Single-minded success - Settlement Support
Single-minded success - Settlement Support
Single-minded success - Settlement Support
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CONSUMER<br />
RIGHTS<br />
House insurance<br />
A WORD OF ADVICE<br />
■ Story by the Insurance Council of New Zealand<br />
Whether you’re insuring your house, car or valuables, the basic idea is that you pay an<br />
annual premium, and your insurance company will pay to replace or repair whatever items<br />
are insured if they are lost or damaged.<br />
An insurance policy is a legally binding contract that<br />
demands complete honesty from both parties. If you<br />
lie to or mislead your insurance company, your policy can be<br />
declared void. Likewise, if your insurance company doesn’t<br />
treat you fairly, you can take your case to court or to the Insurance<br />
and Savings Ombudsman.<br />
House insurance is designed to protect your most valuable<br />
asset: your house.<br />
TYPES OF COVER<br />
There are three types of cover available.<br />
Total replacement (no sum insured)<br />
This means that if your house is destroyed, the insurance<br />
company will rebuild the house and pay all the fees (e.g. architect,<br />
site clearance fees) involved in the process. This type of<br />
insurance policy is usually only available for houses that are<br />
owner-occupied, in good condition or under a certain age.<br />
FIxED SUM INSURED (REPLACEMENT)<br />
This means you and your insurance company agree on the sum<br />
insured, and the company will rebuild your house up to that<br />
limit if it is totally destroyed.<br />
Indemnity policies (present day value)<br />
This is what the house was worth just before a loss. It is roughly<br />
equivalent to the market value of the house (excluding the land).<br />
Contents insurance covers the contents of your home:<br />
• Household possessions<br />
• Furniture<br />
32 LINKZ | ISSUE 48 | 2011<br />
• Clothes<br />
• Appliances<br />
• Carpets and curtains<br />
Most contents policies have claims limits, especially for valuables,<br />
money, documents and collections. Different policies<br />
have different restrictions.<br />
There may also be conditions to the cover. You should check<br />
these with your insurance company.<br />
TYPES OF COVER<br />
There are two types of cover available:<br />
REPLACEMENT POLICIES<br />
This means that the insurance company will replace a lost or<br />
destroyed item with a new one or repair the item so it is as<br />
new. However there are some limits to this (i.e. items over a<br />
certain age may not be replaced). Check the wording of your<br />
insurance policy.<br />
With replacement insurance, the item is usually repaired or<br />
replaced. If you want the cash, you can only get the indemnity<br />
value of the item.<br />
There is also an upper limit on what you can claim. This is<br />
specified in the insurance policy as the sum insured. Openended<br />
policies are available from some insurance companies.<br />
INDEMNITY POLICIES (PRESENT VALUE)<br />
An indemnity policy puts you back in the same position you<br />
were in before the loss or damage occurred. The settlement is<br />
based on how much you would pay for the item second-hand.
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