Insurance cover change coming this year

Last year, the insurance industry signalled it was possible it would move to policies based on a determined value, rather than full replacement cover.

The value would likely be tied to a property’s CV.

That would give reinsurers more detail about what insurance policies were covering.

Fixed-cover policies were commonplace in New Zealand 20 years ago but competition between companies led to full replacement policies becoming the status quo.

Now IAG, which operates insurance brands State, NZI and AMI, among others, says the change will definitely happen this year.

“Across all IAG brands we can confirm the transition to specified Sum Insured home insurance product at some stage this year. We will be able to provide more comprehensive information and timings closer to the time of the change,” a spokeswoman said.

There have been warnings from Consumer New Zealand that property owners will need to be careful about what value their policies are fixed at, as it almost always costs more to replace a house than what it is worth.

An Insurance Council spokesman said insurers were deciding individually when to make the change.