7 Essential Types of Coverage in Residential Property Insurance 

Residential property insurance in New Zealand typically includes several crucial coverage components, each protecting different aspects of your property: 

1. Building Structure Coverage A core component of residential property insurance, building coverage protects your home’s physical structure. This includes permanent fixtures like kitchen cabinets, bathroom fittings, and built-in wardrobes. Coverage extends to repair or rebuild costs following insured events such as fire, storm damage, or other unforeseen incidents. 
2. Contents Coverage While often purchased separately, contents insurance protects your personal belongings within the home. This includes furniture, appliances, clothing, and valuables. Understanding the difference between replacement and indemnity value is crucial for contents coverage to ensure adequate protection for your possessions. 
3. Liability Protection Property owner’s liability coverage protects you financially if someone is injured on your property or if your property causes damage to someone else’s possessions. This essential coverage can help with legal costs and compensation payments if you’re found liable. 
4. Natural Disaster Coverage Working alongside Natural Hazards Commission coverage, private insurance provides additional protection against natural disasters. While the Natural Hazards Commission covers the first $150,000 (plus GST) of damage, private insurance covers amounts beyond this cap, ensuring comprehensive protection for your property. 
5. Temporary Accommodation If your home becomes uninhabitable due to an insured event, this coverage helps with temporary accommodation costs. This includes rental expenses and sometimes additional costs like moving and storage while your home is being repaired or rebuilt. 
6. Landscaping and Outdoor Structures Coverage for external features like fences, driveways, retaining walls, and gardens varies between policies. Understanding these limits is particularly important in New Zealand, where outdoor living spaces are integral to many homes. 
7. Hidden Gradual Damage Some policies include coverage for damage that occurs gradually over time, such as water damage from hidden pipes. This coverage often has specific limits and conditions, making it important to understand your policy’s terms. 

Natural Hazards Commission and Private Insurance Integration 

Understanding how Natural Hazards Commission coverage works with your private insurance is crucial for New Zealand property owners. The Natural Hazards Commission provides the first layer of natural disaster coverage, including: 

• Earthquake damage 

• Natural landslips 

• Volcanic eruption 

• Hydrothermal activity 

• Tsunami damage 

• Storm and flood damage (to residential land only) 

Your private insurance policy then provides coverage beyond the Natural Hazards Commission’s cap, creating a seamless protection system. When making a claim involving natural disaster damage, your private insurer typically manages the entire claims process, coordinating with the Natural Hazards Commission on your behalf. 

Determining Adequate Coverage Levels 

One of the most critical decisions in residential property insurance is determining the right amount of coverage. In New Zealand, this typically involves choosing between sum insured and indemnity value coverage options. 

Sum Insured vs Indemnity Value Coverage 

Sum insured coverage, the most common option in New Zealand, requires you to specify the amount needed to completely rebuild your home. This figure should include: 

• Construction costs 

• Professional fees (architects, engineers) 

• Demolition and debris removal 

• Compliance costs with current building codes 

• Inflation adjustments during rebuilding 

Indemnity value coverage, alternatively, pays the current value of your property, accounting for age and wear. While typically less expensive, this option may leave you financially exposed if you need to rebuild. 

Professional Valuation Importance 

At Gerrards Insurance Brokers, we strongly recommend obtaining a professional property valuation to determine accurate coverage needs. A professional valuation: 

• Accounts for local building costs 

• Considers unique property features 

• Identifies special architectural elements 

• Assesses current building code requirements 

• Evaluates site-specific construction challenges 

Regular revaluation ensures your coverage keeps pace with changing building costs and property improvements. 

Common Coverage Questions and Scenarios 

Coverage During Renovations 

When renovating your property, standard insurance policies may not provide adequate coverage. Renovation work can affect your insurance in several ways: 

• Some policies suspend coverage during major renovations 

• Additional coverage might be needed for building materials 

• Liability risks increase during construction 

• Unoccupied property clauses may apply 

Always inform your insurance broker before starting renovations to ensure appropriate coverage remains in place. 

Holiday Home Considerations 

Holiday homes require special attention in terms of insurance coverage. Key factors include: 

• Extended unoccupied periods 

• Security requirements 

• Regular maintenance expectations 

• Rental use implications 

• Location-specific risks 

Rental Property Requirements 

Investment property owners need specific coverage considerations: 

• Landlord’s insurance features 

• Tenant-caused damage protection 

• Loss of rental income coverage 

• Additional liability protection 

• Body corporate requirements for apartments 

Body Corporate Implications 

For apartments and units, understanding body corporate insurance is crucial: 

• What the body corporate policy covers 

• Unit owner responsibilities 

• Coverage overlaps and gaps 

• Common area liabilities 

• Cross-lease considerations 

Making an Informed Coverage Decision 

Working with Insurance Brokers 

As independent insurance brokers, Gerrards offers several advantages: 

• Access to multiple insurance providers 

• Objective advice on coverage options 

• Local market knowledge and expertise 

• Claims advocacy services 

• Regular coverage reviews 

Documentation Requirements 

Maintaining proper documentation helps ensure smooth claims processing: 

• Detailed property inventory 

• Recent valuations 

• Improvement records 

• Maintenance history 

• Photo documentation 

Premium Factors 

Understanding what affects your premium helps in making informed decisions: 

• Property location and features 

• Construction materials and age 

• Security measures 

• Claims history 

• Natural hazard exposure 

Risk Mitigation Strategies 

Implementing risk mitigation measures can both protect your property and potentially reduce premiums: 

• Regular maintenance programs 

• Security system installation 

• Water leak detection systems 

• Storm preparation measures 

• Fire safety equipment 

Next Steps for Property Coverage 

Securing the right residential property insurance coverage requires careful consideration of your specific circumstances and needs. At Gerrards Insurance Brokers, we understand New Zealand’s unique insurance landscape and can help you navigate these important decisions. 

For a personalised assessment of your property insurance needs, contact our experienced team at Gerrards Insurance Brokers. We’ll help ensure your coverage aligns with your property’s specific requirements and provides comprehensive protection for your valuable asset.