Leap in household contents insurance

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mattwnz

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#3108054 25-Jul-2023 19:20

linw:
Interesting discussion. Out of curiosity I got a quote from AA and it was very close to State. No great surprise there.

Guess we all have to bear the burden of climate change disasters.

Won't help families worrying how to pay the next rent or mortgage payment, though.

But many have chosen to live in areas which are low risk of flooding and sea level rises. These risks have been known for decades. Insurance companies appear to already be charging more for living in higher risk areas, which shouldn't then increase everyone else's. I guess the same thing applies for car drivers.

MikeAqua

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#3108135 26-Jul-2023 08:29

If you have an indemnity value insurance policy, the insurer will only pay what the items were worth at the time of loss.

For example, if you have a couch, that you paid $1,000 for ten years ago, you might only get $100 for that couch. You need to consider your cover on that basis. You might have 200k of stuff at purchase value. But, the indemnity value might be $40k. The numbers I've used are hypothetical, but hopefully the concept is clear.

Insurers have a depreciation schedule for various types of items, they will reluctantly provide these if you ask. You can use these to work out what your contents are worth. I went through that process with our insurer's. I ended up reducing our contents cover by 60%, which significantly reduced our premium. I suspect many people with indemnity cover are over-insured, depending on what type of contents they have.

After that I increased our excess which reduced our premium even further. We've since saved up provision for excesses, in a savings account that we do not touch.

Mike

Wombat1

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#3108140 26-Jul-2023 08:50

Have not had house content insurance for years now. Feels like it is a total waste of money. Have insurance on higher risk items like cars, and home. But contents insurance just feels like a waste.

blackjack17

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#3108208 26-Jul-2023 11:40

networkn:

Give them a call and ask them what happens if you under insure :)

Just called AA and they will payout the full amount that we are insured for regardless of what we actually have (obviously not if we have less than what we are insured for).

AA does not have an average / underinsurance clause.

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jonb

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#3108243 26-Jul-2023 12:27

Wombat1: Have not had house content insurance for years now. Feels like it is a total waste of money. Have insurance on higher risk items like cars, and home. But contents insurance just feels like a waste.

Same. If house literally burns to the ground I'll be in a hole but not life changingly and will take that risk. Won't be flooded unless a plumbing issue, burglary will just be Tv, laptops and damage (if they even bother robbing huge TVs now?). Breaking stuff like TV or phones take the hit (excess + difference often not worth claiming for anyway).

jonathan18

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#3108257 26-Jul-2023 12:56

Contents insurance is but 17% of our total house/contents/car insurance bill - less than $1k a year and up about 10% on last year. If I got really concerned about managing my premiums I’d look at reducing $ coverage but certainly not dropping it entirely. (As we’ve become more financially secure we’ve bought more sh!t, so have actually increased out cover in the last year. I get this is only relevant for a worst-case scenario, eg house burning down, but I don’t think that’s bad value to insure against that.)

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lapimate

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#3108339 26-Jul-2023 14:10

allan: And then you discover that your policy has an "average clause", so that when you lodge your next claim, they only pay 50% of it's value 😟

Extract from https://www.legislation.govt.nz/act/public/1985/0117/latest/DLM76612.html#DLM76612 q.v.

" 15 Prohibition on inclusion of pro rata condition of average in contract of insurance relating to dwellinghouse
(1) No contract of insurance relating to a dwellinghouse or to any of the contents thereof or to both shall contain a pro rata condition of average.
(2) Any provision of any contract of insurance that contravenes subsection (1) shall be of no effect. ... "

duckDecoy

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#3108370 26-Jul-2023 14:57

When I got married this year I went to put the wedding rings onto the insurance as you have to itemize jewellery if it is over $1000. They refused to accept them unless we increased the total contents insured. We'd been running a pretty low value on contents and AA has (if I understood them correctly) a max percentage of itemised pieces relative to the total insured. With our itemised art and jewellery we went over that so they made us up the contents. I found that slightly frustrating as they were forcing us to increase cover, but we did it.

allan

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#3108525 26-Jul-2023 16:50

duckDecoy:
When I got married this year I went to put the wedding rings onto the insurance as you have to itemize jewellery if it is over $1000. They refused to accept them unless we increased the total contents insured. We'd been running a pretty low value on contents and AA has (if I understood them correctly) a max percentage of itemised pieces relative to the total insured. With our itemised art and jewellery we went over that so they made us up the contents. I found that slightly frustrating as they were forcing us to increase cover, but we did it.

Same thing with AMI when I asked to add hearing aids. Turns out I didn't need to specify them, but not an unreasonable request to be asked to increase the sum insured, as I was adding items of value to my policy that I didn't have previously.

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