Insurance industry experts are urging Kiwis to check and understand their house insurance policies to avoid nasty shocks at claim time.
In what is a timely reminder of damage unexpected weather events can cause, gale force winds wreaked havoc on houses in Auckland and Northland last Tuesday.
Photos provided by general insurer AA Insurance, show tiles blown from roofs, guttering and gates buckling under the weight of fallen trees. In another example, a conservatory was smashed to smithereens.
During Sorted 'money week', which runs from August 9 to August 15, the Insurance Council of New Zealand (ICNZ) is urging Kiwis to understand their insurance policies better. Research commissioned by ICNZ of 1000 Kiwis released on Monday shows just over half (54 percent) knew what their insurance covered them for. Many admitted to having no interest in reading their policy documents.
ICNZ said this backs up research from Australia and shows "overconfidence" in peoples' understanding of insurance. But as insurance costs money, reading policy documents is important, as it's the best way to check what's covered (and what's not).
"If you don't read your policy, you don't know what you're covered for and could get some really nasty shocks at claim time," an ICNZ spokesperson said.
ICNZ CEO Tim Grafton urges Kiwis to put some time aside during money week to read their policies and get their questions answered.
"We understand that insurance policies are a long read with no immediate pay-off for your time...however it’s an important part of your financial resilience to help get you back on your feet when the unexpected happens," Grafton said.
The areas of insurance most commonly misunderstood are the 'sum insured', 'excess', and the difference between 'sudden' and 'gradual damage', ICNZ said, noting these are important things for customers to check.
The sum insured is the total dollar value (amount) an insurer can pay up to if there's a claim. The excess is the amount the customer pays towards the claim (the insurer tops up the rest, to the policy limit).
It's also important to check policy cover for sudden and gradual damage, ICNZ said.
For example, damage caused by a sudden leak of water from under the dishwasher may be covered. But if it was caused by a gradual leak to a hidden pipe, this repair may not be covered.
Simon Hobbs, general manager of operations at AA Insurance confirms house insurance customers are now required to calculate and provide an accurate 'sum insured', which is the cost to rebuild their home.
"If customers take reasonable steps to provide an accurate size of their home and sum insured calculation, they will be covered should the worst happen," Hobbs said.
Under AAI's 'full home replacement cover', if the home is repaired or rebuilt because of damage caused by natural disasters (fires, floods and storms), the sum insured is used to settle the claim.
"If [people] have made any changes or additions to their home such as added a new room, deck or a pool, they should let their insurer know to update the rebuild cost of their home," Hobbs added.
The sum insured amount can be calculated using online tools, such as the 'Cordell' calculator. Another option is to get a building expert, architect, or valuer to provide an estimated rebuild cost.
Insurance and Financial Services Ombudsman Karen Stevens suggests Kiwis review their insurance each year, checking whether there's anything their insurer needs to know.
An ideal time to do this is when receiving annual "renewal documents", which include a letter summarising the insurance cover, sum insured and cost ('premium').
"Taking note of what your policy says you must do, before you need to claim, can mean the difference between a successful claim or a declined claim," Stevens said.
General information about insurance can be found on the ICNZ website. Customers can contact their insurer for a copy of their policy at any time.