Why your home or property needs to be protected
Your home and investment properties are your biggest assets and each asset needs to be properly insured so you aren’t left in financial difficulty if something unexpected should happen.
Home insurance covers you for events affecting any residential buildings you own, such as fire damage, while contents insurance covers your personal effects from theft, damage or loss.
Home owners, whether they reside in the property or not (such as landlords), need to insure the house itself. It is not the responsibility of a tenant to insure the house.
The contents in the house need to be insured by the person who owns the contents. The landlord is not responsible for insuring the belongings of a tenant who lives in the property.
There are two main types of house insurance:
- Replacement (up to the Sum Insured)
You will get cover for the costs of replacement up to the sum insured. You need to make sure the sum insured you select is at least the value of your home’s rebuild cost estimate. If your home is damaged or destroyed it will be rebuilt or repaired up to the sum insured amount.
This is the lowest cost option. If your home is completely destroyed, your insurer will pay you an amount equal to the worth of the buildings and improvements to the land before it happened. However, the amount may not cover the full costs to rebuild your home, especially if you home is older.
Natural disaster cover
Your insurance cover also includes cover if your home is damaged or destroyed in a natural disaster, being:
- natural landslip
- volcanic eruption
- hydrothermal activity
- fire (resulting from the natural disasters above).
How to work out how much cover you need
The amount you choose to insure your home for is called your Sum Insured. If you make a claim that’s covered by your policy, you’ll be paid the cost to rebuild up to your specified Sum Insured.
This means your Sum Insured needs to reflect the cost of rebuilding from scratch. This may differ from your home's government or market valuation, so it's important that you find out the cost to rebuild your home.
To help you figure out what it would cost to rebuild your home you could:
- Seek independent advice from a builder, quantity surveyor or registered valuer. Make sure the valuation is for insurance purposes and doesn’t include a market value component or land value.
- Use one of the online calculators provided by the Cordell Sum Sure calculator - it will give you an estimate based on detailed information about your home.
It is important to read through all supporting documentation before you sign a new insurance policy to ensure you fully understand all of the conditions, and what you are, and are not covered for.