Talking insurance is painful, but it’s more painful not to

Insurance is one of those topics no one wants to talk about, but ignoring it can be much more painful in the long run.

Buying a home will be one of the biggest purchases you ever make and while it’s a great asset, it can also be a big financial risk if something goes wrong.

Insuring your new property is essentially compulsory. A bank or lender will not move forward with your loan if the property is not properly insured.

Since the Christchurch earthquakes most insurers only offer agreed value policies which means the payout if your house is totally destroyed is capped at that agreed amount. Prior to the Christchurch earthquakes, complete replacement was common.

As a new homeowner you need to put more thought into your insurance policy to make sure you’re getting the right level of cover. Set the sum too high and you will be paying for insurance you don’t need, set the sum too low and you will be left with having to pay the shortfall if something happens.

Insurers offer calculators which will give you a rough idea of how much it could cost to rebuild or replace your current home.You may want to look at a professional valuation if you didn't get one during the buying process. It pays to get the right advice on this.

While property insurance is essentially compulsory life and mortgage repayment insurance isn’t, but it’s just as important.

You need to ask yourself how will you meet your mortgage payments if you’re too sick or have an accident that prevents you or your partner from working, or worse, if you or your partner dies? It’s unpleasant, but part of the reality of being a property owner and it’s an area that many Kiwi’s ignore at their peril.

There are many different types of insurance cover and depending on your personal and employment circumstances the best policy varies wildly.

Most policies fall into two broad categories.

Health and Wellbeing, which covers:

  • Health insurance
  • Trauma insurance
  • Disability insurance
  • Life insurance

Financial, which covers:

  • Income protection
  • Mortgage repayment insurance

To find out more about these specific types of insurance click here.

It is best to seek professional advice around how to properly cover yourself for unexpected events so you’re not left facing tough choices about how to keep your new home.

If you’d like to find out more, please register for one of our first home buyers seminars or download our first home buyers guide here.