House (or home) insurance would be the second most popular type of insurance in New Zealand after car insurance. House insurance goes hand in hand with every mortgage. Banks and non-bank lenders alike will mostly require that a homeowner has house insurance in place. 

House insurance protects the homeowner (and mortgage provider) financially if the house is destroyed or damaged. Natural disasters such as floods, fires, damage from weather related events, or malicious damage, burglary and theft or accidental damages, are typically covered by house insurance for repair or rebuild costs. 

House insurance is not to be confused with Contents insurance which provides cover for your valuables such as electronics (read about AppleCare vs Contents insurance), clothes, appliances, furniture, etc. Think of house as whatever is fixed and cannot be moved. The actual building and structure which can include garages, swimming pool, fencing and landscaping. Contents insurance on the other hand covers things that are not fixed. Commonly, it is said that if you turned your house upside down, whatever falls out is covered by your Contents insurance. 

What does House insurance cover

Research published by the Insurance Council of New Zealand (ICNZ) just this year shows that almost 50% of Kiwis do not know what they are covered for with insurance even though thousands of dollars is being spent each year. Let's look at what house insurance covers.

The cover provided by house insurance can be different across insurance companies and policies. But, at its core, it is to there to cover the cost to rebuild or repair your house in the event that it is partially or completely damaged. If an earthquake were to collapse your house, a fire were to break out and your house burnt down, a flood swept through and severely damages your house, or if strong winds ripped your roof off, these are events that will fall under the cover of house insurance. Other events that could occur such as a drunk driver crashing through your fence or property, burglars breaking into your property by damaging a window or door, or thugs vandalising your house including fencing, these are also events that will be covered by house insurance. 

Temporary accommodation cover is another key benefit within most house insurance policy. This comes in handy if your home cannot be lived in after an accident or disaster, and you and your family needed temporary accommodation. For example, staying at a hotel or a short term rental. The recent Auckland flooding was a reminder of the importance of having this benefit. A family had to relocate to temporary accommodation for a period of time after the flood and costs quickly ran up to $20,000+ but thankfully they had home insurance. 

Minor renovations are an area to look out for as some insurance companies cover it automatically up to a limit but not all. It's worth checking how much you are covered for under this benefit. For example, AA Home insurance provides cover up to $75,000 while Tower Premium Home insurance covers up to $50,000. If the renovation is major (e.g. requires building consent or impacts the structure) and above the limit covered, your home insurance may not be liable for any damages that comes as a result of the renovation. 

Other benefits can include gradual damage cover for example a leaking pipe (usually limited cover provided), lost or stolen keys and change of locks, stress benefit (paid out when your house is totally destroyed and needs a rebuild), swimming pool cover, etc.

Market Scan on Quashed helps Kiwis to quickly and easily compare and look at what different policies and providers offer within their insurance. This is now available for Car, Contents and Home insurance. The information is presented in a way that makes it easy to compare prices and benefits. Whether you're looking for the cheapest house insurance, or the most comprehensive cover for your house, Market Scan can help.

Does House insurance cover the house when it is rented/tenanted out?

You have to let the insurer know that you are renting the property out for it to be covered. As part of the quote and purchase process, the insurance company will ask this question. Some insurers will allow you to purchase the standard home insurance cover for this. Others do not allow this and will switch you onto their Landlord cover. For example, State Insurance allows a customer to select they have tenants in the house as part of the quote process for house insurance. However, AA Insurance does not allow you to select that you have tenants in the house when going through their online process. Tower Insurance will push you to their Landlord cover as soon as you indicate that you have tenants in your house. All will require you to correctly answer whether you are living in the house or it is being rented out. This is then captured on your policy schedule. The accuracy of the information you provide is really important. If it is not right, your insurance contract may not be valid and so you may not be covered.

What do I need to know when buying House insurance

Basis of settlement is a term you will come across when it comes to house insurance. This refers to how insurance companies will pay out a claim and the maximum amount you are covered for. There are three ways house insurance is offered by an insurer: (1) Sum Insured basis (2) Present-day Value or (3) Total Replacement basis. 

Sum insured means that the insurer would pay out up to the amount that you have chosen to cover your house for, the "sum insured" amount. The amount you choose should be based on a valuation by a valuer or using the amount from your LIM report or an online calculator tool as provided by the insurer. The idea is that the amount will be able to pay for a rebuild of your house if it was completely destroyed. Therefore selecting the right Sum Insured amount is important. This determines how much you can claim on if there is a need to claim. Imagine if you got this wrong and had your Sum Insured amount far less than what it costs to actually rebuild or repair your property, this means you could have to pay the difference out of your own pocket or run the risk of not being able to build a similar house. For example, you chose a sum insured amount of $500,000 on your house insurance.  Your house burnt down a couple of years later. You go to the builders and you are told that it will cost $700,000 to rebuild your house. The insurer will only cover you for the $500,000 you had insured your house for. This will leave you with a difference of $200,000 which you will have to pay yourself.

Present-day value also called Indemnity means that the insurer will pay out based on how much the house is worth just before the damage occurred. This is similar to Market Value when looking at car insurance. Using this example, when you purchase a brand new car it may cost you $30,000. But if you chose to insure the car for Market Value, that means that if your car was written off in an accident  two years later, the car might only be worth $20,000 at that point in time and this is what the insurance company will pay out. To replace a car that is two years old, not the amount which will allow you to purchase a brand new car.

Total Replacement cover means that the insurer will payout any amount it cost to rebuild or repair your house in the event of a claim based on the size of the property you had indicated. While this was previously common with insurers, after the Christchurch earthquake, most insurers realised that this was hard for them to calculate how much risk they were taking so most have moved away from this and shifted to "sum insured".

Do I include the cost for my land when calculating the sum insured amount?

No. House insurance is the cost to rebuild and repair your house.

How much does house insurance cost

As with all insurance policies, prices vary from one insurance company to another. We take a look a property in Auckland's North Shore with a sum insured value of $650,000 and an excess of $400.

AA House - $1,302.50 yearly or $116.75 monthly

AMI Premier House - $1,263.48 yearly or $112.61 monthly

Tower Premium - $1,588.25 yearly or $142.11 monthly

State Comprehensive - $1,406.25 yearly or $121.89 monthly

From the examples above, you can see a price difference of $300+ each year. For some properties, this can be much larger differences of $500+ a year. For a quick and easy comparison of prices and benefits across multiple insurers, use Market Scan on Quashed. No more repeating the same answers across multiple insurance site for a quick quote and saves you time looking up and creating your own comparison table.

Where can I get house insurance

Most of the insurance companies you will know e.g. AA, AMI, State and Tower insurance all offer House insurance. These insurers offer a good online quote and purchase experience for most homes. However, there are also other lesser known insurance companies such as FMG, MAS and Initio. Alternatively, using an insurance broker will bring up other brands such as Vero, NZI and Ando that also offers house insurance.

What is EQC cover and how does it affect my house insurance

If you purchase any house insurance cover in New Zealand you will automatically also be covered by the EQC Insurance. In the event of a natural disaster, the EQC cover will kick in first and they provide cover up to a certain amount i.e. currently it's up to $150,000 and this amount will increase to $300,000 from 1 October 2022. If the cost to repair or rebuild costs more than the amount covered by the EQC, your insurer will pay the difference up to the sum insured amount or as agreed on the basis of cover e.g Total Replacement. 

What's Quashed and how can it help with House insurance

Quashed is a brand new insurance experience for Kiwis. It's an online platform where you can see and manage all your policies in one place, including your House insurance. Whether you're looking to find out more information about House insurance, or you're looking to compare across the different insurance companies, Quashed makes it quick and easy all in one place. On top of that, once you've dropped off all your existing policies into your own Quashed dashboard, you'll be able to get one view across all your insurance and track how much you're spending. We prompt you when you have a renewal coming so you can find the best cover and deal for the next year. You can add your spouse/partner or loved ones, or your trusted adviser, so they can have a secure view of your policies. And, it's completely free to use Quashed!