If you own a house, you have probably become used to being asked to put a figure on how much it would cost to rebuild it.
The country's insurers started to move to "sum insured" house policies from full replacement cover about four years ago. That means that instead of paying out whatever it takes to rebuild a house in the event of a disaster, they now ask homeowners to agree in advance what such a repair should cost.
It provides an element of certainty for insurers, and the reinsurers who provide them financial backing for claims. In the case of another earthquake like the ones in Christchurch, for example, they will know much more accurately the scale of what they might be expected to pay out.
One insurer said it also removed a lot of the negotiations that had previously been common when a house had to be rebuilt รข€“ things such as people wanting the insurer to shell out for top-of-the-range tiles in kitchens and bathrooms. Having an agreed budget limits those conversations.
from
http://www.stuff.co.nz/business/85751022/Insurers-back-down-from-rigid-sum-insured-policies
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