House hunters Ingrid and Dirk sought help from TVNZ’s AA Insurance Location, Location, Location NZ to find their dream lifestyle property.
Hosts Jayne Kiely and Paul Glover were tasked with finding a newer home that didn’t need renovating, and that had a garden. Ingrid and Dirk were also interested in looking at properties that could provide them with a rental income.
AA Insurance expert Tom sat down with Ingrid and Dirk to talk about their insurance needs. “I understand you've had a great week looking at some architecturally designed homes,” Tom says to the couple. “We have, we’ve been very lucky,” Ingrid replies.
But when Tom asks if Ingrid and Dirk have thought about what it might cost to insure their home, the answer from Ingrid is: “No, I guess we haven’t got that far.”
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Insuring architecturally designed properties
Some of the properties the couple considered in Episode five are high-spec architecturally designed homes, which Tom talks to them about. “When you insure you've got to nominate a value and it's called sum insured, and that's basically what it costs to rebuild the house if anything happens,” Tom says.
“I guess an architectural home is a lot more expensive to replace,” says Dirk. “So, every building is different,” Tom replies. It’s worth thinking about the specifics of the property you’re interested in before buying and insuring a home.
“Some of them you've looked [at] have got higher ceilings, high-spec bathrooms and kitchens,” Tom says to Ingrid and Dirk. “And so it's really important that, rather than taking a standard rate, that you really do it specific for the property. And so there are calculators online you can use that give you an estimate.” Online calculators such as aainsurance.co.nz/insurance-calculator are a useful starting point to help estimate the sum insured for standard houses.
But, for the architecturally designed houses Ingrid and Dirk have been looking at, it would be a good idea to engage an expert, such as a quantity surveyor, builder or architect to estimate the rebuild cost of the property and provide a value they can set as their sum insured.
“But certainly with a higher spec house, getting somebody like a quantity surveyor out to actually give you a full cost and really take into consideration all of those features. And that's the value you’ll give to your insurance company.”
“And that includes all the demolition…all that type of thing?” Dirk asks. Tom explains that, in addition to the cost of rebuilding the home, the sum insured should include the estimated cost of demolition and features like driveways, garages, swimming pools.
Properties with rental income
Tom moves on to ask Ingrid and Dirk about their desire to buy a property with the potential for rental income. “I also understand you’re thinking about a property that might have rental income”, to which Ingrid replies: “Yes, that would be ideal for us.”
Tom tells Ingrid and Dirk that, the key thing is to contact your insurance company as renting it out as a short-term or long-term rental may have implications on your insurance cover.
“What you might find is you actually might need a separate landlord insurance policy to cover you. So the really important thing is, once you've decided to do that, is to make sure you let them know so they can ensure that they've got it on their policy for you so you’re covered should anything happen.”
If you're thinking about renting out your own property, it's a good idea to get in touch with your insurer. You’ll need to let them know if you plan to rent your home as a one-off or as a short or long-term rental. In some instances, your policy may already cover you, or in others you may need a separate landlord insurance policy. Your insurance provider can help ensure that you’ve got the right cover in place to suit your situation and help you understand how your policy would respond should something happen while your home is being rented.
“Thanks Tom, that’s been really helpful,” Ingrid says. “Good luck with the search,” Tom replies.
You can watch Ingrid and Dirk’s episode of AA Insurance Location, Location, Location NZ on TVNZ+
New episodes of AA Insurance Location, Location, Location NZ air Sundays 7.30pm on TVNZ 1 and TVNZ+
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