Changes to Residential Insurance

How much money would you need to rebuild your home or other property that you own?  Insurers throughout New Zealand are adopting house insurance policies based on a Sum Insured Replacement Value cover, replacing the open-ended, square metre replacement insurance that provided actual replacement with no limit on the sum insured.

It is now your responsibility to insure for a specific amount.  The new regime limits the maximum amount payable.

This puts the control in your hands to stipulate the amount that it will cost to rebuild your property in the event of a total loss.

This is a fairer and more equitable approach.  It also requires you to take control and consider the real Replacement costs involved.  But the downside is that you need to carefully and accurately calculate the value.

The sum insured is the maximum amount that the insurer will pay to repair or rebuild your home when you make a claim.  So you need to think about the full cost of rebuilding, including demolition and removal of debris, architect and design fees, professional fees and costs of compliance.  Think about the cost of replacing swimming pools, tennis courts, retaining walls, driveways, fences, sheds and garages.  The slope of the land on which your house sits needs to be taken into account, along with the quality and style of the property.

Keep in mind that while you can estimate the costs of bricks and mortar, labour, consent processes and services, demand may surge in the event of a major event, such as the Christchurch earthquakes, and prices tend to increase.

The change reflects global reinsurers looking to better manage their own risks and bring New Zealand into line with other countries.

As your Broker, we will work with you to update your policy at its renewal.  We recommend that you engage the services of a Valuer, Quantity Surveyor, Architect or Builder to help you accurately calculate Replacement costs.  Or you could use an online calculator, based on the information you provide.  Go to and click on the “Links” tab and then select either Cordell Express Residential Valuer or Cordell Comprehensive Residential Valuer.  (Cordell is an independent building and construction information provider)