By Richard Godman
Manager Technical Underwriting, Personal Insurance
6 December, 2017
Rateable values don’t affect insurance premiums because they are an estimate of the market value of the house and land together.
Insurance premiums only reflect the amount of insurance you have in place to rebuild your house (your ‘sum insured’).
The cost to rebuild your home would probably be similar no matter where in the country it was, but the value of the land means the sale price could be vastly different.
In some regions, like Auckland, council valuations will be significantly higher than the rebuild cost for a home, and using the rateable valuation for your sum insured could mean you are paying for much more cover than you will ever need.
But in other regions, the rateable value of your property might actually be lower than the cost to rebuild it. Using your rateable value as the sum insured might mean you don’t have enough cover to rebuild your house if it’s extensively damaged.
Even relying on the ‘improvement value’ portion of a council valuation alone is not recommended.
Even though there’s no relation between your house valuation and your insurance, both can have a big impact on your financial wellbeing.
Looking at the estimated worth of your home might lead you to all kinds of financial decisions – like the decision to upgrade, downsize or move, to refinance or pay down your mortgage or to use the equity in your home for another aspiration.
So it’s also a great time to consider whether you’ve protected your home with the right amount of insurance cover.
At Vero, we encourage customers to check and update their house insurance sum insured regularly. It’s quick and easy to get a rebuild estimate using the Cordell Calculator tool on our website, or if you want more certainty you can get a registered professional to assess the rebuild cost for you.
Vero customers are eligible for additional cover if they meet certain conditions, including checking their rebuild cost using an approved tool and properly describing their house to us.