In New Zealand, homeowners often take great pride in their properties, investing time and money to create comfortable and secure homes.

However, you may be unaware of a lurking risk that could leave you financially vulnerable: underinsurance.

Underinsurance occurs when the value of an insured property is underestimated, leading to insufficient coverage in the event of a disaster.

This issue can have severe consequences, especially when it comes to home, building and contents insurance.

Fortunately, with the advent of online tools, homeowners now have easier access to resources that can help them accurately calculate the sum insured for their properties.

Understanding Underinsurance

Underinsurance poses a significant threat to homeowners across New Zealand.

According to recent studies, a large percentage of properties are undervalued, leaving homeowners exposed to potential financial losses.

When a natural disaster strikes, such as a flood, earthquake, or fire, the rebuild cost or replacing damaged property from these extreme events can exceed the coverage provided by insurance policies by a lot.

One of the primary reasons for underinsurance is not staying updated with property valuations. As property values fluctuate over time. It's essential for homeowners to reassess the replacement cost of their homes, contents, and buildings periodically.

Additionally, many homeowners mistakenly believe that their insurance policies will automatically adjust the level of cover to reflect changes in property values, leading to a false sense of security.

Online Tools for Accurate Valuations

Fortunately, homeowners now have access to a variety of online tools and resources that can help them calculate the level of insurance cover needed for their properties.

These tools help you take into account various factors such as location, property size, construction materials, and local building costs to provide an estimate of the replacement value.

One such tool is the Cordell Sum Sure, which is widely used by insurance professionals and homeowners alike. This online tool allows users to input specific details about their property, such as its address, age, size, and construction type. Based on this information, the calculator generates a comprehensive valuation report, including the estimated cost of rebuilding the property from scratch.

For contents insurance, you can use Sum Insured. Which can help establish accurate replacement costs for contents assets.

Appointing a qualified valuer to assess your commercial building is now required by most insurance companies every two years. If you need guidance on getting a professional valuation please let us know and we can put you in touch with the various valuers in the region.

Tips for Avoiding Underinsurance

In addition to using online tools, there are several steps homeowners can take to avoid underinsurance:

Regularly review insurance policies: Take the time to review your insurance policies annually and make any necessary adjustments to ensure adequate coverage.

Conduct regular valuations: Periodically reassess the replacement value of your property to account for changes in property values and construction costs.

Consider inflation: Factor in inflation when calculating the sum insured for your property to ensure that coverage keeps pace with rising costs.

Consult with professionals: If you're unsure about the adequacy of your insurance coverage, consider consulting with us or property valuers for expert advice.

Conclusion

The risk of underinsurance is a significant concern for homeowners and building owners in New Zealand, but with the help of online tools and resources, it's possible to mitigate.

By regularly reassessing property valuations and using tools like the Cordell Sum Sure calculator and Quotable Value website, owners can ensure that they have adequate insurance coverage to protect their most valuable assets.

Taking proactive steps to address underinsurance can provide peace of mind and financial security in the face of unexpected disasters.

If you're uncertain about your coverage or need professional assistance, your local insurance brokers at C&R Insurance would be happy to guide you.