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Many affected by Far North floods under-insured

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  • Many affected by Far North floods under-insured

    Hi Guys

    Here is an interesting news item from one of this mornings newspapers. I hope no PT member is involved.
    But we investors do need to be up to speed with our insurances no matter where they may be.

    Many affected by Far North floods under-insured
    NZPA | Saturday, 14 July 2007

    Hundreds of people who suffered massive damage to their homes and property following this week's storms in the Far North are either under-insured or not insured at all.

    The Insurance Council said in some flood-stricken towns almost half the community was not insured.

    "Insurance staff are finding people absolutely devastated by the flood, who have no insurance and are overwrought at the prospect facing them after a second flooding of their homes in just a few months," council chief executive Chris Ryan said yesterday.

    Mr Ryan said people renting frequently had no insurance for their effects, while many private homes and businesses appeared to be under-insured.

    "The high level of under- and non-insurance means that while the insured losses for this week's storm will rise significantly, certainly into the tens of millions, the cost to the wider communities and the wider economy will be far greater."

    The high levels of non-insurance meant there would be a huge demand for access to mayoral relief funds and government support.

    "However, these funds should not discriminate against those New Zealanders who are insured and they must have access to the relief funds as well," he said.

    The council also called for a massive increase in funding for volunteer fire and rescue and civil defence and emergency services who were under-resourced and over-stretched in numerous clean-up jobs.

    "Our view is they need a dramatic increase in funding and very quickly."

    An estimate for the insurance cost of this week's storm was expected to be available by late Monday.

    The cost of the severe flooding in the Far North at the moment was at $10 million , and construction crews moving into the North Shore of Auckland, parts of central Auckland, and regions stretching east to the Coromandel Peninsula and Thames was costing $5 million.

    The Government yesterday said it had given $100,000 to the Far North mayoral relief fund to help with the flooding recovery.

    But acknowledged the total cost to it from the damage could end up in the millions once repairs to roads get under way.

    On Thursday the announcement it was giving $500,000 was criticised as too small to make any difference.

    The $500,000 was to be used to hire more people for Taskforce Green who will help repair houses and clear debris.

    The Government has also set up an Emergency Response helpline 0800 779 997 to tell people what government assistance is available to those affected by the recent extreme weather conditions.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    Good point muppet!

    As always though......it all comes back to personal responsibility and common sense.


    • #3
      Originally posted by muppet View Post
      Hi Guys Here is an interesting news item from one of this mornings newspapers. I hope no PT member is involved.
      But we investors do need to be up to speed with our insurances no matter where they may be. Regards
      Muppet raises an issue I have been thinking about recently, namely whether to carry my own insurance on some inv properties. State Insurance has recently made me an offer they think I can't refuse - namely to switch Homeowners on one rental to Landlords policy. In fact they have unilaterally cancelled the former, replaced it with the latter, and invoiced me. I can call them to discuss options, but they don't say what they are. There are some additions to the cover (basically $20K chattels insurance and $10k loss of rent). In exchange they have doubled the premium and raised the excess by nearly 50%.

      I have never made a claim on this property (in several years). In fact in decades of paying insurance premiums I have never had a major claim, just the odd one for window breakage on PPOR (no breakage extension on my rentals policies).

      Loss on major or complete destruction seems unlikely and it would not ruin me.

      There is no mortgagee interest in this property.

      Would be interested in any views.


      • #4
        Hi Artemis

        Have the same problem with STATE.

        Property (3 bed standalone) has been given a premium of $646.21 which is over $200 more than last year. They have also taken it upon themselves to put the rent at $205 p/w. This is way out (low) but suspect the rental may have something to do with the premium. New property that we settle on next week has a premium of $1,312.00 with STATE. This property is a 3 bed and a studio. We also have two other properties insured with STATE but their premiums are not due yet.

        Have gone to an insurance broker who has, in turn, gone to AMP Vero, and come back with $465.02 for the stand alone, and $671.88 for the new property (paid annually). There is a discount for having more than one property with them. On top of that AMP Vero offers virtually double what STATE does - plus one months free premium. So which one should we go with?

        I also have all my house contents insured with them. At the moment they are all in storage. When I rang to have the time extended I was told they only cover it for 6 months instead of a year - a change in policy. When I asked if they were notifying people of that fact I was told they were just waiting till people called - as I had done. After telling them I had been with STATE for over 40 years (and being very angry about it) I managed to get another 6 months but after that I am on my own (or with AMP Vero, methinks). I am not getting the full cover while the contents are in storage, but I am paying the same premium.

        Not just the premiums that are high, but the service and value for money are down the gurgler as well.

        Any other comments from other investors?

        "I not only use all the brains that I have, but all that I can borrow." Woodrow Wilson


        • #5
          Artemis, I guess it is a question of how badly would it hurt you if you did lose that property?

          It is great that there is no mortgage on it, but are you using the equity?

          Insurance will always be on the odds a money losing proposition, to make money insurance companies have to price at a point higher than the likely cost to them.

          However, as a means of risk management it may still be better to take the certainty of a small hit rather than a very unlikely but devastating large hit.

          New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


          • #6
            A larger excess?

            To take an example out to an extreme.

            I know that Telecom runs it's own internal insurance scheme to cover small events. It then has underwriting to cover large events.

            For us the choice would be the size of excess that we can afford to carry.
            The Son of Glenn