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Sum insured

What you need to know

Many insurers in New Zealand offer house insurance based on a maximum sum insured amount, rather than the floor area of a property. Some insurers, like ANZ, also offer full replacement options (except for damage caused by natural disaster), if you personalise your sum insured.

If you’re a homeowner, it’s your responsibility to ensure you have enough cover to protect your home. Here’s how you can do this:

  • Work out your own sum insured - use this calculator or engage a professional.
  • Inform your insurer.

The sum insured specified in your policy is the maximum amount your insurer will pay out for an eligible claim, unless your insurer offers full replacement options (but this will most likely not cover natural disasters). In the event that your house is damaged or destroyed, your insurer will meet the replacement or repair cost of your property, but will not pay any more than the sum insured amount specified on your policy schedule.

Your sum insured will need to cover the total rebuild cost of your home in the event of a total loss. Depending on your particular policy, you may need to take into account:

  • The rebuild cost of your home as well as other structures such as decks, driveways, fencing, pools, carports and garages
  • The cost of materials and finishings to get your house back to the same quality
  • An allowance for compliance costs and professional fees such as architect or council fees
  • Demolition costs
  • If your insurer includes or excludes GST in the sum insured amount.

Watch out

Different insurers may have different definitions of what’s included in the sum insured. They could also have different methods of calculating the sum insured amount for new or existing policies on renewal. In most cases your house insurance does not include cover for your land or contents.

It's your responsibility to work out adequate sum(s) insured for your house and contents. You should fully understand your policy to ensure there are no gaps, and you know what is and isn't covered.

It's important to note that the insurer will only pay the rebuild cost, up to the sum insured amount.

If you already own a home, or are about to get a new house insurance policy, it's likely your insurer offers house insurance based on a maximum sum insured amount. In either case, don't assume your insurer's default amount for your home is accurate, or that they have full replacement options for non-natural disasters (like fire).

Your insurer doesn’t know the details of your property – you do – and insurers, brokers and banks won’t give advice on what your sum insured should be. It’s your responsibility to work out an adequate sum insured amount, and advise your insurer.

It's important to make sure you have enough cover to protect what's likely to be your biggest asset. And if you have a mortgage, you'll need to make sure this meets your lending requirements.

Shared ownership

It's important you understand your responsibility for shared property, such as boundary fences, shared driveways and retaining walls. Usually there will be some responsibility on each neighbour to bear a proportion of the cost of repair and maintenance of shared property. You will need to understand the extent of your responsibility in relation to the shared property so you can consider what allowance to make for it when setting your sum insured.

What will happen to your premium?

Think carefully before providing a lower sum insured amount solely for the sake of a lower premium. Chances are your premium will only be slightly smaller, and it could potentially leave you underinsured by thousands of dollars.

Most insurers will increase your sum insured annually to reflect changes in building costs.

In most cases, you can simply call your insurance company to update your cover there and then.

  • If you have insurance from ANZ you can contact us to discuss updating your sum(s) insured and premium(s).
  • If your ANZ Insurance is underwritten by Vero, please call us on 0800 831 123.
  • If your ANZ Insurance is underwritten by TOWER, please call us on 0800 100 660.
  • If you’re not sure who your policy is underwritten by, or your insurance isn’t already with ANZ, please call us on 0800 269 296 to see how we can help.

Remember to update your lender too

It's also important that you let your bank or lender know who your new insurer is when you switch providers. And also advise them whenever you update or change your insurance policy - so you won't be putting your home loan at risk. If your mortgage is with ANZ, please call 0800 269 296.

Establishing a sum insured

Rebuild costs of different homes can vary significantly. This is due to a wide range of factors such as:

  • The type of land your house is built on. Is it flat, sloping or steep ground?
  • If your home has multiple levels.
  • The construction material. Is your house a weatherboard or brick house?
  • Other structures that are on your property. Do you have a freestanding garage or swimming pool?

Limits apply

It's important to understand that each insurance company has its own policy limits (e.g. for retaining walls) and levels of cover. That's why it's important you read and understand your insurer's policy documents, so you know you have the right amount of cover for your needs.

Qualify for the SumExtra benefit

Use the house insurance calculator or a qualified professionaldisclaimer. The estimate must be based on a complete and accurate description of your home, and be less than three years old when you set your sum insured.

The SumExtra benefit applies if you have a written rebuild cost estimate for your home and have set your sum insured to at least the amount of the estimate.

You may need proof of your estimate at claim time and it can help settle the claim quickly.

 

If you improve your home, remember to revise your estimate and update your sum insured with us to reflect the increased rebuild cost. 

If you've already followed the three steps above and you meet the requirements listed above, then you already qualify for this benefitdisclaimer.

What’s covered by the EQC?

The Earthquake Commission (EQC) is a New Zealand Government agency providing natural disaster insurance to residential property owners. EQC charges a levy on insurance premiums, which it uses to cover damage caused by earthquakes, landslips, volcanic eruptions, hydrothermal activity and tsunamis to your home and some of your land - within limits, of course. For new house insurance policies and existing policies (upon renewal), EQC provides cover of up to $150,000 + GST per dwelling.

EQC is a helping hand, not comprehensive insurance. You can’t rely on EQC to cover your entire situation in a disaster, so make sure your cover is up to date or you could find yourself out of pocket. If you’d like to discuss taking out ANZ House Insurance, please call us today on 0800 269 296.

Please note, this summary is based on information obtained from EQC, however, its accuracy and completeness is not guaranteed. For full details visit the EQC website.

Need help?

How can I work out my sum insured?

(If your ANZ Insurance is underwritten by TOWER please use this calculator)

How much will it cost?
 

Want to know more?

Call us on 0800 269 855

The Cordell Sum Sure calculator is provided by CoreLogic NZ Ltd. The Cordell Sum Sure calculator uses information obtained from a variety of third party sources and the information you provide or confirm and analyses the information against construction industry data to calculate an estimated reconstruction cost of your property. The information and data used by the Cordell Sum Sure calculator may not reflect the specific details of your property and may not be complete, current or accurate. The estimated reconstruction cost may not reflect the actual cost to rebuild your home.

The Cordell Sum Sure calculator is not intended to replace a professional valuation. It is not a recommendation or personalised financial advice. It is your responsibility to provide a sum insured amount for your house. You must decide whether the estimate provided by the Cordell Sum Sure calculator is appropriate or if you should use an alternative sum insured amount based on your knowledge of the property. Use of the Cordell Sum Sure calculator is authorised on the condition that CoreLogic NZ Limited, ANZ Bank New Zealand Limited and Vero Insurance New Zealand Limited do not warrant the accuracy, currency or completeness of the estimated reconstruction cost and do not have any liability of any kind for any loss or damage howsoever arising (including through negligence) in connection with the use of or reliance on the Cordell Sum Sure calculator.

The SumExtra benefit detailed below should be read in conjunction with your ANZ Asset Protector policy document. Please note that bold words are as defined in that policy document. “We”, and “our” means Vero Insurance New Zealand Limited.

The SumExtra benefit is available when your schedule shows you are insured for cover for your home and the cover is not limited to indemnity value.

If we elect to settle your claim for loss or damage to your home on the basis that we pay the cost of repairing or rebuilding and that cost exceeds the sum insured, we will pay:

a. up to a further 10% of the sum insured towards the cost of repairing or rebuilding where the loss or damage is caused by natural disaster; or

b. the cost of repairing or rebuilding where the loss or damage arises from any insured cause other than natural disaster; provided the sum insured at the time of loss is equal to or greater than an estimate of costs to rebuild your home that you obtained:

(i) from the online rebuilding cost calculator accessed through anz.co.nz, or from such other online rebuilding cost calculator as we accept;

(ii) by a registered valuer, registered quantity surveyor, building practitioner holding an appropriate trade licence, or such other building specialist, as we accept;or

(iii) by such other method or source as we accept;

and provided also:

(iv) that the written estimate of costs provides a complete and correct description of the home and is less than 3 years old at the time the sum insured was most recently agreed;

(v) where you subsequently increased the size, or improved the quality, of your home, that you increased the sum insured proportionately to the increase in rebuild cost of your home, otherwise we will pay only up to a further 10% of the sum insured whether the loss or damage is caused by natural disaster or arises from any insured cause other than natural disaster.

When you make a claim you may be asked to provide proof of the estimate of costs to rebuild your home that you obtained prior to setting your sum insured. Having this information ready and available will help us settle your claim more quickly.

The cover provided by this benefit does not increase the sum insured. Any cover that is based on a percentage of the sum insured does not increase. This benefit will not apply where you claim for the Demand Surge Inflation Protection benefit. In all other respects, the policy remains unaltered.

A registered valuer, registered quantity surveyor, building practitioner holding an appropriate trade licence, or such other specialist as Vero accept.

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Policies that are insured for indemnity value are excluded.

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