New insurance rules will create stress and expense for many older people

New insurance rules where homeowners must calculate the rebuild cost of their properties will create extra stress and expense for many older people throughout the country, according to Age Concern New Zealand.

Insurance companies are changing the way they insure homes - switching from ‘like-for-like’ policies, with an unspecified replacement cost, to ‘sum insured’ where homes will be insured up to a maximum specified amount - and asking the owner to take responsibility for calculating the rebuild cost.

Age Concern New Zealand, President Evelyn Weir says the pressure on homeowners to calculate this each year will be a complicated task for many people – but particularly for senior citizens, many of whom are likely to find the process bewildering and expensive, with most on fixed incomes having no way to bear the extra financial burden.

“It is a complicated, complex exercise for someone who may not know much about building materials and costs.”

An estimated cost to rebuild on a home’s existing site needs to be based on its current size, construction type and standard, together with any other structures such as decks, driveways, sheds, garages, fencing, retaining walls, recreational features and other special features.

Mrs Weir says homeowners may need to pay for expert advice, such as that from a quantity surveyor, architect or building engineer.

“For older people on fixed incomes this will be an extra unbudgeted cost for them to keep their home insurance up to date and pay annual premiums.”

Also, Mrs Weir said older people without computer know-how or access to the internet will not benefit from online calculator tools on insurance company websites.

“These are only available to those with computers, so many people without that technology will miss out or need extra support.”

The move to capped sum-insured policies comes after an unprecedented series of natural disasters such as earthquakes, tsunami and hurricanes throughout the world and, as a result, the global companies which provide natural disaster cover to New Zealand insurance companies have asked for homes to be insured up to a specified amount, providing the maximum cost insurers would have to pay to rebuild the homes.

ENDS

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