The cost to insure property could go up by more than 50% over the next three months, according to a report from the
NZ Herald.
The prices are going up in order to cover the cost of methamphetamine damage to rental properties, Runacres Insurance Managing Editor David Crick told the
NZ Herald.
“From figures that we've looked at, an overall increase, somebody could [now] be looking at a 50 to 55% increase on their premium for a property that could be worth $300,000 to $400,000,” Crick said.
Fire service and
EQC levies were also pushing up prices – with fire levy prices up by 40% and the levy paid for
EQC which was up by 33%.
“We're finding that because of the increase cost of methamphetamine testing, the fire service levy and the EQC levies are going to dramatically increase the level of housing insurance,” Crick said. "The cost to repair housing from the damage is increasing and insurers have introduced a new cost in the insurance package.”
An increasing number of properties now need to be tested for drugs prior to being insured, he said. “When people look at the actual full cost for insurance now, there could be people that may take the chance to self-insure the property, which would be the wrong thing to do.”
According to the
NZ Herald, Crick said the Insurance Council of New Zealand and others were looking to talk to the government about the increases and see if they could be challenged.
Jo Mason, chief executive of NZbrokers, told the
NZ Herald that methamphetamine cover on rented homes would increase by up to 56%.
“If we take the example of a 1970s farmhouse occupied by a farm worker with a replacement value of $230,000 which cost $944 to insure eight months ago, this will rise to $1,478 in November – an increase of 56 per cent,” Mason said. “While the fire service and EQC are essential factors in managing the risk of home ownership, it's a real concern to see that this increase is going to hit many of those in lower value housing disproportionately higher.”
Related stories:
Levy hikes will spur insured homeowners to shop around - Bank
Meth claims cost IAG $14 million a year
