March 17 2014
Insurance & Savings Ombudsman Karen Stevens urges people to check that the amount they are insuring their house for will be enough to rebuild it in the event of a disaster.
“Many people don’t fully understand the changes in house insurance from full replacement to sum insured,” says Karen. “The sum insured is now the maximum amount your insurer will pay in the unfortunate event that your house needs to be rebuilt.
“We understand that most people are renewing their new sum insured house insurance policies based on the default amount in their renewal notice,” says Karen. “This default amount is based on the original square meterage people gave their insurer. In a number of complaints referred to us, the original measurement was found to be incorrect.
“There are also other factors to take into account when working out the rebuild cost. For example additional features need to be identified, including fences, garages, sleep-outs, playhouses, swimming pools, retaining walls, paths and washing lines.”
“At the very least, we recommend people read their renewal notice carefully, check the square meterage of their homes, and answer the questions on the on-line insurance calculators, which are a good place to start,” says Karen.
“The risk is that you won’t have enough cover to rebuild your home should you need it.”
See the ISO Scheme sum insured info sheet.
And see ISO Scheme house insurance case studies where people have found themselves underinsured by $944,052, and underinsured by $250,000.