Why is home insurance like this again?

Our reinsurers need to be able to work out their exposure in New Zealand

Why use Sum Insured

Internationally the insurance industry has, in recent times, been challenged by an unprecedented series of natural disasters such as earthquakes, tsunami, and hurricanes.

As a result, in 2012 reinsurers – the global companies that provide natural disaster cover to local insurance companies – told many New Zealand insurers that they want to know the maximum amount insurers would need to pay out in claims for New Zealand homes. Insuring homes on a Sum Insured basis enables insurers like IAG to do this.

Why home insurance matters

  • Safeguard your precious home
  • Protect your investment
  • Meet lender requirements

Is insurance like this elsewhere in the world?

Sum Insured home insurance is aligned with many of the policies in other countries such as Australia, the United Kingdom and the United States, and meets the requirements of IAG's reinsurers.

What is reinsurance?

Reinsurance is insurance for insurance companies – it's the cover that insurance companies take out against certain types and scale of claims. It helps insurance companies pay out on claims after catastrophic events like the Canterbury earthquakes.

What this means

Basing home insurance on a Sum Insured that better reflects the potential cost of rebuilding a home enables insurers to provide a level of cover that better the risks relating to that home and the likely cost of any claims that might arise in relation to it.

That's why it's important to be as accurate as possible when estimating the potential cost of rebuilding your home.

Why home insurance matters

People's homes are worth protecting for lots of reasons. For many people their home is the heart of their family, a place where people feel safe and comfortable.

For most people their home is also their largest asset. Realistically, few people can afford not to protect the asset they've spent years saving or paying for, and, if you have a mortgage on your home, your bank will probably require it to be adequately covered.

One of the fundamental purposes of 'replacement' home insurance is to restore damaged parts of your home to a condition as similar as possible to that when new, following any event that leads to a claim. A Sum Insured-based policy enables the insurer to quantify, at the outset, the maximum amount payable by the insurer to do that, should a claim occur.

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