4 Costly House Insurance Mistakes To Avoid

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22 Sep 4 Costly House Insurance Mistakes To Avoid

When it comes to protecting your biggest investment with house insurance, knowing what mistakes to avoid is just as important as knowing what to look out for in house insurance cover. To avoid having to pay for costly repairs, or even a rebuild of your home, in the event of a disaster or an unexpected event, ensure you avoid these 4 costly house insurance mistakes.

1. Not insuring your home correctly

One of the biggest mistakes that homeowners can make is insuring a home for its market value rather than for the cost of rebuilding. When taking out a house insurance policy, homeowners will be asked to specify a Sum Insured for their home. This means if your home is damaged or destroyed, your insurer will pay out no more than the Sum Insured amount. As such, your Sum Insured should be based on how much it would cost you to rebuild your home in today’s marketplace using similar materials – no matter what the real estate market is doing. Under-insuring means you may not have enough cover to replace all the items under your policy should a loss take place. Over-insuring can mean unnecessarily expensive premiums. What’s more, you can’t hold the insurer liable if you get the Sum Insured amount wrong.

If you don’t know how much it would cost to rebuild your house, there are two ways to value your property:

  • The Cordell Sum Sure calculator is a good place to start- just enter your address and check the property details listed. Remember to take into account other items on your property, not just your house. Please note that this calculator only provides an estimate and the financial decision is yours. You can change the number if you think it’s not correct.
  • To get a more accurate number, you can pay a qualified valuer, quantity surveyor or licensed builder to provide an estimate. This might be a better option if your house has special features.


Once you’ve set your Sum Insured, it’s important to keep it up to date. It’s a good idea to review your insurance each year to make sure the Sum Insured is still appropriate for your house. You should also check and update your Sum Insured once your improvements are done – especially when renovations add great value to your property.

2. Not choosing the right excess

Some insurance policies may allow you to pay a higher excess in the event of a claim, with lower monthly premium payments. On the flip-side, you’ll pay more excess each time you do make a claim.

Paying a higher excess for a lower premium is ideal for homeowners who prefer to avoid making claims on smaller losses – instead repairing these at their own cost – and only claiming higher cost losses. It makes sense then to choose a policy excess at the point at which it becomes a struggle for you to make the excess payment.

For example, if you’re comfortable contributing the first $2,000 in excess each time you claim, you would only claim for losses greater than $2,000. Anything costing less than this amount, would be repaired or replaced at your own cost. That way your monthly premiums are reduced which could save you in the long term.

Before you choose a higher excess option, it’s important you compare house insurance policies and get sound advice from your Insurance Adviser so that you’re not paying extra for things you don’t really need.

3. Selecting an insurance company by price alone

When looking for an insurance policy, price should not be the only factor to consider. It’s worth noting that some policies are cheaper because the coverage is less comprehensive. Insurance is about getting you back on track when the worst scenario happens. What’s the point of having insurance if you have to pay out of your own pocket every time the unexpected happens?  As Max Insurances, we understand that insurance policies can be complicated, and we really want to work with you to help you understand what level of cover you need, and make sure you are aware of the policy terms, conditions and exclusions. With access to an extensive panel of trustworthy insurance providers in NZ, we can compare heaps of policies to help you find the best insurance cover at the best price.

What’s more, we’re not just there at the beginning, we also make sure we are there for you at claim time if need be. Providing our customers with maximum service at minimum fuss is what we do, and we always make sure that we go that extra mile for all our customers. In the event of a claim, we can help liaise with the insurer on your behalf and assist you through the whole process to ensure a fair and timely outcome.

4. Not maintaining your home properly

Home maintenance is vital not only for improving your home’s value and appeal should you need to sell, but also when it comes to insuring your home.

From an insurance perspective, some insurance policies won’t cover gradual damage and may only include coverage for losses which are “sudden and accidental”. Which means that slow leak in the roof causing damage over several months may not be covered in your house insurance. Some insurance companies may offer to cut premiums by a certain amount if homeowners install a smoke detector or burglar alarm.

To keep on top of general wear and tear around your home, regular maintenance and repairs are needed. That means repairing or replacing items that are affected by corrosion, rust, rot, mildew or mould as soon as they occur to avoid long term damage. If you’re struggling to find the budget for repairs to your home, talk to Max Loans about a home improvement loan – a fast and easy finance solution to cover the cost of repairs around the home, no matter how big or small.

And check out these home improvement tips that can turn your home into a place your family won’t ever want to leave.

Remember to let your insurer know if you’ve made improvements on your home since you last took out or renewed your insurance policy, to ensure your home’s sum insured accurately reflects and covers these improvements.


For most people, the home is their most valuable asset. So it makes sense to insure it correctly. House insurance is designed to cover you for sudden accidents and damage to your house, from burst pipes to the cost of a total rebuild. But you may not have enough cover, the right excess, or finance to properly maintain your home.

Find out how Max Insurances can help you compare and find the right house insurance cover to fit your needs and budget, by contacting our team today.

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