Now might be a good time to dust off your home insurance policy to gauge the adequacy of your insurance cover.

Recent extreme weather events have written a new chapter cataloguing sad examples of homeowners caught out by flaky insurance policies left to fester in the bottom draw.

Think how much the cost of building has risen over the last five years and how that could leave you exposed if events put you in the position of having to fix or rebuild your property.

Individual owners’ uninsurance and under-insurance issues following the Auckland Anniversary floods and Cyclone Gabrielle exceeded $2.3B, according to an estimate by the Munich Reinsurance Company and highlighted in a new report by NZIER.

Now insurers are signalling that they won’t renew policies in at-risk areas, further complicating the risks of property ownership.

Insurers are reassessing risk – and premiums

Extreme weather events have changed the way re-insurers assess New Zealand’s risk profile.

For many years, Kiwi property owners have shared the risks, which made insurance policies more affordable. But that’s changed, as insurers align premiums with risks, such as proximity to fault lines and flood zones.

Now, insurance costs are going up for everyone.

Actuarial findings shared with the Treasury revealed a significant rise in home insurance premiums, with increases surpassing 30% in various parts of New Zealand.

According to non-profit organisation Consumer NZ, house insurance premiums are up by 97% and contents insurance by 48% over the past decade.

The chief executive of one of the country’s largest insurers says home insurance policy holders should brace for average premium hikes of “20% plus” this year.

Some insurers have gone even further to manage their exposure to risk, restricting the availability of online quotes in certain regions.

No insurance, no mortgage  

Insurance, once an afterthought, or even a foregone conclusion, is now a top-of-the-list consideration for property buyers.

Lenders want evidence that insurance is in place before advancing funds.

You might have found the ideal home in a great school zone, but if the insurer has classified the property in a hazard risk area, all you could get from the bank is a sad face.

IBANZ CEO Mel Gorham said homeowners may now find it more difficult to arrange house cover to settle on a newly purchased property, even if it was unaffected by last year’s weather events, as insurers are now more sensitive to possible natural hazard risks.

“It’s easy for first-home buyers, in particular, to be wowed by views, school zones, or that dream kitchen, but IBANZ urges buyers to stay grounded in reality and make sure the property is really a sound investment before signing up,” she said.

Check out Money Hub’s essential guide covering problematic regions for house insurance, key considerations for insuring in high-risk regions, and frequently asked questions.

What you can do

Changing insurance companies is right up there with changing banks – just too hard, which is why only 20% of policy holders would consider a change in the next 12 months, according to a Consumer NZ survey. Few people are prepared to shop around for a sharper price. And then, for those who bother, property risk assessments for online quotes add significant effort to finding a more competitive rate.

Here’s what you can do:

  • Increase the excess to reduce premiums
  • Choose more limited policies, like fire-only or fire and burglary coverage. Remember that EQ Cover still offers essential protection in the case of natural disasters
  • Look for discounts by bundling house and contents policies

Find a home that ticks all the boxes – including insurance. Call 0800 GOODWINS or check our current listings