Historically, and understandably, the value of a residential property has been the most important element to consider when looking to buy or sell.
But with New Zealand’s rapidly changing environment and increasing risk of natural disaster, it comes as no surprise that obtaining home insurance for such events has become a critical factor.
This is so much the case that the availability of residential property insurance has leapt into first place for the most important factor to consider when buying or selling. But how has it changed, and how can you secure insurance for your own residential property?
In light of New Zealand’s increasing rate of natural disasters, the Earthquake Commision (EQC) has implemented a number of key changes that affect residential property owners:
Although insurance policies have been created to support New Zealand homeowners, what has followed is an increasing difficulty to gain and renew affordable residential property insurance in some locations and circumstances.
Homes are being assessed in greater detail for natural disaster risk before insurance cover is accepted by private insurers. Risk assessment tools and procedures are expected to continue to grow and develop.
What does this mean for residential property owners? For a small proportion of residential property owners, insurance may be impossible to gain or become completely unaffordable over time. This can impact directly on both the future saleability and value of your property
Residential insurance cover is only a one year contract that may not necessarily be renewed. On the other hand, mortgage debt obligations may extend out over 20 years. Looking to the future, the ability to renew insurance every year at an affordable premium is an important consideration to underpin the dwelling and property value longevity.
If your existing property is already insured, it’s more important now than ever to record its’ current condition in greater detail. In the case of natural disaster or fire, this will allow you to establish the true impact of any changes or losses.
There are three ways you can provide proof of the condition of your home pre disaster or loss:
A 3D property scan is the most modern way of replicating your home with Virtual Reality – providing in-arguable clarity. Replicating every detail and angle through point cloud data capture, every corner of your house is represented accurately.
What this means is that your portfolio of evidence is greatly strengthened, and the condition of your home is accurately shown – leaving no room for debating the severity of any damage.
We recommend: using a combination of all three methods to create irrefutable proof of the condition of your home. Ideally all together in an ‘electronic wallet’ of your house and property details that can be shared with your insurer and mortgagee.
What’s important for those looking to invest in residential property is gaining clarity around its associated risks, especially from natural disaster and potential climate change impacts. The last thing you want is to invest in a property and find out it can’t be insured in the future.
EQC have recently updated legislation to allow fuller disclosure of all historic information and claims made on a residential property. If you’re buying, you can now more easily gain clarity around the risk of the property and the steps taken to repair historic damage.
We recommend: applying directly to EQC to get disclosure of historical information surrounding a residential property.
Be prepared for natural and financial disasters. With the increasing changes around insurance, it’s a crucial time to put your property in a secure position, and know how to invest appropriately.
Whether you’re buying or selling, education and knowledge are paramount to know how to respond to changing environments.
TelferYoung’s valuers have a sound and ever-growing knowledge of New Zealand’s local authority regulations and general requirements, what’s at risk and what’s not. Talk to a valuer for advice about the potential risk of your residential property and for direction on what needs to be done to secure insurance.
Posted 10 months ago