Your guide to understanding changes to our home insurance

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1 This year your NZI home cover is different We recommend you: Check the Total Sum Insured amount provided on your Policy Schedule Estimate the likely cost of rebuilding your home, taking into consideration any Recreational Features, retaining walls and Special Features Talk to your broker if you need to adjust your home s Total Sum Insured or if cover/additional cover is needed for Recreational Features or retaining walls, or to arrange cover for Special Features. Your guide to understanding changes to our home insurance For more information visit or talk to your broker. NZI is a business division of IAG New Zealand Limited, a wholly owned subsidiary of Insurance Australia Group, Australasia s largest general insurer. Established in 1859, it is today one of the country s largest and longest-serving fire and general insurance brands, protecting tens of thousands of New Zealanders every year. Through our broad range of commercial, personal, marine, professional risks and rural insurance products, we pride ourselves on helping people to achieve the best protection for their assets. We pay remuneration to our brokers and intermediaries when they issue our policies, and when these policies are renewed or varied. To find out more about the advantages of choosing NZI, talk to your broker or visit nzi.co.nz. nzi.co.nz Information booklet NZ /13

2 This booklet is intended for policy holders whose homes are currently insured for an unspecified replacement cost or for those on a replacement sum insured policy. For those policy holders insured for present value, some information in this booklet may still be relevant please talk to your broker. How NZI home cover is changing From now on the way NZI insures your home is going to be different. If your home is currently insured for an unspecified replacement cost, when your home insurance policy renews, it will shift to being insured for up to a maximum specified amount. This amount is called the Total Sum Insured. Check your Total Sum Insured On your home insurance Policy Schedule, we ve provided you with a Total Sum Insured amount which is based on some of the information held by us your home s location, year built and floor area. The information may be out of date, so please let your broker know if any of the details on your Policy Schedule are incorrect and need to be updated. There are other factors that can also affect the cost to rebuild your home, and consequently what your Total Sum Insured should take into account. Two examples of these are the slope of the land your home is built on and the quality of your home we either don t hold this information or it s incomplete. We ve based the Total Sum Insured amount we ve provided you with on an average or ordinary build quality and on the home being on flat land. If either of these assumptions is incorrect, then it could affect the cost of repairing or rebuilding your home so you may need to alter your Total Sum Insured. Why it s important to check your Total Sum Insured Unspecified replacement cost Maximum specified amount (Total Sum Insured) The Total Sum Insured will be the maximum amount payable for any damage to your home, so it s important you ensure that your Total Sum Insured reflects the likely cost of rebuilding your home as accurately as possible. If you set your Total Sum Insured too low, you may have to rebuild to a lesser size or quality, or pay for some of the building cost yourself. If you set your Total Sum Insured too high, you may be paying too much premium. If your home is to be rebuilt and the actual cost of rebuilding is less than your Total Sum Insured, then that actual cost is all we would pay. This change isn t just limited to NZI it impacts many other New Zealand insurance providers and many New Zealand homeowners will be affected. Why things are changing A number of reinsurers the companies that cover insurance companies against natural disasters and catastrophes now require homes in New Zealand to be insured for a specified amount. This is because they want to know the maximum amount that insurers would have to pay to rebuild the homes they insure. There are also other changes to your Policy Wording which is enclosed. A summary of the key changes is included in your renewal pack. Please make sure you read your Policy Wording carefully so you re aware of your cover and how it works. How these changes affect you It s important that you ensure the Total Sum Insured amount on your Policy Schedule reflects the likely cost of rebuilding your home as accurately as possible. This is because if your home suffered extensive damage and needed to be rebuilt, the maximum we d pay is your Total Sum Insured, even if the actual cost of rebuilding turned out to be greater than that. 1 2

3 Different ways to estimate the likely cost of rebuilding your home }Visit } where you ll find an easy-to-use calculator that can help you estimate the likely cost of rebuilding your home. You ll also find other resources and information on the site that will help you understand changes to your home insurance and where to go for more support. Commission an independent Valuation for Insurance Purposes from a registered valuer. Hire a professional assessor or licensed builder. What comprises the cost of rebuilding? An estimate of the cost of rebuilding a home should be based on what it could cost to rebuild the house on its current site and based on its present size, and standard and type of construction. It should include the cost of rebuilding other structures such as decks, driveways, sheds, garages and fences. While building costs will be a significant portion of the estimate, the estimate should also take into account the demolition and removal of debris, site preparation, professional fees and compliance costs (the handy calculator provides some allowance for these factors when estimating a home s likely cost to rebuild). It s important to set your Total Sum Insured at an amount you re comfortable with. If your Total Sum Insured isn t sufficient, your insurance might not cover the full cost of rebuilding after a major event. Major factors affecting the cost of rebuilding Standard of construction the quality of materials used in your home Site rebuilding on a slope is more expensive than building on flat land Size the floor area of your home, taking into account all levels Construction materials roofing, wall construction and floor type Check out the diagram on the following pages to find out more. Don t overlook Recreational Features, retaining walls or any Special Features Recreational Features and retaining walls Tennis courts, permanently fixed swimming pools and/or permanently fixed spa pools including ancillary equipment and/or pump(s). Please check your Policy Wording for details about the level of cover you have (if any) for Recreational Features and retaining walls. If the likely cost to rebuild these exceeds any cover automatically provided, or if you want to arrange cover/additional cover, please contact your broker. You should also take into account the removal of debris, site preparation, professional fees and compliance costs for each of these. Special Features Bridges, culverts, cable cars, permanent fords or dams, wharves, piers, landings and/or jetties or private utility plants including wind or water mills, or diesel generators are not automatically covered by your home insurance. If you require cover for any of these features, please contact your broker. You should also take into account the removal of debris, site preparation, professional fees and compliance costs for each of these. What to do: Check the Total Sum Insured amount on your Policy Schedule Estimate the likely cost of rebuilding your home, taking into consideration any Recreational Features, retaining walls and Special Features Talk to your broker if you need to adjust your home s Total Sum Insured amount or if you need to arrange cover/additional cover for Recreational Features or retaining walls, or to arrange cover for Special Features. 3 4

4 Knowing your home Here are the main features that affect what it costs to rebuild a home. These are the kinds of things you ll need to know in order to estimate the likely cost of rebuilding your home. + Special Features: Bridges, culverts, cable cars, permanent fords or dams, wharves, piers, landings and/or jetties or private utility plants including wind or water mills, or diesel generators are not automatically covered by your home insurance. If you require cover for any of these features, you ll need to contact your broker. Things to know about your home Age Standard of construction Slope of land Size (floor area) Number of levels Materials used for floors, exterior walls and roofing Number and type of rooms Exterior structures associated with your home Recreational Features Retaining walls Special Features Home Sum Insured (to reflect the likely cost of rebuilding your home) Recreational Features Retaining walls Recreational Features: Tennis courts, permanently fixed swimming pools and / or permanently fixed spa pools including ancillary equipment and/or pump(s). Please check your Policy Wording for details about the level of cover you have (if any) for Recreational Features. If you require cover, or if you want additional cover to any that s automatically provided, please contact your broker. Number and type of rooms. All the rooms that make up your home. Number of levels. This includes split-level as well as multi-storey homes. + Special Features (Separate Sum(s) Insured) = Total Sum Insured Note: You could be eligible for other benefits in addition to the above. Also, some aspects of these changes may not apply, so please check your Policy Wording for full details or talk to your broker. Retaining walls. Please check your Policy Wording for details about the level of cover you have (if any) for retaining walls. If you require cover, or if you want additional cover to any that s automatically provided, please contact your broker. Flat or sloping land. The slope of the land your home is built on. Floor area. A square metre measurement that includes all levels in your home. The style and standard of construction. Is your home a villa, is it 30 years old or is it relatively new? Is it finished and fitted out to an average or higher quality? Floors, exterior walls and roofing. The materials your home is made of. Exterior structures associated with your home. These include decks, balconies, driveways, garages, fencing, sheds and tanks. 5 6

5 The fundamental purpose of home insurance policies is to restore damaged parts of your home to their condition when new, following a covered event. That s why it s important you don t insure your home for less than the likely cost of rebuilding it. Choosing not to adjust your Total Sum Insured We strongly recommend that you check that the Total Sum Insured amount we ve suggested on your Policy Schedule accurately reflects the likely cost of rebuilding your home, and contact your broker immediately if it needs changing. If you don t adjust the Total Sum Insured amount on your Policy Schedule, we ll automatically apply this amount to your home insurance when it renews. This will become your Total Sum Insured until it s changed and if your home is to be rebuilt it s the maximum we d pay, even if the actual cost of rebuilding turned out to be greater than that. If the Total Sum Insured amount on your Policy Schedule is too low, you may have to rebuild to a lesser size or quality, or pay for some of the building cost yourself. If the Total Sum Insured amount is too high, you may be paying too much premium. Settling a claim The way we settle a claim in the event of your home being damaged or destroyed has also changed. When we determine your home is repairable We ll cover the costs associated with repairing it, including demolition and removal of debris, materials and labour, compliance and professional fees. Or we may pay you an amount that s equivalent to these costs. If we determine it s not economically viable to repair your home You can choose to rebuild on the same or a different site. In this case we ll cover the costs associated with rebuilding your home at the same site, including demolition and removal of your old home, materials and labour, compliance and professional fees. If we determine it s not economically viable to repair your home and you choose to buy another home or we agree to a cash payment We ll pay up to an amount that s equivalent to the necessary cost of demolishing and removing your old home, and the materials and labour that would have been involved in rebuilding it. Remember, in each of these instances the most we will pay are the Sum Insured amounts shown on your Policy Schedule as those are the maximum amounts payable under your policy. The Total Sum Insured amount on your Policy Schedule is based on some of the information held by us your home s location, year built and floor area. We ve also assumed that your home has an average or ordinary build quality and is on flat land, as explained on page 2. The information we ve considered may be incorrect, incomplete or out of date, so please let your broker know if any of the details on your Policy Schedule needs to be updated. 7 8

6 A guide to home insurance terminology Recreational Features Tennis courts, permanently fixed swimming pools and/or permanently fixed spa pools including ancillary equipment and/or pump(s). Reinsurers The companies that insure insurance companies against natural disasters and catastrophes. This cover strengthens our claims paying ability, and is required by legislation. When it s time to renew your home insurance, make sure you re comfortable that the Total Sum Insured amount on your Policy Schedule accurately reflects the likely cost of rebuilding your home. If you need to adjust it, you ll need to let your broker know. Special Features Bridges, culverts, cable cars, permanent fords or dams, wharves, piers, landings and/or jetties or private utility plants including wind or water mills, or diesel generators. Total Sum Insured The maximum amount payable to rebuild or repair your home including any Special Features you have arranged cover for. Need help managing your insurance premiums? There are several ways to manage costs associated with your premiums. Provide accurate data Ensure the information you provide to us about your home is accurate. Voluntary excesses If you don t make claims very often, ask your broker about opting for a higher excess. This may enable us to reduce your premium. Instalment payments Spread the cost of your premium across the year by setting up a direct debit authority and paying it in instalments. However, the total you pay for the year will be more than if you were to pay in one lump sum annually. NZI Essence The NZI Essence product range has been designed to offer cost-effective cover options. Talk to your broker to find out if the Essence range offers a good option for you. For further information about changes to our home insurance: you can visit or contact your broker. NZI is a business division of IAG New Zealand Limited, which has a Standard & Poor s financial strength rating of AA-. 1 This is one of the highest in the industry, and means we have a very strong claims paying ability. As a customer, this is your reassurance that NZI will be able to pay your claims. This information booklet provides some guidance and a brief outline of some of the key changes to your home insurance. For full details of your home insurance, please refer to your latest Policy Schedule and Policy Wording. 1 Rating received from Standard & Poor s (Australia) Pty Ltd, an approved rating agency. Rating scale is available at nzi.co.nz 9 10