House insurance: terms and definitions
Defining house insurance
Are you finding yourself wondering “How does house insurance work?” We are here to explain. House insurance is a type of insurance policy that covers damage to your home.
There are different levels of coverage that homeowners can go for, ranging from basic to more comprehensive policies. We will explore the options related to house insurance in New Zealand below.
The difference between house insurance, home insurance, and homeowner’s insurance
While the terms are often used interchangeably, there is a difference between house insurance, home insurance, and homeowner’s insurance.
- House insurance when buying a house is usually mandatory and refers to a policy that protects one’s house.
- Homeowner’s insurance, or home insurance, is a more encompassing policy that covers more than one’s actual house, including other structures on the property and personal belongings contained within it.
Losses covered by house insurance
What does house insurance cover in New Zealand? House insurance covers losses from perils that might cause sudden and accidental damage to your home. This typically includes the cost to repair, rebuild, or replace your home.
Cutting costs on house insurance
1. Insurance company choice
What to consider when choosing an insurance company
Purchasing insurance for your home can be overwhelming, but it is necessary. To make sure you are choosing the right insurance company, you should consider the following:
- the company’s history and reputation;
- the company’s financial strength;
- the types of coverage offered by the company.
Where to find a trustworthy insurance company
A good way to find a trustworthy insurance company is to ask friends and family who own homes for referrals and recommendations, as they will offer unbiased reviews based on their experiences.
Different insurance companies offer different price policies
So how much do you pay for house insurance? There are many factors affecting the price of your policy, which can vary depending on the insurer. Different companies offer different discounts to clients, based on factors such as their loyalty to the company or how well-equipped their home is.
2. Financial stability of your home insurance company
There are different ways to check an insurer’s financial stability:
- Ratings: Ratings companies specialize in rating insurance companies based on factors such as financial leverage and offer their services online for free.
- Complaints: Official complaints regarding unpaid claims filed by customers are registered and publicly available online.
- Business history: Standing the test of time in a competitive industry is usually a mark of a company’s financial strength.
A financially strong insurer will be able to pay out large numbers of customer claims even in sudden disastrous circumstances. When insurers do not have the financial resources to process high-volume requests, this can lead to clients paying out of pocket.
3. Using the same insurance company for different needs
A good tip for saving money on house insurance is to look for carriers who provide bundle offers and give discounted rates to customers who purchase both their house and car insurance from them.
4. State insurance companies
Governmental insurance in New Zealand
Given that early colonial New Zealand was characterized by a lack of roads whereas shipwrecks and fires were common, it is no surprise that the insurance industry in the country grew rapidly. While the government originally set up firms to compete with private insurers, these have largely been privatized.
While public and private insurance both have their pros and cons, private insurance typically offers shorter processing times and a wider scope of coverage when it comes to home and contents insurance in New Zealand.
Currently, there is only one governmental insurance company in New Zealand. It is called State Insurance and it has been helping New Zealanders with their insurance for more than 100 years already.
Insurance sales agent
5. Insurance agent choice
What to consider when choosing an insurance agent
In order to choose the right insurance agent, you should consider the following things:
- Are they a direct agent working on behalf of one company or an independent agent?
- Do they have the technical knowledge and good credentials?
- Are they enthusiastic and friendly?
The trustworthiness of clients’ testimonials about agents
While client testimonials are a great resource for helping you find an agent, they are not always trustworthy. It is not uncommon for businesses to pay freelancers to leave positive reviews on their websites, but you should be able to identify fraudulent testimonials by keeping your wits about you online.
Saving money by choosing a professional insurance agent
A professional agent will not only offer you personalized attention and regular check-ins, but they will also explain how to estimate house insurance and help you save money by comparing all available insurance quotes and pointing out their benefits and drawbacks for you.
6. Asking for your insurance agent’s advice
Your ideal insurance agent will have your best interests at heart and, so, it is advisable to ask them how you can lower your insurance costs. To ensure you are getting the best deal, ask if you are getting all the discounts for which you qualify and do not hesitate to ask them to match or beat a lower rate if you find one.
7. Monitoring your agent’s work
Trusting your agent
Although you should aim to work with an honest agent, it is advisable to always be wary. It is not uncommon for problems to arise when it is time for insured homeowners to file a claim, finding out that they are not covered for a certain type of damage.
Checking your agent’s work
If you have reservations about your agent and need to put your mind at ease, you can monitor their work:
- Check their references.
- Ask them questions.
- Ensure that they comply with the law.
8. Online insurance
Online house insurance
If you are familiar with the structural details of your home, you can buy house insurance online. There are plenty of insurance companies that offer an online service.
Buying house insurance online vs. offline: Which is cheaper?
How much does house insurance cost online? The truth is that, even though online insurance rates can be competitive, it is not always cheaper to buy house insurance online. Working physically with an insurance expert who knows your home can help you ensure you are covered for all possible circumstances, meaning it can save you money in the long run.
Buying house insurance online in New Zealand
To buy house insurance online in New Zealand, check out the following websites:
9. Online portals
Insurance comparison websites in New Zealand
If you want to conduct an insurance comparison in New Zealand, have a look at these websites:
10. Considering insurance costs when buying a new home
The region where your house is situated can affect the insurance price because of risks such as the local crime rate and susceptibility to natural hazards. Typically, the higher the likelihood of these incidents in your region, the higher the insurance rates.
11. Disaster-prone areas
An area is defined as hazard-prone if the mortality risk there is higher than a certain threshold. This could be because of natural disasters, such as typhoons, wildfires, floods, and others.
Disasters covered by house insurance include earthquakes, floods, windstorms, rockslides, and lightning strikes.
12. Improving your home outside
Making your home more disaster-resistant
Making your home more disaster-resistant is a sure-fire way to save money on your insurance. There are many steps you can take to protect your house from extreme weather and natural hazards, from inexpensive solutions to more fundamental changes to the structure of your property.
Reinforcing the outer parts of your home
To ensure your house is disaster-proof, you should reinforce its outer parts. You can protect your windows with storm shutters. An impact-resistant roof goes a long way to protect your house from extreme natural phenomena. Heavy, metal doors are ideal for securing a home while bolting the house to its foundation by bracing walls with plywood helps stabilize walls.
Insurance discounts for owners of disaster-resistant homes
A disaster-resistant home means that it will incur minimal damages in the likelihood of a catastrophic event. This makes owners of these homes appealing clients for insurers, whom they reward with better rates.
13. Improving your home inside
Making your home safer by reinforcing its inner parts
To reduce the risk of fire and water damage to your home, you should reinforce its heating, plumbing, and electrical systems. You should always check appliances regularly and you can upgrade washing machine hoses and install water detection devices.
Insurance discounts for owners of well-equipped homes
If your home is well-equipped, it is unlikely to sustain major losses or damages, which is why insurers commonly offer discounts for owners of homes with safety equipment installed.
14. Securing your home
To make your home safer, you