Insurance warning for investors

Consumer chief executive Sue Chetwin says that information will be vital under changes to the way home insurance policies are structured.

The insurance industry has flagged a move to fixed-cover policies from the current replacement value model. 

Insurance Council chief executive Chris Ryan said it would likely become common for new and renewed policies over the next  year or two.  He said it would give reinsurers more clarity.

The policies would be based on Government valuations.

Canterbury Property Investors Association president Lewis Donaldson said property owners would have to be up to date with their insurance and remain that way

“Otherwise there could be an impact on financing and refinancing if you are underinsured.”

Chetwin agreed it would be vital that the price insurance was fixed for was what it would actually cost to replace the property.

She suggested property owners use a quantity surveyor before taking out a policy, particularly on top-end or unusual properties.

Donaldson said the change could mean headaches at first as people had to get valuations. “If things are done correctly there shouldn’t be too much of an issue. The only problem is when houses are underinsured.”