It’s wise to do a ‘health check’ on your insurances if you’re closing in on retirement, or have already given up work. Tim Grafton, chief executive of the Insurance Council of New Zealand, explains why it’s important to check your insurance covers you for what you need it to, during this period in your life.
Check and update your house insurance
When it’s time to retire, many people sell their larger family homes and downsize to something more modest and easier to manage. If you’ve done this recently, you’re no doubt familiar with calculating your sum insured.
If you haven’t moved recently, you should check that your sum insured is enough to cover the cost of rebuilding your house and outbuildings from the ground up, should you suffer a total loss. In fact, you should check your sum insured every year.
Sum insured calculators
Most insurers have sum insured calculators that will do the bulk of the assessment of your house for you. These calculators take into account the price of materials and labour, as well as specialist services, such as quantity surveyors and architects. As these costs change each year, it’s important to regularly update your sum insured. That way if the worst happens you have what you need to get back on your feet.
Consider your contents
If you’ve downsized your house, you may have downsized the amount you keep in it, too. Or possibly you recently bought some new furniture or jewellery. No matter what your situation, you should review your contents insurance cover annually. As time passes, we get rid of items we’ve previously owned and purchase or are gifted new ones. All these incomings and outgoings can change the value of contents you need to insure.
Use sum insured calculators on insurers’ websites to get an estimate for the value of your possessions. And while you’re at it, remember to check what items should be specified under your policy and get updated valuations for them. Valuations for specified items should be updated annually to ensure they keep up with the price of precious metals, spare parts, and changes in valuation technology.
And what about the car?
Cars devalue year on year, so it makes sense to re-evaluate how much your car is insured for each year. If your policy states your insurer will pay you market rate, do some research on online sales sites and make sure the listed market rate is accurate. Your insurer won’t pay more than the going market rate at the time of an accident, even if you’ve insured the car for more.
If your policy contains an agreed value, this is the maximum your insurer will pay regardless of market rate. If this is more than the market rate for your car and you’re looking to reduce your premiums, you could consider reducing this.
First published 14 May 2018
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