High-tech house data set to aid at-risk Kiwis with home insurance estimates

Homeowners now have to estimate how much it would cost to rebuild their damaged home in the event of disaster.

Homeowners are at risk of being under-insured because of changes that make insurance clients estimate how much it would cost to rebuild, the Earthquake Commission says.

But help is on the way in the form of developing technology that combines "street view"-type visuals, topography, location and building cost information to enable an accurate estimation of rebuild costs.

"We know of companies that are talking to insurers that have used Google-type vehicles to photograph a large number of properties in New Zealand ... read the lie of the land, have algorithms that can calculate rebuild costs down to the last nail, and can update different consent requirements," said Tim Grafton, chief executive of the Insurance Council.

"It is getting not too far away where the ability to provide a pretty good estimate of rebuild should be more readily available."

Changes introduced in the wake of the Canterbury earthquakes at the insistence of global re-insurers mean customers must now say how much it would cost to rebuild their property to the same standard.

Previously, homes were insured for an unspecified full replacement cost, with premiums based on what the insurance company said the house was worth. Insurance companies now provide online calculators to help figure out rebuild costs, but say that those who struggle to use them should hire a professional.

Earthquake chief executive Ian Simpson said the move to "sum insured" could mean some New Zealanders were under-insured.

There had been an effort to educate homeowners about the changes and risk from insurance companies, he said, and it would be something the commission would also consider.

"I think as we look at our public education strategy for the coming years, we need to think very carefully about whether that is a significant part about what we do as well, because I think it is a risk for homeowners across the country."

Mr Simpson and Sir Maarten Wevers, the chairman of the Earthquake Commission's board, appeared before a parliamentary select committee yesterday for the commission's annual review.

Labour MP Clayton Cosgrove asked if the commission - which provides "first loss" cover against damage to residential homes from earthquakes and other natural disasters - was aware of growing concern that people were under-insuring.

That was not intentional, but because they were relying on online calculators and advice which did not give accurate results.

Mr Cosgrove said he knew one case where a homeowner later paid $1000 to have an assessor estimate the rebuild cost, and found they were 80 per cent under-insured.

If under-insurance was significant, the Crown could come under pressure to help meet costs for homeowners, "if you have another big one and all of a sudden you think you are insured to rebuild your four-bedroom house and you can afford a one-bedroom tree hut".

Mr Grafton said if people were under-insured it was likely to be by between 10-15 per cent. It was recommended to pay a quantity surveyor for an estimate if there was uncertainty.

Insurance changes

• Homeowners are now being asked to state the dollar amount they want to insure their home for, up to a sum insured. If a house is destroyed the sum insured is the maximum the insurer will spend to rebuild a house.

• Online tools exist but estimating rebuild costs can be tricky. The Insurance Council says imminent technology will combine databases with visual, topographic and other information to accurately provide rebuild costs.