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Good news item re. using valuers for insurance calculation
My insurer has confirmed to me in writing re a partial loss.
They will pay actual costs incurred to repair or rebuild to substantially the same condition and extent as when it was new; or at their option a cash equivalent.
This is limited to the sum insured.
They do not have the concept of pro-rata averaging or co-risk; as the cover is for the value of the house.
I won't name the insurance company for two reasons.
1. You should have your own confirmation if you are concerned, I believe.
2. That increases the chance of someone getting a different answer, reporting back here, then we can investigate further.
It is my personal responsibility to ensure the figure is as accurate as possible if I want to avoid under insuring.
By no means an easy feat. If you ask 100 builders how much it will cost to completely clear your section and rebuild your house, you will get 100 different prices. The insurance companies have a no lose strategy here especially as they have deals with every supplier they deal with to get even better pricing, which they don't pass on to Joe customer.
Yes many insurance companies got hurt with all the recent disasters but now with rocketing premiums and this no lose policy I think it's time to buy shares in Insurance Co's.
Agreed, no easy feat.
Taking out insurance is about risk, and the re-insurers now see us as high risk.
They want to know their liability, hence the fixed sum.
Other countries have this; it is just this transitional phase for us that causes a lot of angst.
The extra premiums if one ends up over insuring isn't much in the big scheme of things; especially if you are risk adverse.
Other punters out there like mrsaneperson don't even take out home insurance (or so she says)
Re the shares.
People often buy shares in the companies whose products and services they use.
Other punters out there like mrsaneperson don't even take out home insurance (or so she says)
And we all watch the current legal battle raging with uninsured Canterburyians Vs Government over their settlements. Hope Cantabs win, then no one will need insurance as the Govo will bail us all out. (Help me Nannie, this 36 year old can't, I mean doesn't want to, wipe his own ...)
And we all watch the current legal battle raging with uninsured Canterburyians Vs Government over their settlements.
Hang on.
One old codger down there owned 2 properties, next door to each other.
One his house, = 100% CV payment as he had insurance
One his section,= 50% CV payment as he couldn't have insurance.
It's not a bailout. The government is purchasing land. If they don't sell, roads and services will not be maintained regardless of the condition of the housing on the land. Insurance has nothing to do with the purchase of land.
My insurance company values a rental for me at $400,000.
This includes a 50 year old house of around 105sqm, A double garage that is 18 yrs old
and a 7 year old, one bedroom MDU of 37sqm.
All this in an area where only brand new houses are worth that much.
"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
My first insurance renewal has arrived.
Market value of property - about $350k.
Insurance company calculation - $330k.
I've added $100k to the market value and insured it for $450k.
New premium is about $100 cheaper than last years.
Some interesting stats.
Appears many people either don't understand and are not seeking advise, or can't be bothered, or just want the cheapest premiums.
New Zealand's biggest insurer revealed this week that 60 to 75 per cent of its 800,000 homeowner policy holders have not responded to new estimated house values the company sent to them.
AA Insurance, which has more than 300,000 customers, said 75 per cent of its policy-holders had not made any changes to the estimated figure sent to them.
Almost 90 per cent of the rest had increased their cover, and early claims suggested these higher valuations were correct.
...............
He found it hard to believe so many house owners had not responded, because the valuations given by the insurance companies were "just desk-top calculations" and did not reflect the true value of insured homes.
"If you don't do anything, you're leaving yourself vulnerable and exposed. If you have a mortgage and the house burns down, the bank will still want to be repaid."
Perhaps it's like a Will.
"I must get around to updating that"
I am still surprised that the banks do not require proof every year showing adequate (for them) insurance cover.
Last edited by speights boy; 15-03-2014, 07:18 AM.
I think its only a matter of time before banks require the sum insured value to be completed by some-one who has a clue, over a "default value" which is as far as i can tell based on nothing but house area and age. The banks will want know you have proper coverage.
Our default value was sent to us, the information on it was wrong, default value was $2000 m2. This is way to low to rebuild what we have.
Ive prepared rebuild estimates and in all cases the home owner has been surprised how much more they need to insure their homes for.
You also need to consider what you will rebuild if the house is destroyed. You may own a Villa but that does not mean you will rebuild a home styled like a villa. So you dont need to insure the home for the extra cost if you are wanting to rebuild a brick home with a 2.4m stud (but you may HAVE to, to make sure the market value is right for your mortgage debt etc).
A valuer isnt the person you want to pay to come up with a rebuild value, their job is market values. Get either a residential estimator or a QS. These guys will know the local rebuild rates and will likely do a takeoff similar to what they would do if you went to them with a concept plan for a new build.
Yes it does cost money, just as a valuer does every-time you have him around to value your property...and that isnt cheap but its accepted. Having the right insurance is more important and people just dont get it yet. It wont take long till some-one loses their home and realises they are underinsured $200K and it gets on campbell live or similar.
Simply adding money to your premiums based on nothing isnt going to help you either.
The insurance companies have it good, they will pay "up to" your sum insured. They arent guaranteeing your will get your full sum insured. So you can pay premiums for years for no reason. I think they should pay the value you are insuring, no questions asked. But thats not the case.
So you dont need to insure the home for the extra cost if you are wanting to rebuild a brick home with a 2.4m stud (but you may HAVE to, to make sure the market value is right for your mortgage debt etc).
In the case of a rebuild doesn't your insurer pay the money directly to the bank if you have a mortgage ?
If it covers the mortgage the remainder is returned to you and then you would have to reapply for funds to build ?
If it doesn't cover the mortgage then you are still owe that sum before applying for new debt ?
Not sure if that is how it works, but that would be my guess.
yes if your house is destroyed and you are underinsured you would still be liable for the balance with the bank (who would want to be in that position) and what bank would want that risk, which is why i think they will eventually make a proper rebuild cost compulsory, especially for those who are near the LVR
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