By Adam Heath
Executive General Manager, Insurance Solutions
16 May, 2016
The research shows that up to 85% of New Zealanders may experience an insurance shortfall of some sort if they need to rebuild their house as a result of major damage or if their home is totally destroyed.
We’re pleased to note that Treasury’s findings show the level of underinsurance in New Zealand as a whole would be overstated in the event of another major natural disaster, as events such as the Canterbury earthquakes are generally location-specific. Clearly it would be extremely rare for all houses across the whole of New Zealand to be affected simultaneously.
However, when Treasury ran a hypothetical earthquake event in Wellington, it found the impact on 5% of households would be “severe”, with several thousand households facing a shortfall of around $40,000.
Such underinsurance continues to be a concern given the level of education and awareness we, and the New Zealand insurance industry as a whole, have endeavoured to provide to our customers and New Zealand households in general.
Statistics are one thing, but for our customers the real question – and sobering thought - is whether or not they could be one of the 5% or several thousand homeowners affected by a significant insurance shortfall.
At Vero we know it’s important for our customers to set the right Sum Insured for their home insurance, not only to ensure they have the right level of cover at the time of loss, but also to ensure they only pay for the cover they actually need. We appreciate that even with the help of online tools like the Cordell Calculator, setting an accurate Sum Insured for more unique houses may (in some cases) not be a very straightforward process. We also acknowledge that our customers are individuals and it’s very rare that any two homes are completely identical. That’s why we’ve developed a more flexible approach.
In February 2015, we conducted our own research with customers and as a result, we introduced a new product called SumExtra. SumExtra provides Vero customers with a broad and comprehensive home policy which protects our customers more fully, ensuring they have greater certainty and peace of mind at the time they need it most.
By qualifying for SumExtra, our customers can benefit from up to 10% more cover if their home is destroyed by a natural disaster like an earthquake or a tsunami and, if their house is damaged or destroyed by another insured event like a fire, we’ll repair or replace their home even if the cost is more than the Sum Insured amount. Most of our customers are eligible for this market leading benefit simply by updating their Sum Insured amount once every three years using our Cordell Calculator or an approved valuation.
Through products like SumExtra, we’ve tried to make it as easy as possible for our customers to ensure they have sufficient cover to repair or rebuild their home if the worst should happen.
If you’re not sure what your Sum Insured is right now, contact your broker, adviser, one of our valued business partners or use the Cordell Calculator located on our website to check and update it.
Read the Treasury article here: ‘Sum Insured’ cover for household insurance – what are the risks?