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Let's talk about the importance of insurance add-ons

Not all insurance policies are created equally. What may seem like a good, cheaper deal, can be woefully inadequate and, unfortunately, this realisation usually only hits people when it comes to claims time.

Take the cost to rebuild a home that has become uninhabitable due to fire, natural disasters etc.

In terms of insurance pay-outs, the home rebuild cover is pretty much the same across the board when it comes to choosing providers. The real difference in policy cover lies in the extensions and sub-limits included in that home replacement policy.

Where will you live if you lost your home?

Let’s use a total loss of your home as an example. The policy covers the rebuild costs, but what about the other associated costs incurred during the rebuilding period itself?

For example, where are you going to live while the new home is being built? With relatives? At a motel? In a rental? And more importantly, assuming that this will be for a matter of six months to a year or more, how will you pay for this accommodation in the meantime?

Insurers have an extension titled "Alternative Accommodation." This cover contributes towards your alternative temporary accommodation and kicks in when your house becomes uninhabitable due to damage that is covered by your policy.

Pretty simple, right? What you might not know is just how much different insurers contribute towards this. Some direct insurers, for example, only contribute up to $20k towards this, whereas Ando, an insurer I use at Caveo, give up to $50k.

Not all policy extensions are created equal

If we look at the average cost of a hotel in NZ, say $180 per night - the earlier insurer is going to be able to pay for 15 weeks or emergency accommodation, whereas I'd provide you with 39 weeks. That's an extra $30k towards accommodation while your home is being rebuilt, or if you're looking for another place to buy.

So, my question to you would be, would you be comfortable paying that much extra for accommodation, for saving a couple of hundred a year between those two policies?

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Not all insurers are created equal either….

Storage of contents, stress payments and percentage increases on how much we’d pay out are just a few of the many options that make our insurers more competitive than the likes of an insurer you can call direct on the phone. The added bonus of a using a qualified broker means you only have to deal with one dedicated person who is there to guide you through the claims process and help negotiate and manage details on your behalf.

If you’d like a review of your current policy, whether domestic or commercial, to check if the limits are going to work for you in a claim event, then don’t hesitate to reach out.

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Joshua.

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About Joshua

Hi my name is Joshua, and I am the General Manager of Caveo, our Fire & General insurance arm. My main job is to help guide you through the often-daunting world of insurance. I step in from the get-go, offering tailored advice for your specific situation. First home buyer? Business owner? No matter the situation, I can help make the entire process pain-free from start to finish. I’m quite extroverted so I love meeting my clients in person: over a coffee, at one of my existing clients eateries or at the golf course - it’s the best way to get to know what makes someone tick and who doesn’t love getting out from behind the desk. When I’m not working you’ll find me at the gym, walking my dog or strumming my guitar and trying to convince anyone that’ll listen that the folk genre is going to make a comeback any moment now (you heard it here first).

‍Disclaimer: Before you make any decisions, discuss your situation with an adviser from Velocity Financial, and seek advice from professionals, such as a lawyer and accountant, to find the best solution for your unique situation.

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