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Understanding your home sums insured

When you first take out home insurance, you’ll be asked to specify the total amount it would cost to rebuild your home. This includes the cost to rebuild your home to the same size, specifications, and quality. It also includes things like fences, driveways, special features (e.g. retaining walls or swimming pools over the amount specified in your policy), demolition, debris removal, compliance and professional fees. All costs should include GST. This is known as your ‘total sum insured’.

Your total sum insured is the maximum amount IAG New Zealand Limited (IAG) will pay, in  most cases, after any applicable excess has been deducted.

What to include in your total sum insured

If your home is destroyed by a natural hazard, or sustains significant damage from a major event like flooding or fire, it may be determined to be a total loss. You want your total sum insured to cover all costs to avoid having to pay anything yourself. Your total sum insured should reflect the estimated maximum amount it would cost to repair or rebuild your home, including consideration for how costs could change over time (i.e. inflation).

Your total sum insured is an amount you choose. It should include:

  • your home sum insured (including special features e.g. retaining walls and swimming pools over the amount specified in your policy wording)
  • the sum insured for any special features that are over the amount specified on your policy wording.

You’ll need to tell IAG the rebuild value of your home without its special features, and the value of those features, to make sure you have enough cover for both. 

Home sum insured

Factors to take into account include:

  • cost to rebuild your home
  • demolition costs
  • council consents and other professional fees
  • building costs
  • labour costs
  • the floor area of your home
  • fixed floor coverings e.g. carpet
  • land slope
  • construction materials
  • quality of materials and finish
  • fixtures and fittings e.g. baths, toilets, ovens, heat pumps
  • number of storeys in your home
  • your home’s design e.g. villa, bungalow, contemporary, one-off architectural
  • outbuildings e.g. detached garages and carports, granny flats
  • driveways, decks, paths, and fences
  • public utility services e.g. power and telephone lines, supply and wastewater pipes
  • all retaining walls up to the amount specified on your policy wording
  • bridges, culverts, permanent fords or dams, up to $15,000
  • a permanently fixed swimming pool including its necessary equipment such as pumps, up to the amount specified on your policy wording.

Special feature sums insured

Home insurance policies have limits on some items. If yours are worth more, you can list them on your policy as a special feature, with their own sum insured amount. Certain features, like cable cars or jetties, won’t be insured unless listed on your policy with a separate special feature sum insured amount.

Special feature sums insured include:

  • all retaining walls over the amount specified on your policy wording
  • a permanently fixed swimming pool and its necessary equipment such as pumps, that are over the amount specified on your policy wording
  • a bridge, culvert, permanent ford or dam over $15,000
  • a wharf, pier, landing or jetty
  • a cable car and its associated equipment.

Check your policy wording for everything you need to consider in calculating your total sum insured.

Covering shared assets

If you have a cross-leased property, you’ll need to consider how to cover shared assets such as driveways, fences, and retaining walls. Check your property’s title documents for reference to a ‘plan of flats’ (or similar) that sets out the various areas the cross lease applies to. If you’re still unsure, talk to your legal advisor. 

Body corporates must consider all the units in their multi-dwelling property as well as any common property.

Estimating your sum insured

You can use the Cordell Sum Sure calculator to get an estimate of the cost to rebuild your home. This is an independent tool provided by CoreLogic NZ Limited, and not BNZ or IAG.

The estimated rebuild cost is a guide only, and is not meant to replace a professional valuation or quantity surveyor estimate. It may be useful to get a professional to assess your property. This is recommended for large homes (more than 500sqm), high-value homes (more than $2 million) or architecturally designed homes.

The figure is based on information gathered throughout New Zealand from third party organisations, such as your local council and other core industry suppliers. The calculator takes into consideration anticipated construction costs, allowances for professional fees, demolition, removal of debris and GST.

The calculator doesn’t take into consideration some special features or future changes to building costs (i.e. inflation) over your policy. You should review it regularly to make sure your total home sum insured remains up to date. 

Using the Cordell Sum Sure calculator

Once you’ve entered your address, the calculator will prepopulate information about your property. This is a starting point for you to add additional features that need cover, or any renovations you’ve made.

Not all the prepopulated information provided by the calculator will necessarily be accurate for your home. You’ll need to decide whether the estimate is appropriate, or if you should amend it based on your knowledge of your home and other permanent structures or special features on your property.

If you can’t find your address, and it includes a unit number e.g. 23a, try different variations such as 1/23 or 23/1. If you still can’t find it, the calculator may not have details of the property, it may be a new subdivision, or the calculator is not suitable for the property address. 

Don’t worry if the photo doesn’t match your house. The photo might be different because your house is new, or the photo is outdated, a boundary shot, or a street view. The property details are based on the address, not the photo. 

If you’re in the Canterbury area and your property has been identified as having a CERA technical category rating (foundation requirements), then an allowance will have been made for this. This is indicative only, and you should seek specific engineering advice for a reliable estimate of any costs. 

The Cordell Sum Sure calculator assumes an average floor area for any garages, sheds, or pool houses. If you have a particularly large, detached building, you might want to select a sum insured higher than the calculator’s estimate.

The calculator uses typical building costs for standard finishes to provide an estimate. If your home has significant special features and fittings, was built to a superior standard, is very large, is a historic or heritage house or has a high value, consider using other options to establish a better estimate of the rebuilding cost such as a registered property valuer or quantity surveyor.

Try the Cordell Sum Sure calculator to estimate your sum insured.

Keeping your total home sum insured up to date

It’s your responsibility to set the total home sum insured when you apply for insurance. It’s important to regularly review your sums insured to make sure they’re up to date and that you have the right level of cover.

A good time to review your policy is when it comes up for renewal. It’s also a good idea to review your sums insured if you complete any renovations, as these may change how much it may cost to repair or rebuild your home after a loss.

IAG may adjust your sums insured at renewal to factor in rising building costs and changes in the market. However, these adjustments don’t account for your unique situation such as any changes you’ve made to your home since you last set your sums insured. Nor will these adjustments necessarily reflect the actual change to the replacement cost of your house.

If you set your total home sum insured too low, you may not be able to repair or rebuild to the same size and quality, or you could find yourself paying for some of the repairs or rebuild costs yourself.

Get in touch

You can review and update your sums insured at any time by logging into your BNZ app or Internet Banking and navigating to the IAG dashboard.^ How to manage your insurance online

You can also talk to the IAG team about your total home sum insured. The team is available Mon-Fri, 8am-8pm, Sat-Sun 8.30am-5pm.