Buying a home is an exciting milestone and may be one of the biggest investments we make. It’s important to consider thoroughly researching the property before you commit to it. Knowing whether a property is prone to natural hazards can help you understand the risks of the property you’re buying and make an informed decision.
Understanding natural hazard-related risks
Insurers generally look at a range of risk factors when calculating your insurance premium, including risks related to natural hazards and weather. There are resources available to help you do your due diligence to determine if an area is prone to these risks. Here are a few things to look at:
LIM reports: the Land Information Memorandum (LIM) provides a summary of information the local council holds about the land, such as natural hazard risks, issued consents, water services and drainage.
Localised hazards maps: some local councils may share natural hazard information and flood data to help communities understand risks in their local area. Examples of this include the Auckland Council Flood Viewer and Otago Regional Council Natural Hazards Portal.
The Natural Hazards Portal: the Natural Hazards Commission Toka Tū Ake (NHC) has an online portal where you may find specific information about an area or property. The Natural Hazards Portal can tell you if there have been any natural hazard claims settled by NHC at that specific address. Understanding details of prior NHC claims is important, as it may affect your eligibility to make an NHC claim on that property in future.
Natural hazards insurance cover
NHC provides homeowners with NHCover if they have a private home insurance policy that includes fire insurance. Along with NHC’s contribution, your personal home insurance policy can help cover the costs of rebuilding your home after an insurable event. It’s helpful to understand how these types of claims can differ from other home claims:
Damage to your land: your home insurance policy doesn’t typically provide cover for any damage to land. This is where NHC may be able to help by covering a portion of the repair costs for damage to insured land after a natural hazard event.
Damage to your home: if your home is damaged by a natural hazard, NHCover generally covers the cost of repairing or replacing your home up to the NHC building cover cap. If the cost of repairing or rebuilding your home exceeds the NHC building cover cap, your home policy provides top up cover for the natural hazard damage, up to the value of your sum insured. Any cover over the NHC building cover cap is outlined in the terms of your private insurance policy, so it’s important to carefully read your policy wording. If you’re an AA Insurance customer, you can find your policy wording on our website.
We’ve put together some information about how NHCover works and an overview of the claims process if you’re making a home insurance claim after a natural hazard so you know what to expect if your home is affected by a natural hazard.
Your sum insured
Whether you’re a first-time buyer or have owned your home for years, it’s important to set an accurate sum insured. Your sum insured is the value agreed to with your insurer when you first purchase your insurance, and each year upon renewal. The sum insured is often the maximum amount that your insurance provider will pay to rebuild your home.
A qualified professional (builder, architect, quantity surveyor or other valuation expert) can help you estimate rebuild costs for your property, particularly if you have an architecturally built house or high-end features. Alternatively, some insurers have made online calculators available to help estimate typical building costs for standard residential homes. Generally, these calculators provide estimates only and rely on you accurately inputting your details.
Doing your due diligence before you commit to a property and looking at your insurance options are key steps to help you understand what you’re buying. It may be one of the biggest purchases you’ll ever make, so it’s a good idea to take the time to do your research on the home so you can make an informed decision and buy with confidence.
Any questions?
Now’s a great time to review your insurance. We recommend checking your details are up to date and ensuring the policy and cover you’ve chosen is right for you and your insurance needs.
If you have any questions about your insurance, need to update your AA Insurance policies or would like a quote, don’t hesitate to contact us. You can find our opening hours and ways to get in touch with us on our contact page.
This blog provides general information only and is not intended to be a recommendation or personalised financial advice. Excesses, terms, conditions, limits and exclusions apply to AA Insurance Limited’s policies. Please check the policy wording for details of cover. The provision of cover is subject to the underwriting criteria that apply at the time.