Published with permission from Vero
It can take a long time to save and plan to buy a new house, and it’ll likely be the largest asset you’ll ever own – so it makes sense you would want to safeguard it!
Insuring your new purchase is often not high on the priority list and could end up being organised a bit late in the buying process. However, you would be surprised at how long it can take to organise your insurance, especially depending on the type of home you buy, its age, the location and also the condition of the house. Because of this it’s recommend you start thinking about insurance as soon as you find a property you like – read our tips below for what you need to think about.
1. Look up the insurance history of the house
When you come across a property you might like to buy, you want to try and unearth everything you can about its history and any factors that could impact your insurance. These are likely things such as the property’s age, size, location, condition, and the materials the home it constructed from.
It’s also recommended you try to find out where the current owners have the house insured, if their insurer has any special terms imposed on the property, what premiums they pay, and the claims history, if any (especially if there was major damage in the past).
2. Explore the insurance options available to you
Once you find a home you believe ticks all the boxes, and you want to make an offer on it, start considering what type of insurance you will need to suit your needs.
First things first, check you can, in fact, get insurance on the property. It’s worth considering putting an insurance condition on the sale and purchase agreement, this way you can ensure you’re not stuck with a property you can’t get insurance on!
3. Get your insurance sorted early
You want to hunt around to ensure you are able to get cover for the house and you can afford your mortgage, rates and insurance premiums. Should your insurance needs be complicated, it might pay to get advice from an insurance adviser or broker to find out what you need to know, and get the best cover for you.
It’s common among banks to make house insurance compulsory with any lending, so when you take out a mortgage make sure you get your insurance in order before settlement.
You will need to get your insurance to come into affect on settlement day, when the property officially becomes yours (regardless of whether you move in straight away or not). It’s also a good idea in case an accident happens while you’re moving in – you don’t want to have a large repair bill on the first day of living in your new house!
4. Get the correct sum insured
The majority of house insurance in New Zealand is based on a ‘sum insured’ amount. This means the most you get paid out, if the property is damaged, will be the amount specified in your insurance policy. You want to get your sum insured figure correct – if it’s too high you’re paying for cover you don’t need, if it’s too low your may find you can’t rebuild your home completely in the case it is destroyed.
You want the sum insured amount to reflect the full cost of a rebuilt house and you will need to ensure this includes any additional structures on the property such as garden sheds, deck, concreted areas like a driveway, and the cost to remove debris and any demolition needed, plus professional and legal fees.
A good way to help you calculate this cost is to use an online tool such as Vero’s Cordell Calculator. The calculator will give you an approximate idea of the cost to rebuild your home. Another option is to have a quantity surveyor or registered valuer provide you with an estimate to rebuild, then you can use this figure to set the sum insured amount on your insurance policy. This method can be particularly helpful if you have a house with special features or an architecturally designed home.
Purchasing a new property is an exciting event for many Kiwis. It can also be a very stressful time, but with a small amount of planning, you can help make the process run more smoothly and ensure you’re not caught out with any last-minute difficulties, like getting house cover to complete a purchase. You can rest easy knowing you’ve taken all the right steps to avoid any calamities that leave you out of pocket!
If you’d like to check your insurance, or talk to someone about home insurance, you will find the brokers at Over Fifty Insurance both knowledgable and helpful, so get in touch today.
By Richard Godman