to be hurtful or unkind.

However, my insurance company was very clear in the info pamphlets they sent to me on my renewal to sum insured.
It had a very large title; something along the lines of "Important information. Your Insurance has changed"

It is my personal responsibility to ensure the figure is as accurate as possible if I want to avoid under insuring.

[Leftette]

Yes. I know that, and you know that, but I still bet there's thousands who choose to ignore it, either wilfully or ignorantly, or just plainly assume that, as has been the case over the years, the number estimated by the insurance company must be correct - it SOUNDS correct, and surely they know more about the estimating process given they re-build houses all the time, than I.

[speights boy]

Yep, you're probably right.
Can't cater for all cases.

Hard to think what else can be done though.

Bit like when interest rates rise, and all the bleeding heart sob stories start coming out about how people can't afford their mortgage anymore.

[flyernzl]

Yes of course.
The elderly widow in Taihape is presumed too know more about the costs of rebuilding than all the highly-paid insurance company staff.
(But they still want you to pay for the expertise, which they no longer say they have).

We got a valuation on an IP from a long established Auckland valuer.
One page cost-of-rebuild valuation.
Three pages of exclusion and weasel out clauses, along the lines of "If we've got this all wrong then its not our fault and you can't sue us".

Which is handy-dandy, because a rental property is by definition a business and therefore unlike your own home the Sale of Goods Act does not apply.

[klauster]

rebuild or replacement value

Three extremes; “she will be right”, DIY mentality and a new playing ground for scammers.
And why would you relay on an analyst of sales statistics (valuer) when its comes to rebuild or replacement of your home?

[CMC007]

I am curious to know what happens if i significantly over value my home (and pay the increased premiums to match), what happens if I do end up needing to replace? Will I get the agreed value paid out and get to rebuild a better quality/larger home? Or am I limited to replacing like with like?

[speights boy]

Insurance change costs homeowners

Insurance Council spokesman Samson Samasoni said the changes were introduced because, following the Canterbury earthquakes, reinsurers insisted on knowing insurers' liability.
If the rebuild costs less than the valuation provided by a customer then an insurer will only pay the rebuild cost and no more.

[flyernzl]

I am curious to know what happens if i significantly over value my home (and pay the increased premiums to match)

You will only get a rebuild to the previous size and quality - so the insurance company wins.
Of course if you underpay on the basis of a lesser value, you only get that value - so the insurance company does not lose.

[Leftette]

What happens if you insure for half the value of the property, and half burns down? Do they pay out 50 per cent of the sum insured or the amount you insured for?