Navigating house insurance changes


(from Fairfax news)
When my policy renewal letter from the insurance company arrived in the mail, I knew I could put it off no longer. It was time to sum insure.
Like everyone else's house insurance, my policy has rolled over every year with little more than a slight increase in premium.
This year it renewed with a very big caveat: unless we took steps, we could no longer bank on the insurer fully replacing our house if anything went wrong.
That means guessing what our house is worth to replace, or getting in a valuer. So I sit down at our computer and hit the "sum insured" calculator to try and figure out what my house is worth.
The Cordell calculator, used by a number of insurers, gets straight to the point. It asks for my postcode. Since my postcode is rural and not in the heart of Auckland, I appreciate the distinction.
Then the questions begin. What kind of house do I have? Modern? A bungalow? How high are the ceilings? What kind of materials is it clad in?
Being spatially challenged, I call my husband in for some of them, like "how big is our deck" and are we "extensively" or just "averagely" fenced? And how about our outbuildings and Para pool? The calculator wants to know about them all.
Thirty or so questions later, it's time to add it up - and it's a shock.
The replacement cost of our house is more than twice its rateable value. In my postcode, only mansions are worth that much.
So I review. Did I click something wrong? Are my ceiling heights too high? Was it worth claiming the double garage when it's really a men's shed that leaks?
One of the factors I do have to take into account is the cost of demolition. That can't be cheap, I think.
Another clue, according to my insurer's website, is that "sum insured" does not include the land value or reflect what I paid for my house.
Speaking plainly, the market value of my home, "does not equate to what it costs to rebuild it".
David Clark, chief executive of the Property Institute which covers quantity surveyors and registered valuers, says this is one of the major misunderstandings about sum insurance.
With few exceptions the calculator's value will be higher than the market value and registered valuations are proving markedly higher again.
He admits valuers are not sure why there is such a difference.
"The calculator out of the insurance companies just produce a single figure at the end, and we can't actually see where the differences lie.
"In a lot of cases it will be complications around things like retaining walls, outbuildings, extensive fencing, extensive kitchens and the like ...We assume it's those sort of things."
Getting an insurance valuation from a quantity surveyor is considered the most accurate but most expensive way of getting an accurate handle on your rebuild costs. The next best option is a registered valuer, but Clark admits many people are loathe to pay $500 or more to get that level of accuracy.
However, the calculator is a blunt instrument. For example, there is no question that will take into account any fancy kitchen fittings or even, in some cases, how big your kitchen is.
The most concerning element of this exercise is that most Kiwis have yet to do this for themselves and like me are officially under-insured.
Insurance companies are reporting that roughly two-thirds of their customers have not changed the house values suggested by their insurer.
After the Christchurch earthquakes many insurers found that the costs of replacement were higher than they anticipated.
Clark says the cost of demolition, for example, was always thought to be about 10 per cent but in Christchurch that figure soon blew out.
So now insurers want to ensure the premiums they are getting are going to cover their liabilities.
The problem for policy holders is the sum insurance process will almost certainly mean a big lift in their premiums.
One option is a form of self-insurance; in other words, insuring only what you want to replace. By knocking off 5 square metres I managed to reduce my sum insured value by $12,000.
By deciding not to rebuild my driveways and or my carport, I'm down another $57,000.
And the insurers are not bothered by this.
"We're getting reports that some appear to be nominating sums that might be below the default and of course that's the customer's prerogative," says Insurance Council spokesman Samson Samasoni.
"What we're concerned about is that homeowners nominate a sum that meets their future needs.
"We know of customers who are deliberately nominating a figure below the default amount because they plan to downsize if some misfortune occurred."
In other words, an elderly couple in a five-bedroom home might justifiably insure themselves on the basis they won't replace all those bedrooms if disaster strikes.
However, it's clear that this method needs agreement from your insurer.
As always, it's also worth checking just how much of a difference in premium it would be to deliberately reduce your rebuild value. In some instances, there may be little in it.
I try another calculator. The results are the same but it helpfully provides a breakdown of demolition and professional fees.
Demolition, it turns out, would cost about $26,000; professional fees, such as an architect's costs or building consents, are $32,000. GST is a whopping $87,000.
And I learn an interesting fact along the way about the postcode that I provided at the start.
After all, if land values aren't part of the equation, why does the calculator bother to ask?
Clark tells me that the postcode is a guide for the calculator on the stability and quality of my land, not whether I'm living in a pricey or cheap location.
I sigh. It seems there's no getting around a higher premium, but at least I understand why.
I reach for the phone to tell the insurance company to change my policy.
今年,有一个非常重要的提醒更新:除非我们採取措施,否则如果出了什麼不幸, 我们不能保证保险公司能对我们的房子作出重建。这意味著我们要猜测房子更換的价值,或找估值师的协助。於是我坐下来在电脑上点擊“保额”的计算器,试图找出我的房子是值多少的。
该计算器由多个保险公司所採用,能得到开门见山的答案。它要求我提供邮政编码。由於我的邮编是郊区,而不是在奧克兰的心臟地带,我认为这樣很好。它然后开始提问。我有什麼樣的房子?现代? 平房?有多高的天花板?它是什麼樣的材料建造的?
这般的提问,使我不得不打电话给我的丈夫, 问一问这樣的问题,像“我们的阳台有多大?”, 『我们有怎樣的围栏?』我们房屋的附属建筑和水池又是什麼回事?计算器想了解全部疑问。
三十条左右的问题后,计算器把它们加起来 - 这是一个震惊。我们家的重建成本是保额的两倍以上。在我的邮编裡,只有豪宅是值那麼多钱。所以我重新检讨一下, 难道我点擊了不对的东西吗?是我的天花板高度太高?我是否应该把丈夫的工作坊称为双车库?其中一个我必须要考虑到的因素是拆迁成本。我想那是不可能便宜的。另一条線索是,根据我的保险公司的网站,是“保额”不包括土地价值或反映市场价值。
总结这女士的遭遇, 专家认为这是关於保险金额的重大误解之一。除了少数例外, 计算器通常都将物业的价值计算成较市场价值为高, 而已註冊的估值服务亦被证明往往把估价抬高。估值者往往也不知道为什麼会有这樣的差異。
原来保险公司的计算器只计算出一个单一的数据作结尾,所以我们不能真正看到其中的差別所在, 在很多情況下,当计算周围的事物如挡土牆,附属建筑,大型围栏,开放式廚房之类的东西时, 就会混淆不清......
从一个测量师得到一个保险估值被认为是对重建成本最準确的计算方法,但也是最昂贵的。选择是註冊评估师是另一个做法,但很多人都不喜欢支付$ 500或以上来获得这种服务. 然而,计算器不是全能的。例如, 它不能计算你的廚房有多精致的装修。
这个话题的最令人关注的因素是,大多数新西兰人还沒有做到这一点, 所以他们, 包括这女士都沒有得到合适的保障。保险公司报告說,大約三分之二的客戶都沒有改变他们的保险公司提出了房屋的价值。基督城地震后许多保险公司发现,更換的成本比他们预期的高。例如, 拆迁成本一直被认为是大約10 %,但在基督城这一数字很快就不成立了。