Top insurance tips for home buyers

Lighter mornings, longer afternoons and blossoms appearing can only mean one thing… we’re finally emerging from a long winter and springtime is here!

Another tell-tale sign that spring has officially sprung is when property listings start to creep up after a slow period over winter. Along with street appeal and school zones, there’s a lot to consider when you’re looking to buy a house, so AA Insurance has today released its top tips for buyers to check off before signing on the dotted line.

Tom Bartlett, Head of Home Claims at AA Insurance says, “Whether you’re entering the property market for the first time, or looking for a change this springtime, house hunters need to make sure they do all their due diligence on a property before the deal is done. The flooding and cyclones have affected properties across the country, so we’ve compiled a handy list of things to consider when you’re on the open home circuit this spring.”

• Structural integrity – obtain a builder’s report to ensure the property is structurally sound and does not leak, specifically checking foundations, cladding and roofing. Most insurance policies do not cover “gradual damage” caused by hidden leaks, so a moisture test is a great investment.

• Land information – consider whether the area is prone to natural hazards, and if so, what work has been done to mitigate the risk? A LIM report is crucial, so make sure you have all the updated documentation from the local council or your real estate agent to help you understand whether the property is prone to flooding or slips which may impact your insurance premiums. Check out the Toka Tū Ake EQC Natural Hazards Portal, and if you’re buying in Auckland, the Auckland Flood Viewer (remember to work closely with your lawyer during this process who will know all the ins and outs).

• Sum Insured – when insuring your home and contents, calculate everything it would take to rebuild your home and contents from the ground up to inform the level of cover you need. From a contents perspective, sum insured is the total amount your contents are covered for. For your home insurance, it is the re-build cost. It’s important you don’t rely on market value or your purchase price to determine your sum insured, because in most cases the rebuild cost will differ from both of these values. AA Insurance has Cordell's Sum Sure and Contents calculator on its website to estimate the amount of cover you need for your home insurance.

• Focus on the smell – when you first enter the house, make sure you pay attention to the smell of the house. Does it smell damp or musty, or are there strategically placed scented candles around the open home? Do the carpets have any dark stains? If so, it may be a sign of a mouldy home. As with leaks, most insurers don’t cover gradual water damage causing mould, so it may pay to look out for early signs of mould before buying the property.

• Timeframes – with insurance being a condition of a mortgage, once the settlement date of the home is finalised work backwards to make sure you have plenty of time to get your insurance sorted. Most insurance quotes are only valid for 30 days and your cover can start 45 days in advance. AA Insurance generally provides a letter of intent if the settlement date is more than 45 days out (subject to underwriting terms and conditions).

• Damaging walls during the moving process – one of the most frequent claims AA Insurance receives from people moving house is damage to walls when moving in. We recommend having a plan for the placement of each furniture item within your home to avoid bumps and marks on your walls, and tape or pad sharp edges of your furniture.

• Water pipes – AA Insurance claims data shows that a delay in locating the main water source often causes significantly more water damage when it comes to burst pipes, so make sure you know where the water mains are. If the house was built in the 70s, 80s or early 90s, check the condition of the water pipes and the age and condition of the hot water cylinder. Many pipe brands during these decades have a limited life span of up to 30 years, including the joints.

• Insurance history and customer history – answer all questions asked by insurers openly and honestly, so there are no issues at claims time which could impact the outcome of your claim or your future insurability.

• Rubbish – have you decked out your new place with new electronics or other toys? Keep in mind how you dispose of the packaging to avoid alerting any opportunistic thieves who might be tempted to help themselves to your precious new items.

• Security – don’t put off installing an alarm or security camera. Open homes are open to everyone, and there have been instances of burglars tracking property sales and targeting recently sold homes when people are moving in.

Bartlett says, “Not all damage is noticed when you’re viewing a property, and many buyers don't notice prior damage during the initial ‘honeymoon’ phase of open homes. Remember to pay close attention to the details and don’t skip the building report.

“If you are buying a house with renovations, check whether council consent was needed and granted, and any relevant codes of compliance issued. This means the quality of the work and materials are up to standard.

“House hunting can be a long process with lots of ups and downs but having a list of things to think about can help you relax and focus on what’s important in a property. Happy house hunting!”