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Frequently asked questions about building insurance

Building insurance is one of the most common policies in the insurance market, with plenty of inquiries constantly surrounding its scope and operation. Here are some of the most frequently asked questions about building insurance in New Zealand.

Building Insurance Requirements and Coverages

Building insurance typically covers the cost of repairing or rebuilding your business’s premises if it’s damaged or destroyed. It’s divided into several sections, four of which we will explain in depth:

What Does Building Insurance Cover?

Building insurance usually covers the structure of your building, including walls, ceilings, floors, roofs, windows and doors. It also covers permanent fixtures and fittings, such as baths, toilets and fitted kitchens. Some policies even include external structures like carparks and fences.

Is Building Insurance Mandatory?

While not legally required, building insurance is often mandatory if you have a mortgage on your property. Most lenders make it a condition of their loan that the building is insured for the cost of its rebuild. This insurance is for their protection as well as yours, as it ensures they will get their money back if the property is destroyed.

How is the Cost of Building Insurance Determined?

The cost of your building insurance is calculated based on several factors. These include the location of your building, the size and type of your property, the materials used in its construction, and your claims history. A property that is in an area prone to natural disasters, or made of non desirable materials such as EPS, will usually cost more to insure.

Does Building Insurance Cover Natural Disasters?

Yes, building insurance typically covers damage caused by a range of natural disasters, such as fires, storms, floods and earthquakes. However, not all policies cover all types of disasters, so it’s crucial to check the details of your policy to understand what is covered.

Building Insurance in New Zealand

Uniqueness of Building Insurance in New Zealand

The recent disasters like the Christchurch Earthquakes and Auckland Floods stand as stern reminders of the country’s vulnerability. The Christchurch Earthquakes, one of the deadliest natural disasters in New Zealand’s history, resulted in significant loss of life and property. Likewise, the Auckland Floods caused substantial structural damage to many buildings. These incidents underscore the need for extensive building insurance in New Zealand.

Building Insurance Necessity in New Zealand

While not every business in New Zealand is mandated by law to have building insurance, given the country’s risk profile, it’s highly recommended. Insuring your business premises can safeguard you against the financial implications of restoring or rebuilding after an unforeseen event.

In certain scenarios, having building insurance is a requisite, such as when you have a mortgage on your property. Many lenders require you to have adequate insurance coverage as a condition of the loan agreement. The primary aim is to ensure that the lender’s financial interest in the property is protected, along with safeguarding your investment.

Cost of Building Insurance in New Zealand

The cost of building insurance in New Zealand varies based on several factors like the location, size, and construction material of the building. Given the relatively high frequency of natural disasters, insurance premiums are often higher than in countries with lower risk profiles.

Another crucial component to consider in the cost of building insurance in New Zealand is the Fire and Emergency New Zealand (FENZ) Levy. This levy is applied to all contracts of insurance where the property is insured against the risk of fire. 

How to Buy Building Insurance with Gerrards

When you choose Gerrards for your building insurance needs, we streamline the process for you.

How Long Does It Take to Buy Building Insurance Through Us?

We can get multiple quotes from top insurers in less than 24 hours, providing you with the best coverage options for your building. Once you choose a policy, we send out a certificate, demonstrating that your building is insured.

Building Insurance Certificate

The building insurance certificate is proof of your policy, detailing the coverage, policy number, the insured property, and the duration of the insurance coverage. 

What Types Of Buildings Do We Cover?

At Gerrards, we cater to all different types of buildings. We can provide commercial building insurance, industrial building insurance, body corporate insurance, apartment building insurance and more.

How Much Building Insurance Do I Need?

The amount of building insurance you need largely depends on your property. A registered insurance valuer will be able to determine the rebuild cost of your property for you. 

Building Claims

How Do I Make a Building Insurance Claim?

When you need to make a claim, simply contact us at Gerrards. We will handle the communications with the insurance company, advocating on your behalf to ensure a smooth and successful claim process.

What Are Some Common Building Claims?

A restaurant owner in Wellington had a close brush with disaster when an electrical fault sparked a fire in the building after business hours. Luckily, the fire department responded quickly, but not before the fire had caused substantial damage to the building’s structure, including the roof and interior walls. Thankfully, the owner had building insurance that covered the repair costs.

A retail store located near the coast in Auckland was severely affected during a violent storm. High winds ripped off part of the roof, and heavy rain led to water damage in some parts of the building. Because the owner had comprehensive building insurance, he was able to file a claim and get the necessary repairs done without affecting his business finances significantly.

Christchurch is no stranger to earthquakes, and a small business owner learned that the hard way when a quake caused a part of her building to collapse. The repair costs were significant, but her building insurance covered the expenses, allowing her to focus on getting her business back up and running.

A series of heavy rainfalls led to significant flooding in parts of Hamilton. An auto repair shop was among the buildings affected, with floodwaters causing substantial damage to the building’s foundations and interior. Thanks to the owner’s foresight in securing a robust building insurance policy, the repair costs were covered, saving the business from potential financial disaster.

A community centre in a suburb of Dunedin was vandalized one night with broken windows and graffiti on the exterior walls. The clean-up and repair costs were considerable, but the building insurance policy included cover for vandalism, easing the financial burden of this unpleasant incident.

An owner of a commercial building in Napier was moving a piece of equipment when an accident occurred. A heavy piece of equipment was inadvertently dropped, causing damage to the structure of the building. The repairs were expensive, but the owner’s building insurance policy covered accidental damage, ensuring the incident didn’t lead to a financial setback.

Building Insurance Policy Changes

What Happens if I Need to Change My Insurance Later?

If your building insurance needs change, or you improve or expand your property, you can adjust your building insurance policy to match. However, keep in mind that changes could result in an increase in your premium.

What Happens if I Cancel My Building Policy?

If you cancel your policy, you leave your business exposed to financial risk. You will have to bear the entire cost of any damage or loss to your property.

Compare Building Insurance with Other Policies

Building Insurance vs Material Damage

Building insurance and material damage insurance are essentially the same. Both provide cover for physical loss or damage to your property.

Building Insurance vs Business Interruption Insurance

While building insurance covers the physical damage to your property, business interruption insurance covers the loss of income that you suffers after a disaster.

Building Insurance vs Public Liability

Building insurance covers your property, while public liability insurance protects you against claims for damage or injury caused to other people or their property.

Do you have further questions about building insurance nz?

We hope this guide has shed light on the intricacies of building insurance in New Zealand. However, we understand that every business is unique, and you might still have questions specific to your situation. At Gerrards Insurance Brokers, we’re here to help. If you have any further queries about building insurance, or any other insurance need, please don’t hesitate to contact us. Our team of experienced professionals is always ready to provide personalised advice and solutions tailored to your business.