Most Common Mistakes:
1. Misunderstanding 'Value'
There are a number of different types of value you can place on your home. They are all calculated differently and are meant to be used for different purposes e.g:
- Current Market Value: is what your house + land is worth on the open market, it’s driven by what buyers are paying in the surrounding location.
- Rateable Value (RV) or Government Value (GV): is a computer generated value model to be used by council for the purpose of setting rates.
- Indemnity Value: is the depreciated value of a property at the time of damage / or loss, usually in relation to a cash compensation settlement.
- Reinstatement or Replacement Value: is the estimated cost of rebuilding your home at a given time.
- Sum Insured Value: is the capped amount you agree to insurance your home for replacement with your insurer.
The reinstatement value is the only relevant value to your new sum insured policy.
The biggest fish-hook for NZ policy holders will be confusing what they think ‘their house is worth’, with what it would cost to rebuild!
Your SUM INSURED value is the rebuild value you nominate on your home insurance policy.
At Sum Insured Valuations, we can not decide on what your ‘sum insured value’ is going to be. The amount you wish to set your policy is entirely up to you! But we can provide you with a ‘reinstatement estimate’ to be used as a professional guide.
The key criteria used by valuers and online calculators alike to reach their rebuild estimate is your FLOOR AREA MEASUREMENT.
It is critical to all value calculations that you are working with the correct square meterage of your home!
3. Misinterpreting Your Policy
The professional advice held within our report is only part way to working out your nominated ‘sum insured’ amount… the other part of the equation is understanding your insurance policy details.Learn More in ‘How to Use Report’
4. Misleading Guarantees
Some firms are providing misguided advice that professional valuation & QS reports are “for your insurance company”
The report containing your ‘Reinstatement Estimate’ provided by a registered valuer or quantity surveyor is not “for the insurance company”, it is for the policy holder’s interest / benefit / records only. Undertaking this level of due diligence is recommended, but not compulsory.
It is our understanding that professional reports will not be filed by your insurer. Just like their online calculators, it is not a document that they will refer to in the event of a claim.
The onus will remain with you, the policy holder, to utilise the professional advice provided to your best advantage when nominating your sum insured.
Remembering the ‘fixed sum’ amount you nominate is the capped amount, or basically the highest amount for which your insurer is liable. Unfortunately, this does not mean this is the amount you will automatically get cash settled in the event your house is damaged beyond repair.
If you have to make a replacement claim, your insurer will then undertake their own assessment as to what they believe the rebuilding cost to be at that time, and that is what they will offer as a potential settlement. This amount could be less, or no more than the sum insured figure nominated on your policy.
Granted professional advice provides no guarantees as to what your insurer will offer in the worst case scenario, it will though give you the best back-up evidence to support your case in the event of your insurer offering a lesser rebuild settlement than your nominated full capped amount.
We want our communication with our clients to be very clear and transparent. We are to here to support you the policy holder, we are completely independent of any insurance company.