How much do you I insure my rental for?

[Fuzzywuzzy]

Hi there! I have a three bed rental property in Auckland with a value of $700k. It's 172m2 in floor area.
Two questions:
a. What level would you set the excess to reduce premiums (currently $1000)?
b. How much of the value of the property should I insure for - been told $3000/m2?
Many thanks!

[Perry]

It's probably prudent to pay for an insurance valuation, then provide that to your broker/insurer.
It is even possible that insurance coys will require one, nowadays.
Keep in mind that the Certificate of Insurance (or whatever it's called) is about the cost to re-build, not about current market value.

[Don't believe the Hype]

Also remember there is a cost of demolition and landscaping and then soft furnishings that are not part of the quoted $/m2 rebuild cost.

[Bob Kane]

There's a quick formula that I use that can save you $1000 from not paying a valuer:
1. If the house is a 1950s weatherboard 3 bedrooms - $500,000
2. If the house is a 1980s 4 bedroom, double garage - $1,000,000
3. If it's a recent, expensive, quality house - $1,500,000

Don't worry if your house doesn't closely match my descriptions.
There's not much difference in premiums.
If you own a house in the 1.5m range - don't penny pinch over a few hundred $$.
There, send me $100 and keep $900 in your pocket.

[learningInProgress]

Also remember there is a cost of demolition and landscaping and then soft furnishings that are not part of the quoted $/m2 rebuild cost.

Would this also covered as part of your home insurance pay off?

[Don't believe the Hype]

Demo can cost $10-$20k.

If you insure a 100m2 house for $200k I.e. $2000/m2 the payout would need to cover demo, site prep then rebuild.

[Rosco]

Is it a simple flat site, with easy access? Or multi levels, retaining walls, unstable foundations etc.

How much should you insure it for? cost to replace it to the same standard. So this might include
- demolition
- removal of rubish, materials
- asbestos removal plan?
- redoing piles, retaining walls
- rebuilding the house

My preference would be that once completed, I have a whole property, not just 2/3rd's of it replaced, so I over insure if anything. And as has been mentioned above, if you go slightly higher the premiums are virtually the same anyway.

Ross

[learningInProgress]

Sorry might have misunderstood the concept. Do you mind to explain a bit?

So if i have a "total lost" for my insured house, will the insurer will give me the full lumpsum of the insured $$ that i may use as it may or are they going to drip feed me for the cost of replacing the house which they have complete flexibility to say "nah we're not gona pay for that"?

[Nick G]

Ask your insurer/broker. I have been told by my broker that it is replacement cost, not "market value". Replacement cost needs to include demolition, council, architect etc. I don't know if it covers mortgage payments in the interim actually, must look into that.

[heugumper]

I agree that the mortgage payments are a worry, Nick G. If tenants can't live in the house and the rent stops coming in, how does one keep paying the mortgage? And even if you can cover this from other rentals/incomes, what if the event was widespread like the Chch earthquake?

Those of you in Chch, how did you manage during this time?

Paul.