# Home Insurance

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**IMPORTANT:** Be 100% sure the property can get comprehensive home insurance *before* making any bid or offer on it!
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## Insurance is mandatory and critical

Home insurance is a mandatory condition of finance from any lender. You must be 100% sure that you can get insurance on the property before you make any sort of offer on it (including unconditional bids or conditional offers). I cannot stress this enough.

**Auckland floods warning:** Many properties in Auckland have "Natural hazards" listed on their LIM reports, and many insurance companies are now excluding coverage for natural hazards or overall insurance coverage. Be incredibly careful when evaluating properties, as even slight omissions on your part could be a very expensive insurance mistake.

## Get the online quote sorted before

The easiest way to organise insurance is to go to one of the insurance websites, get a quote and have it saved. The day before you go unconditional or on fall of the hammer, take out the insurance policy. This is a good way to ensure you have coverage and there's no issues.&#x20;

## Insurance Brokers

In my experience I have found insurance brokers to be next to useless for a single home insurance transaction, and don't forget their incentive structure is tied to certain companies. The easiest way for you will be to organise insurance directly with a provider, but if you have existing consolidations, it may not be a bad idea.

## Insurance certificate and bank

Not a big deal, but when you take out your insurance policy, you have the option to register the interest your bank has on your property. Do this once you arrange your mortgage - you can take out an insurance policy without this, and amend it later to add in the bank once you sort out finances.

## Re-build value

After the Christchurch earthquakes, insurers now insure you for a sum-assured value that you determine, generally based off the Cordell-Sum system. It's really important you consider how much insurance coverage you require for your personal circumstances - don't forget about the cost of rebuilding a property after a natural disaster when everyone else is trying to do the same.&#x20;

## Insurance exclusions

Be really careful about any **exclusions** in your insurance policy. For example, some insurers exclude coastal erosion - if you can see the ocean from your house, congratulations and commiserations, because there's a chance the ocean swallows your house up, or your house slides down into it - and insurance won't care. Read your coverage carefully.

## Self-Insurance

This is solely my opinion, but if you reach a point where you are mortgage free and have sufficient net worth, you are not legally or mandatorily required to have insurance on your house - you effectively "self-insure". This saves the premium costs, and you bear the risk. Many in the insurance business will violently oppose my opinion here, but it's what I've done for my properties - putting my premiums into another investment fund, and if something does happen, leveraging it. Bear in mind third party risk too, as if you have a large tree that falls over on your neighbours house without insurance, you'll need to cover their losses - and if they have a $20 million house, you're on the hook for that.
