Home Insurance 101: Understanding the Basics

Your home is so much more than the sum of its parts. It represents the very life of your family. Having properly structured home insurance means you cover your home and everything inside it from the unexpected.

NZ home insurance through the years

In general, the only type of home insurance you’re required to get when applying for a mortgage just to cover for repairs and replacements. Most New Zealand homeowners own “actual replacement” coverage, which will restore your home after it gets damaged by fire or another calamity.

Over the years, the types of home insurance now available have changed significantly. Now, you can choose a specific total sum insured amount that will represent the total amount payable when you lose your home.

Things to consider when getting home insurance

Scope the exterior of your home

The first thing to do when considering how much coverage to get for your home is to check the outside. Find out how much it will cost to replace your home’s driveway, fence, keys and locks, and walls. If you have other structures like a tennis court or a swimming pool, you also need to note these down, too.

One common mistake people make when doing their estimates is they forget to include demolition and hauling fees. You need to make sure that you give allowance for this when coming up with an estimate. Otherwise, you’ll end up paying for this out from your own pocket.

Check the contents of your home

Next thing to check are the contents of your home. Home insurance companies don’t usually require this, but it’s a good idea to include them. After all, some of the things inside your home have the same–if not, a higher–value than other parts of your home.

Check if the policy includes a Simplified Contents coverage. This type of coverage allows you to insure specific items like jewelry and those that are kept in storage facilities. Be sure to also check if the policy covers collectible items like coins, cards, stamps and action figurines.

Choosing a home insurance company

When it’s time to find a home insurance company to cover your home, look for one that has a positive claims record and a trusted brand name. It can be tempting to go with the cheapest insurance, but this isn’t always the best option. You need to find a company that will give you the widest coverage with the lowest premiums, and the fastest processing time.  A company with an AA-­Standard & Poor’s rating is ideal.

Talk to your insurance adviser about whether you also need to look at income protection. Income protection is an add-on that protects you from possible foreclosure in the event that you can’t work because of illness or injury.

Finally, take the time to read your policy! It is so important to be familiar with the things that your policy covers and excludes before the unfortunate time when you need to use it.

This website is written as a general guide and is not personalised advice. It is not intended as personal financial advice,nor is it specific advice to your situation. The author has written this in good faith and disclaims any liability from any action or inaction from how you may use this website or the results it may or may not achieve. Government, bank, company, insurer and lending policies, as well as other policies, procedures, and information in this website are likely to also change from time to time, and rules and decisions and policies may be applied differently and/or on a case-by-case basis. These rules may also change from the approximate time this was written. You are encouraged to recheck if these matters are accurate and up to date. By reading and using this website, you agree to hold the author, associated entities and/or associates, harmless.