Essential guide to home insurance

1. Choose the right policy

The first thing you need to consider is what kind of policy is right for you. Is it just you and your family living in your home year-round? Are you insuring a property you rent out short-term, or do you have a rental property rented out full-time?

Selecting the right policy involves more than just comparing prices. Ensure the policy you choose covers your specific needs, especially if the property is tenanted. A homeowner’s policy might not cover tenant-caused damages. Conversely, the most expensive policy isn’t always the best; it may include unnecessary features. Understand what each policy offers and use comparison tools, like the one provided by initio, to make an informed decision.

What happens if you choose the wrong policy? It depends on the coverage you’ve selected versus what you actually need. For example, if you select own-home insurance but have two dwellings on your property, the second dwelling might not be covered in case of an incident. Additionally, if you choose home and contents insurance but occasionally rent out your home short-term, you might not be covered for tenant-caused damage, loss of rent, and other features that our specialized landlord cover includes. We’re not trying to scare you, but we want to ensure you have the right protection. If something happens, you deserve the best solution. Insurance is about paying claims, but we can’t pay your claims if you don’t choose the right cover.

If you need help choosing the right policy, we have many resources online to help you make an informed decision, including getting the right insurance for you.

Key takeaways

• Determine your needs: Ensure your policy covers all aspects relevant to your situation, especially tenant-related scenarios.
• Make informed decisions: Don’t just compare prices; understand the features and coverage of each policy. The most expensive policy may include unnecessary features, while a cheaper one might miss crucial protections.
• Use comparison tools to choose a policy that fits your needs and offers adequate coverage.

Choose your insurance     Policy Comparison Tool

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2. Understanding the sum insured

One key aspect of house insurance is accurately determining the sum insured. This amount should cover the cost to fully rebuild your house to its current size and standard, considering today’s building costs. It should also include the cost of reconstructing site improvements like driveways and fences in case of a total loss.

Avoid the temptation to reduce the sum insured to save on premiums, as this could leave you underinsured. Instead, ensure the sum insured covers the full replacement value of your property. To save on premiums without compromising coverage, consider choosing a higher excess.

Our online quote calculator (when you view a full quote) provides a ‘base’ replacement sum insured using a fixed rebuild cost per square metre. You’ll need to adjust this figure to ensure it’s enough to fully rebuild your house. If you’re unsure, there are useful tools available to help. The Cordell Sum Sure Calculator uses council data to estimate rebuild costs for most houses across New Zealand.

When you renew your insurance policy each year, it’s a perfect opportunity to review and update your sum insured. This is crucial due to building cost inflation.

Key takeaways:

• Sum insured should cover demolition as well as total house rebuild costs, including other structures like fences and swimming pools.
• Don’t reduce your sum insured to try and save on premium
• Review your sum insured annually

Learn more

• Why does my rebuild value change?
• Calculating your sum insured

Sum insured calculator

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3. Selecting the right excess value

Excess is the amount you pay out of pocket when something goes wrong, such as a broken window. Choosing a high excess could reduce your annual insurance premium but requires you to pay more if you file a claim. Conversely, a low excess could increase your annual premium but lowers your out-of-pocket cost when making a claim. Assessing your financial risk tolerance is essential to determine the right excess amount for your situation.

When it comes to excess, cheap doesn’t necessarily mean good. To ensure your home insurance adequately protects your most valuable asset, you need to have the right coverage. For example, if your property is tenanted, a standard homeowner’s insurance policy won’t cover you for damage caused by tenants. Remember that under Initio’s  landlord insurance policy , the tenant is only responsible for covering the excess on careless damage claims. Don’t assume they will pay the excess every time there’s damage at your rental property.

When deciding on your excess amount, consider how much of a financial burden you can comfortably bear if something happens to your property. This assessment will help you strike the right balance between affordable premiums and manageable out-of-pocket costs.

Key takeaways

• Balance your excess: High excess lowers premiums but increases out-of-pocket costs; low excess raises premiums but decreases costs when claiming.
• Coverage matters: Ensure your insurance policy suits your specific needs, especially if your property is tenanted, to avoid gaps in protection.

Learn more

• Demystifying insurance excess

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4. Knowing replacement values

It’s crucial to know the true replacement value of your property. Insurers may provide a guide, but they don’t have intimate knowledge of your house and contents. The replacement value should include all aspects of the property, such as driveways, fences, and pools. Tools like online sum-insured calculators can assist in this process, and for precise calculations, engaging a quantity surveyor is a good option. Keeping a list of what property you have, including detailed records of significant items and upgrades, will help ensure that nothing is overlooked and that you receive the full value if you need to make a claim. This thorough approach ensures your insurance cover matches the full cost to rebuild or repair your entire property.

Sum insured calculator

Key takeaways

• Accurate valuation: Ensure you know the true replacement value of your property.
• Use tools and experts: Use online valuation tools and consider consulting a professional for accurate calculations.
• Detailed inventory: Keep a detailed list of your property’s significant items and upgrades.
• Keep it updated: Regularly update your property’s valuation and inventory to reflect changes.

Learn more:

• What contents are covered for market value?
• What contents do I need to specify?
• Calculate your sum insured

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5. Understanding limitations

It’s important to know what your house insurance policy covers and what it doesn’t. Some things, like leaky house syndrome and acts of terrorism, are usually not covered. Other risks, like those from renovation work, might need extra policies. Regular wear and tear aren’t covered since insurance is meant for sudden and accidental events. Knowing these limits helps you understand what risks you need to handle yourself.

Examples of potential insurance limitations

1. Leaky house syndrome: Typically not covered under standard policies.
2. Acts of terrorism: Usually excluded from coverage.
3. Renovation risks: May require additional policies to cover potential issues.
4. Regular wear and tear: Insurance is for sudden and accidental events, not ongoing maintenance.
5. Mould and rot: Often excluded unless caused by a covered event.
6. Gradual damage: Issues developing over time, like slow leaks, are usually not covered.

Your house insurance should give you peace of mind by covering major risks while letting you manage smaller ones. Understanding this lets you make smart decisions to protect your most valuable assets. 

Key Takeaways

• Uninsurable risks: Some things, like leaky house syndrome and acts of terrorism, are usually not covered.
• Additional policies: Risks from renovation work might need extra policies.
• Not wear and tear: Insurance is for sudden and accidental events, not regular wear and tear.
• Manage minor risks: Your policy should cover major risks, letting you handle smaller ones.
• Understand policy exclusions: Knowing what’s excluded helps you manage potential risks better.

Additional information

• Things initio doesn’t cover

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