Insurance Companies have us over a Barrel

sledrunner, May 26, 3:55am
Just asked my insurance company what would happen with delayed settlements with the new capped insurance figures. In short they couldn't or wouldn't answer the question.

Imagine another earthquake with settlements delayed for five years or more. The value of your insurance cap gets smaller every day the insurers delay settlement. By the end of five years you would be lucky to build half of your house due to building inflation reducing the value of the payout.

Should you have any disagreements with your insurers then they can hold you to ransom just by delaying settlement. All risk and cost for settlement delay for claims nearing the settlement cap has been transferred to the policy holder and every benefit of delay transferred to the insurers.

Given that insurance policies are meant to be in plain language that allow simple understanding of the scope of our policies, why aren't the insurers pointing out that the insurance cover at time of loss has nothing to do with equivalent value being paid at time of settlement (which is a time entirely under their control).


lambrat, May 26, 6:24am
what are these new capped insurance figures. oops, have i missed something?

sledrunner, May 26, 6:32am
Just referring to how most house insurance is now to a total maximum dollar value rather than actual replacement costs. The capped value is the most the insurance company will pay towards your insurance claim.

lambrat, May 26, 6:47am
i guess it could be their way of forcing people to know their policies well, value their homes properly and insure them accordingly . lots of people i know had no idea and were very surprised to be caught a bit short . i know i was, and for a start am much more aware now of how changes to the building code have implications.
thankfully its not retrospective and my replacement policy in place at the time of the major damage must be honoured. am currently still playing pingpong with bungling eqc, waiting for them to admit its over their darn cap.

william1980, May 26, 12:19pm
I've added a contingency into my sum insured figure for this very reason.

apeman12, May 26, 9:09pm
So really what sledrunner is asking you and others is does your contingency cover 41/2years of insurance company peeing around, how much extra are you paying them for the privilege? Is it worth it?

cassina1, May 27, 2:23am
Another issue is that full future cover maybe unaffordable for many and even for yourself there is no way you can predict building costs going into the future.

cassina1, May 27, 2:25am
You would have to have a contingency in the event of a refusal to pay out for a big earthquake in ChCh 2nd time around.

corkranb, May 27, 3:33am
I have a 230m2 newer home in Waimari Beach. IAG set the insurance premium rate for a rebuild at $474.000. I rang and verified things and these costs will not cover a rebuild when demolishing, engineering, architect, council fees etc. are built into the equation. I asked them to raise it to $725.000 and it only cost an extra $143 for piece of mind.

cassina1, May 27, 6:22am
It costs me about $600 for 190k of cover on my flat. I am guessing with your cover you would be paying $1500 which would not be affordable by everyone. So I am guessing I would not be alone in underinsuring based on what one can afford. In the event of a worst case senario I am sure my insurance cover will be enough for a container home which would be more robust and much cheaper to repair in another quake anyway. Lets not forget the Council itself has not been able to get reinsurance on a lot of assets. So leaving ChCh could become necessary too.

buyit59, May 27, 6:40am
To Cassina - If you are an attached flat and on X lease it may pay to check your legal requirements . We were one of three units and the rebuild had to be approved by the other owners , done within a certain time etc . Luckily we all were with the same ins co. which made talking a bit easier . Never say never BUT I won't go down the x lease track in a hurry again thats for sure.

cassina1, May 27, 7:09am
What you are saying is perhaps what happens in a Body Corp type situation which mine isn't but independently owned. There was no legal requirement to even insure my place when I bought it except for the period of the mortgage. Considering my place survived with only cosmetic damage I am thinking the whole city will be flattened in another big shake for my place to come down

shazza351, Aug 12, 4:34pm
What people must remember is that the sum insured amount is the rebuild cost, and it's not so easy to get a rebuild from an insurer. the premiums you're paying are more likely to cover a repair, or part of some repairs, maybe.

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