All about your Sum Insured
New Zealand is a country of proud home owners. Our homes say a lot about us: where we’re from, what we believe in and how we want others to perceive us. The bad news is, many New Zealanders are underinsured.
That’s why we want to work with you and together with your broker to get an accurate Sum Insured in place for your home.
So, what exactly is Sum Insured?
When you take out a replacement home insurance policy, your broker will ask you for your Sum Insured or work with you to figure this out. This is the maximum amount payable, after any applicable excesses, to rebuild your home in the event of a total loss such as from a fire or earthquake or if your home suffered significant damage from flooding.
It’s important to have the right figure in place because if you don’t, you may not have enough cover to rebuild or repair your home to the quality and size it once was. The figure covers labour, materials, demolition, consents and other fees associated with rebuilding and repairing the home to its equivalent size and quality.
Your total Sum Insured amount also needs to include professional fees and removal of debris, and take into account rising building costs, inflation and any changes to your home.
Sum Insured is
Sum Insured isn't
Using the Cordell Sum Sure calculator
A great place to start is the Cordell Sum Sure calculator. It’s easy to use and doesn’t take a lot of time.
The estimated figure generated by the calculator is based on the estimated cost to rebuild your home and includes anticipated construction costs, allowances for professional fees, demolition and removal of debris.
Why it's important to get right
- Home is where the heart it is. Your Sum Insured needs to cover all facets of the rebuild from demolition and labour to construction and fixtures such as baths, toilets and heat pumps.
- Setting your Sum Insured amount too low means you may have to rebuild your home to a lesser size or quality. You may also have to pay for some of the repairs or rebuild yourself.
- It's important to update your Sum Insured amount and make sure it’s accurate. A great time to do this is when your policy is up for renewal or if you’ve renovated or added to your property. You can amend your Sum Insured at any time and it pays to make sure your review it regularly.
Calculating your Sum Insured
The figure you have for your Sum Insured needs to cover all aspects of a rebuild:
- Demolition costs
- Council consent fees and other professional fees
- Labour costs
- The floor area of your home
- Land slope and access
- Construction materials
- Quality of the materials and finish
- Fixtures and fittings (i.e. toilets and baths, oven, heat pumps)
- Fixed floor covering (i.e. carpet)
- Number of levels - is it a one, two or three storey home?
- Your home's design is considered in the pricing: villa, bungalow, contemporary and/or a one-off architectural
- Outbuildings like granny flats, detached garages and carports
- Driveways, decks, paths and fences
Remember to include any additional Recreational Features (such as swimming pools and tennis courts), Retaining Walls or Special Features (like a bridge or cable car) that would increase the rebuild cost of your home. You may need to purchase additional cover for these, so tell your broker if you have any and what the rebuild cost is. Make sure you check your Policy Wording for everything you need to include in your Sum Insured.
All of this can be easily estimated using the Cordell Sum Sure calculator or talking to your insurance broker to organise a valuation professional to help you come up with a more accurate estimate.
What do I need to do?
When it's time to take out home insurance or renew your current policy, you should work with your broker to consider the amount your home needs to be insured for. It’s good to get into the habit of reviewing your Sum Insured when your home insurance policy comes up for renewal, or when making improvements and renovations to your home.
Although we may automatically adjust your Sum Insured for increases in construction costs at your policy’s renewal, it doesn’t account for any changes or additions you may have made to your property like a pool or granny flat.
If you have bought house, it’s important not to rely on the market value or purchase price to determine your Sum Insured. If you have recently built a house, you could use a recent build cost, however you need to consider all parts of your home that are covered by the policy such as paths and fencing, as well as costs for demolition and site clearing. You also need to consider inflation that might have occurred since that build cost was agreed and any further inflation that may occur over the course of your policy period. If you think your current Sum Insured amount is too low, we encourage you to work with your broker. They will let us know if there are any changes you want to make.
Use an online calculator
The Cordell Sum Sure calculator is free, easy-to-use and will generate an estimated cost for rebuilding your home. The estimated figure is based on information gathered from across New Zealand from third party organisations such as your local Council. Using this information, the calculator takes into consideration the following: anticipated construction costs, allowances for professional fees, demolition and removal of debris, and will account for price difference in some of these services around New Zealand.
The calculator doesn’t take into consideration rising costs during your period of insurance. If you wish to include an allowance for this in your Sum Insured, you will need to add it to the estimate produced by the calculator. The calculator doesn’t add GST to your estimated rebuild cost, because your NZI Sum Insured is a GST-exclusive amount. GST is payable in addition to the total sum insured for NZI home policies.
If you have any Special Features (such as a bridge, cable car or jetty) you will need to add these to the amount produced by the calculator as well. Also, if you live in a home greater than 500sqm or with a higher value than $2million, the calculator may not be appropriate, as it is designed for standard builds.
Contact a professional
If you want more peace of mind that your Sum Insured is accurate, it might be useful to get a professional in. They will visit your property to assess the rebuild cost. If you live in a home greater than 500sqm, or a higher value than $2 million, or an architecturally designed home, this is highly recommended.
QV and Construction Cost Consultants can provide residential valuations at a competitive price for NZI customers. Contact them below:
Otherwise try other registered professionals, such as:
- If your address can’t be found and it includes a unit number (e.g. 23a), try different variations (e.g. 1/23, 23/1). If your address still can’t be found, Cordell Sum Sure calculator may not have details of the property, it may be a new subdivision or the calculator is not suitable for the property at that address.
- Don’t worry if the photograph doesn’t match your house. The photograph might be different (e.g. your house is brand new, or there is an old photo, a boundary photo or street front photo) but the property details are based on the address not the photo.
- The calculator assumes an average floor area for any garages, sheds or pool houses, so if you have a particularly large detached building you might want to select a Sum Insured higher than the estimate the calculator provides.
- If you’re in the Canterbury area and your property has been identified as having a CERA technical category rating (foundation requirements), then an allowance will have been made for this. This is indicative only and you should seek specific engineering advice for a reliable estimate of any costs.
- The calculator uses typical building costs for standard finishes to provide an estimate. If your home has significant special features and fittings, was built to a superior standard, is very large or has a high value, consider using other options to establish a better estimate of the rebuilding cost such as a registered property valuer or quantity surveyor, or select a Sum Insured higher than the estimate the calculator provides.
- Factors such as the slope (steepness) of your land, the style and quality of construction are important to get right when using the calculator. Seek advice if you are unsure what to enter in the calculator.
- This calculator has been customised for NZI so it is important that you use the calculator provided by your insurer.
- Owners of cross-leased properties need to consider how to cover shared assets such as driveways, fences and retaining walls. Check your property's Title documents for reference to a 'plan of flats' (or similar) that sets out the various areas the cross lease applies to, and if you're still unsure, talk to your legal advisor.
- Body corporates must consider all the units in their multi-dwelling property as well as any common property.
This calculator provides an estimate Sum Insured for your home but the final decision is yours, so if you think your amount is not correct you can change it. This is general information and is not a recommendation, opinion or guidance. If you would like a recommendation please contact a registered valuer or quantity surveyor. This calculator information does not provide any advice or opinion on the extent or adequacy of the cover provided by Sum Insured insurance. This information is not personalised financial advice and does not take into account your particular situation. You must make your own decision on the Sum Insured that is appropriate for your circumstances.
The Cordell Sum Sure calculator is an independent tool. NZI doesn’t have access to the information you enter, or access to the estimate that it produces, so if you’d like to adjust your home’s Sum Insured, or add additional cover for retaining walls, Recreational Features like swimming pools and tennis courts or Special Features like bridges, you’ll need to contact us. It’s your responsibility to ensure that your Sum Insured is adequate.