Loopholes that caught homeowners out on sum insured policies in the past will probably be problematic this time around, too, the Insurance and Savings Ombudsman scheme says.
Sum insured policies were common 20 years ago but consumer pressure forced insurers to change to replacement value policies.
Most insurers are changing back this year, to give them more certainty over what they would have to pay out in the event of natural disaster.
ISO spokeswoman Virginia Douglas said no complaints had been received about the move yet, but there had been complaints made in the past about sum insured policies.
Most of the complaints related to people not understanding what was included when they signed up for cover, she said. As a result, many people who received payouts did not have enough to rebuild their homes to the standard they required.
Things such as demolition costs had been left out of people’s calculations, as well as the cost of bringing buildings up to new building code standards. “Things like double glazing will significantly add to the cost of rebuilding older hopes, and insulation.”
Groundworks could also add to the bill, as could planning and architect fees. “We say to people that they should imagine what it would take to get everything off the section, and then once it’s off, put everything back again.”
Small things such as sheds, pools, paths and fences could quickly add to the cost, she said.
Douglas said insurers would use a house’s size to determine the default sum insured until they heard from their customers about what level of cover they wanted. She said owners should not rely on their rates demands to work out how big their homes were. “Either measure it yourself, or get someone to assist you with this.”
The ISO says people can get a more accurate opinion of what their sum insured should be from a valuer, quantity surveyor or builder.