More on the new “sum assured” house insurance policies

Diana Clements, writing in the New Zealand Herald today (here), has an article about the future of property insurance as companies go along the Sum Assured or Fixed Sum route. This is the future for all of us, and has very serious implications for everyone with a house insurance policy.  The article is an important read as preparation for when you have to renew your insurance policy during the year.

A few points not evident in the article:

  1. there is no clarity yet about what the technical terms in the new policies will mean. There may be a wide difference between insurer and policy holder as to what the policy document will mean in practice. An ideal scenario for a plain English policy document approach.
  2. there is no certainty that insurance companies will accept the value of the agreed sum should the property be damaged or destroyed. Christchurch’s post-earthquake experience shows that some insurers will endeavour to find points to re-interpret or dispute, to reduce the cost of the pay-outs they have to make.
  3. there is no certainty that the new policies will give claimants sufficient rights to protect their interests should a dispute arise.
  4. the article discusses the role of the Insurance and Savings Ombudsman in neutral and uncritical terms, missing the point that the ISO has been relatively ineffective in the Christchurch situation.

There are two previous post on this form of insurance, for AA insurance here, and IAG plus VERO here.

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