Insurers ripping off victims

MONDAY, JANUARY 31, 2011

Insurers ripping off victims

I couldn't believe it when I read this in the news yesterday http://www.stuff.co.nz/business/industries/4601859/Quake-hit-home-insurance-rip-off. If it isn't bad enough that some 3000 homes in Christchurch are in for the skittle as far as being unrepairable are concerned - but it seems the victims insurance companies what them to continue paying the previous premiums - and in at least one known case, they've increased. Excuuuuse me?

When insuring something, you have a couple of choices. You either insure it for the market value at the time, or insure it for full replacement value. In the former instance, that's what you think the market thinks it's worth - and usually less if the insurance companies have to pay out. In the latter, you do get replacement value - but in terms of a home, I know we'd get something built to the 130sqm home we have today - but certainly not using the beautiful rimu and matai timbers this solid house was created from. No insurance company is going to pay to source that, so the 'replacement' is an anomaly anyway.

To tell anyone that their property insurance has to stay the same or increase after such as event as the November 'quakes is not only ludicrous, it's absolutely unethical. To be blunt, it's sheer theft.

I do not believe for a minute that no-one who has been faced with this has not said to their insurers, "Look, I insured my home for the value of x amount of dollars. It's now not worth a quarter of that, so I need to adjust the premiums to reflect what it is now worth." Just in case, of course, the fence does happen to fall onto the neighbours place and cause damage as some pea-brain from IAG was quoted as saying. These days, the cost of the excess would be more than the cost to repair the fence, so using it as an example was more than a bit precious.

For those homes that were crumpled to non-entry status, what is the point of continuing to insure it? It is not useable for the purpose for which it was built, it has to be demolished - and any materials from it do belong to the insurance company, not to the owner, same as a written off or pinched car. Land doesn't need insuring - it either is there, or it is not. And if not, well, the EQC supposedly look after that.

So what bright spark with a criminal mind came up with this idea? Whoever it was, I've got one thing to say... are you sleeping well at night?