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Home insurance through the roof

by Lindsay Shelton
Till two years ago, we’d never paid more than $2000 for insuring our Brooklyn house and its contents. Last year, the cost went up to $3000, which didn’t seem too surprising after the 2016 earthquakes. But when the bill arrived this year, the increase was beyond belief.

The cost for house and contents insurance that arrived in the mail a few weeks ago was a startling $4886. Almost $2000 more than last year. And from the same insurance company that we’d been using (and not claiming from) for years. It’s a profitable company, I know, as I’ve read its annual reports.

The proposed increase seemed unacceptably high. So I rang the insurance broker, who said the company was probably aiming to get out of the home insurance business. The broker said she would seek another insurer, with a lesser premium.

She came back with a policy proposal from another company. The cost: $3814. More than $1000 less than what was being asked by our old insurer.

Meantime I had to renew the insurance for my car (with a different insurer). A friendly and efficient call centre person asked if I wanted other policies as well.

Do you have house insurance, I asked. The answer was yes. I provided details on line, then answered some questions on the phone, and a quote was promptly delivered – for only $2300. Less than I had paid last year, and not much more than the premium in 2016.

All three policies insured the house and its contents for the same amount. But each of them had pages of small print, for anyone who had the time and the ability to carry out a comparative analysis.

What to do? We decided that the lowest quote seemed to be uncomfortably low, so we went with the $3814 premium.

Did we make the right decision? Would we have been as well insured if we had chosen the cheapest premium? These are questions, it would seem, that only insurance experts could answer. And that doesn’t include the average home owner.

Insurance Council: NZ rated second riskiest country in the world.

3 comments:

  1. David Mackenzie, 25. October 2018, 8:47

    I guess it’s about risk. Risk is not the same thing as disaster or even danger. It seems to me to be something like, “How likely to happen is the bad thing measured against how bad the consequence would be of its worst expression?” In other words it’s unreal.

     
  2. MchaelBarnett, 26. October 2018, 11:35

    I acknowledge the dilemma and the questions you raise. Recently I have had discussions with a friend who is familiar with the insurance industry and where it is heading. He pointed out to me a little appreciated fact in that the insurance policy underpins the ongoing value of a property.

    In New Zealand the insurance industry has been benign in that property owners have enjoyed very low premiums, extensive cover and minimal claim excesses – Insurers were taking on most of the risk. This has already changed with the implementation of sum insured policies replacing comprehensive cover.

    After a decade of non-stop disasters, the insurance industry is undergoing radical change and risk transfer is taking place whereby insurers are transferring much of the risk onto property owners. You probably made a wise decision in not accepting the lowest quote, but even then this does not resolve the dilemma many of us are facing, living in an earthquake prone area.

     
  3. Guy, 2. November 2018, 13:14

    Lindsay – if you think insurance premiums for a house are expensive, you should try living in a unit titled apartment. The insurance for our building has gone up over 500% over the last 7 years. And we have no options – all the insurers have pulled out of the market, except for one.

     

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