Important changes to your Home Cover policy

From 22 April 2013, Home Cover will be offered on a Sum Insured basis only. It will provide cover for the rebuild cost of your home up to a Sum Insured amount as provided by you.  This means that you will need to establish a maximum dollar value (the Sum Insured) for your Home Cover policy sufficient to cover the rebuild cost of your home.  This is a change from area based cover which previously covered the cost of rebuilding your home up to the specified floor area. 

What do I need to know?

From 22 April 2013, all new Home Cover policies will be provided on a Sum Insured basis (i.e. the cost to rebuild your home up to a Sum Insured) – instead of cover based on floor area. For existing customers this change will apply from your annual review date. 

It’s very important that your Sum Insured is sufficient to cover the total cost of rebuilding your home. If your home was previously insured on a square metre basis, a default Sum Insured (based on standard average rebuild costs) will be applied and provided on your Policy Schedule contained within your annual review documentation.

You will need to understand what your Sum Insured should cover and establish the rebuild cost of your home. If, after establishing the rebuild cost of your home the Sum Insured noted on your Policy Schedule does not accurately reflect the cost to rebuild your home – please call us on 0800 SUM INSURED (0800 786 467) to make any adjustments. You can read more about this in this section of our website.

What does this mean for my home?

Because no two houses are the same, the Sum Insured you establish needs to be specific to your property – that means taking into account what materials it’s made out of, what type of land it’s on and more. The rebuild cost of a renovated villa, an architecturally-designed home or a 1960s brick and tile house is unlikely to be the same, even if they have a similar floor area.

That’s why it’s very important that your Sum Insured is sufficient to cover the total cost of rebuilding your home. If it’s underinsured it could mean that in the event of a loss that requires the complete rebuild of your home (total loss), you’re not covered for the full cost of rebuilding your home. On the other hand, if the Sum Insured is far greater than the cost of rebuilding, you could be paying a higher premium than necessary.

Why the change?

After a number of large-scale natural disasters in New Zealand and around the world, international reinsurers want to better understand their risk and have reviewed their terms and costs for providing cover. This has driven the change to home insurance policies moving to a dollar figure (Sum Insured) basis. 

Your default Sum Insured

It is important you establish a Sum Insured for your home as you are best placed to ensure this is sufficient to cover the full rebuild cost of your home in the event of a total loss.  However, when you receive your schedule at your annual policy review you’ll notice your home – if you’ve previously had area based cover – will have a default Sum Insured*. This has been calculated by using an average cost to rebuild a standard house in New Zealand ($2000 per square metre of living area and $1000 per square metre of non-living area) and applying that to the floor area you’ve previously provided for your home.

However, using the average rebuilding cost may not be appropriate in every case.  It may be too high or too low depending on a wide range of factors. So it’s important that you establish a Sum Insured to cover all the costs associated with rebuilding your specific home, including garages, decks and other elements of your property.

If you don’t contact us, the default Sum Insured noted on your Policy Schedule will be applied. To help determine your Sum Insured, see the steps under the 'Establishing your Sum Insured' tab.

 

 

Step 1: Understanding what your Sum Insured should cover

You need to establish a Sum Insured sufficient to cover the total cost of rebuilding your home.

That’s not just your home itself – it includes costs to rebuild your driveway, fences, decks, paths, swimming pool, garages and any other structures. On top of that, it should include other costs associated with rebuilding, such as demolition, debris removal, professional fees and compliance costs. 

Step 2: Find the Sum Insured that's right for your home

To find out a Sum Insured amount that would suit your home, you’ll need an estimate of the cost to rebuild from a valuer, quantity surveyor, or other suitably qualified professional. An independent online calculation tool can also help, such as the Cordell Calculator**. Access to the calculator is available here.

Step 3: Confirm your Sum Insured

Does the Sum Insured you’ve established to rebuild your home match with the Sum Insured noted on your Policy Schedule? If not, call us on 0800 SUM INSURED (0800 786 467) to make any adjustments.

Is the ‘rebuild cost’ different than the value of my home?

Yes – the value of your home is based on what someone else will pay for both your land and home. The rebuild cost is the total cost of rebuilding your home to the same state in the event of a total loss. As well as your home, it needs to include costs to rebuild your driveway, fences, paths, decks, swimming pool, garages and any other structures. And it should also include other costs associated with rebuilding, such as demolition, debris removal, professional fees and compliance costs. 

I don't know what Sum Insured to select, what should I do? 

The default Sum Insured may not be appropriate  for your home and may be too high or too low.  It’s important you establish the correct Sum Insured for your home as soon as you can, through a valuer, quantity surveyor or other suitably qualified professional. An independent online calculation tool such as that provided by Cordell can also assist with establishing the rebuild cost of your home. You’ll find the Cordell Calculator** here.

What’s the Cordell Calculator?

The Cordell Calculator (an independent tool from Cordell) asks you a whole lot of questions about your home, including everything from your fittings, to the size of your home, to the materials used. Depending on your answers, it generates an estimated cost to rebuild your home. This includes demolition, debris removal, professional fees and compliance costs. You’ll find the Cordell Calculator here.

What information will I need to know when using the Cordell Calculator?

You will need a good overall understanding of your home, including how many bathrooms it has, as well as its features such as balconies, decks, garages, carports, sheds etc. However, most importantly you will need to know the following specific information:

  • The style of your home and when it was built (approx. year will be sufficient) 
  • The total size in square metres (SQM) of the floor area of your home.
  • The materials your home is made of, for example: what the physical floor is made of (e.g., concrete/ timber); what the exterior walls are made of (e.g. blockwork/solid brickwork/weatherboard/stucco); what the roof is made of (e.g. long run iron/corrugated iron/terracotta tiles/concrete tiles/slate).

You’ll find the Cordell Calculator here.

How do I find out the floor area of my home?

The most accurate way of establishing the floor area of your home is by measuring it out. You can do this by measuring your external walls and using these figures to calculate the corresponding square metre area of your home. If you need a hand, you can ask an expert such as a builder or quantity surveyor to do this for you.

What happens if I don't contact Westpac or I am happy with the Sum Insured on my Policy Schedule?

If you don’t contact us, your Sum Insured will be set to the default Sum Insured* amount documented on your Policy Schedule. And if you’re happy with that amount of cover, there’s no need to contact us.

However it’s your responsibility to ensure your Sum Insured is sufficient to cover the total cost of rebuilding your home. If it’s underinsured it could mean that in the event of a total loss, you’re not covered for the full cost of rebuilding your home. On the other hand, if the Sum Insured is far greater than the cost of rebuilding, you may be paying a higher premium than necessary.

Will my Home Cover policy provide full replacement cover?

If you’ve established a Sum Insured sufficient to cover the total cost of rebuilding your home, then in the event of a total loss your policy should provide full cover for the rebuild of your home. If the Sum Insured isn’t high enough, it may not cover the full cost of rebuilding your home. Use the Cordell Calculator to help estimate your Sum Insured. You’ll find the Cordell Calculator here.

Will I be paid my full Sum Insured in the event of a total loss?

Your policy provides cover for the costs incurred in rebuilding your home, up to the Sum Insured. This means that in the event of a total loss, your Sum Insured (less any applicable excesses) is the maximum you’ll be paid under your policy towards the costs of rebuilding your home.

Will my Sum Insured be adjusted each year?

Once you’ve established your Sum Insured amount, it may be adjusted automatically at each annual review date. The adjustment factor will be noted on your Policy Schedule and should allow for the increased average costs of construction. We encourage you to review your Sum Insured yourself annually too.

The Cordell Calculator is an independent tool that helps you figure out how much it will cost to rebuild your home following a total loss - an amount which you may choose to use for your Sum Insured.

Access to the Cordell Calculator** is available here.

Westpac Home Cover is arranged by Westpac New Zealand Limited ("Westpac") and underwritten by Lumley General Insurance (N.Z.) Limited (“Lumley”). Westpac does not guarantee the obligations of, or any products issued by Lumley. Westpac may receive commission payments as a result of the arrangement of Lumley policies. For Lumley's financial strength rating please click here.

The information contained on this page is intended as a general guide only and may vary at times. Terms, conditions, exclusions and limits apply. More detail can be found in the policy document (downloaded here as a PDF, or obtained from any Westpac branch free of charge). The availability of any insurance cover is subject to the acceptance and approval of a complete application.

Any payment is subject to your claim being accepted. 

*The default Sum Insured calculation is a standard methodology applied to all homes insured with Lumley. It applies an average cost to rebuild a standard house in New Zealand ($2000 per square metre of living area and $1000 per square metre of non-living area) to the floor area you have previously provided for your home. This is an estimate only and may/will be different from actual costs. Other than using the area of your home, the calculation of the default Sum Insured is in no way personalised for your circumstances or particular home. Lumley does not guarantee the default Sum Insured is sufficient to cover the rebuild of your home. It is your responsibility to determine a Sum Insured figure that is adequate to rebuild your home.

** Access to the Cordell Calculator is provided for your assistance only. Typical estimated building replacement costs are provided by Cordell Information Pty Ltd (A.B.N. 95 159 137 274) (‘Cordell’). Whilst every care is taken to ensure the accuracy of the information as a guide for costing, no responsibility is accepted by Cordell for its accuracy. Please check with an Architect, Builder, Quantity Surveyor, Valuer or other suitably qualified professional for an accurate estimate. Neither Lumley (or a relevant related company, as the case may be) nor Westpac (or a relevant related company, as the case may be) take any responsibility for the estimated costs provided by Cordell nor any liability for the accuracy of or reliance upon or use of, the costs. Access to Cordell’s calculator is provided for your assistance only. Westpac accepts no responsibility for the availability of Cordell’s calculator.