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Home Insurance Puts You In The Driver’s Seat. Now What?

Home-Owners And Indeed Property Investors Are Getting Understandably Antsy

The insurance industry’s recent shift from a replacement-cost-based to a sum-insured-based coverage for properties seems to be leaving property owners with more questions than answers.  No longer will insurance companies work out the amount your biggest asset(s) should be insured for.  Instead, the onus is now on the owner to work out the total rebuild cost should the property be completely destroyed.  

Easy-peasy-lemon-squeeze?  Not really.  Not at all.  Underestimating your rebuild cost essentially nullifies the whole point of insuring your property in the first place.  Which begs the question, why bother?  Overestimating your rebuild cost pretty much guarantees you to make as much use of your premium payments as throwing them down the drain.  After all, the maximum you can ever claim is the actual rebuild cost. 

Though many insurance providers provide online calculators to help homeowners work out the estimated rebuild cost, the Insurance Council and industry experts warn that these calculations provide only a very crude estimate. This latest Fair Go exposé also highlight where these calculators fail.  

As accurate as you could with the information you feed these calculators with, without surveying the property and taking into all of its peculiarities, no one can really give you a proper cost estimate to rebuild*.  Many industry insiders are saying that the only reliable rebuild cost estimate can only be arrived at by engaging the services of quantity surveyors or builders.  

When renewing your insurance policy this year, also make sure you your insurer as many questions as possible:  Will I be covered for the cost of getting new planning consents or getting an architectural design?  Will the policy cover the upgrade of an old house to comply with current legislation at the time of rebuild?  Will there be scope to adjust my insurance cover should there be a major renovation?  These are all issues that will affect your cover when disaster does strike.  

Have you renewed your property insurance this year?  What are some of the issues facing you right now?  Leave a comment below.

* To this end APIA will be facilitating a members only information evening in the coming weeks inviting the insights of a quantity surveyor to give investors more information about what features of your property is likely to increase rebuild cost.  Watch out for it by subscribing to the APIA newsletter.  

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