Insurance Council Warns:

Many Building Owners are Under-insured

In the last two years New Zealand has seen some significant increases in building and plant replacement costs due to rising labour, compliance and material costs.

The building boom has meant that the supply of labour struggled to meet demand, and therefore labour costs have increased. The cost of building consents have nearly doubled due to the tightening up of the Building Act following the leaky building problem, and materials such as steel & cement have risen in price, says John Lucas, Insurance Manager of the Insurance Council.

John Lucas says that many property owners have fallen into the habit of not obtaining annual insurance valuations, and therefore are relying on valuations that could be two or three years old. Property owners risk being under-insured, especially when building costs have increased 25% or more over the last 2-years, and their building replacement valuations are not current.

Specialist plant used in New Zealand's industry is at risk of being under-insured if new valuations are not obtained annually. Plant costs have increased due to rising oil and steel commodity prices. If there is a significant fall in the New Zealand dollar this year, this may add to the problem, says John Lucas.

Businesses that are under-insured run the risk of being caught short should a serious loss occur, which could have flow-on effects to the rest of New Zealand's economy.

The Insurance Council recommends that building and plant owners obtain updated insurance valuations every 12-months from a registered valuer.

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