Insurance Crisis Looming Warns Property Institute

Insurance Crisis Looming Warns Property Institute

Changes to home insurance mean New Zealand is setting itself up for disaster, warned Property Institute Chief Executive David Clark.

"If there is one thing we all learned from the experience of the Christchurch earthquakes, it's the importance of making sure that we are all adequately insured in the event of disaster"

"The country's failure to adapt to changes in home insurance mean that we will be set up for a disaster in the event of another crisis"

Most house insurance policies previously provided for full replacement regardless of value, however changes in the industry are now putting the onus on the homeowner to specify a maximum amount insured.

"The vast majority of homeowners are simply accepting a default value provided to them, or using online calculators which don't take a wide array of variables into account. Compared to the professional assessment of a Registered Valuer, these methods tend to result in significant underinsurance" said Mr. Clark.

"Worse, some homeowners who make the responsible decision of having a professional visit their property to calculate a rebuild cost are being ripped off by people completely unqualified to do this work"

While Registered Valuers are strictly regulated in New Zealand, there is no regulation preventing people who are not qualified from providing insurance valuations.

"It's absolutely vital that people understand the risks involved in using a value that hasn't been calculated by a professional, and the Government needs to understand the risks that the country is running if we continue to allow widespread inaccurate insurance of the country's major asset base"

ENDS

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