House Insurance

How house insurance and claims work

We step you through the basics of house insurance and make sense of the jargon so you can make informed decisions about protecting your property.

One of the key benefits of house insurance is that it protects you financially if your home is damaged or completely destroyed either by a covered natural disaster or accidental damage. Here’s a rundown of the key steps to get house insurance and file a claim.

Getting House Insurance:

• Research and compare insurance providers and policies to find the best fit for your needs.
• Get a quote from your chosen insurance provider.
• Complete the application process and make the first premium payment.
• Wait for the policy to become active.

Making a Claim:

• Assess the damage and take necessary steps to prevent further damage.
• Contact the insurance provider to initiate the claims process.
• Provide details about the incident and damage, including photos and documentation.
• Wait for the insurance adjuster to assess the damage and determine coverage.
• If the claim is approved, receive payment for damages covered by the policy.
• If the claim is denied or disputed, provide additional information or dispute the decision through the appeals process.

Policy terms to understand

Let’s take a look at some of the common terms you’ll need to understand:

Basis of settlement

This refers to how a claim will be paid out by your insurance company and the maximum amount that you are covered for.

Generally, there are three ways that insurers offer house insurance:

• Sum insured.
• Present-day value.
• Total replacement basis.

Sum insured

“Sum insured” is the maximum payout you will receive if your home needs to be rebuilt or undergo significant repairs.

The insurance company will provide a “default” sum-insured figure. However, if you’re not sure the amount accurately reflects the rebuild cost, you can:

• Get the sum from a registered valuer or registered quantity surveyor.
• Use the online sum-insured calculator suggested by your insurance company.

Present-day value

Certain homes may be insured based on their present-day value (also known as indemnity) rather than a specific sum. If your home is insured for its present-day value, you’ll be covered for its market value at the time of loss or damage (excluding the land value).

Total replacement basis

The insurer will pay out any amount it costs to repair or rebuild your home calculated on the square metre area of the house. However, replacement cover insurance is no longer common. After the Christchurch earthquake, many insurers shifted to sum insured as it took a lot of work to assess how much risk they were taking on.

Temporary accommodation

If your policy provides comprehensive cover, you may be able to access funds for temporary accommodation. If you’re covered for temporary accommodation, the insurer will provide an amount to cover your temporary accommodation expenses in the event that your house is damaged.

What is a house insurance premium?

Your premium is how much you pay for your house insurance policy. It is usually paid on a monthly or annual basis, and some insurers offer a discount by paying the premium as an annual lump sum.

Factors that can affect your premium:

• The sum insured amount.
• The level of coverage you choose.
• The location of your property.
• Any previous claims you’ve made.

What does house insurance excess mean?

Excess is the amount you pay when you make a claim on your policy. Your insurer will then pay out the rest, up to the sum insured amount.

Most insurers will allow you to choose how much excess you pay.

Choosing a higher excess can reduce your premium payment, but if you need to make a claim, your excess can be substantial.

On the other hand, if you decrease your excess, it’s likely your premium will increase because the insurance company is taking on more of the risk.

What to consider when choosing house insurance

Benefits: Take a look at the list of events and circumstances covered by your home insurance policy — do they meet your needs?

Insurance cover limits: Keep in mind that there are limits to the coverage provided by your house and contents insurance policies. Carefully review the Product Disclosure Statement (PDS) and house insurance quote for information on cover limits.

Excess: Determine what this amount is and whether there are multiple excesses. As noted, you may also be able to adjust the excess amount to change your premium.

Optional extras: Decide whether any optional extras are relevant and how much your premium would increase if you add them. For example, flood insurance is not typically covered under standard home insurance policies but may be added as an extra.

Exclusions: What is excluded from the cover? Get clear on what isn’t covered, so you don’t get caught out in the future if you sustain damage to your home via natural disasters or accidental damage.

Quickly compare a range of house insurance policies side-by-side today.

House Insurance FAQs

What is landlord insurance cover?

Landlords’ insurance covers property owners from financial losses related to their rental property. The building is covered by the policy, and sometimes any of the landlord’s contents stored at the property are covered too. Landlord insurance will generally cover deliberate damage by tenants.

How much house insurance do I need?

It’s important to carefully calculate the appropriate amount of insurance required. Rising building costs, and price of labour fluctuate, so it may cost more to replace your home in a years time than it would today. This is why it’s important to review your insurance yearly to ensure your cover is enough to replace your home.