House Insurance

Hi,

I have a conditional contract on some dirt with a house that was built in the 70's. I approached a well known rural insurer back in December, and they came out and had a look at the house, and prepared an insurance proposal for me that was very acceptable (full replacement, liability cover, reasonable premium, etc).
I had a pre-purchase building inspection performed on the property, which revealed some problems, so I commissioned a different inspector to look at this issues in more detail. In "utmost good faith", I then supplied both building inspection reports to the insurer.

The insurer responded by declining to provide me with insurance for the property [:0], and advised me to ask the vendor's insurance company if they would transfer the current policy to me.

When I went back to the real estate agent, I found out that the vendor's insurer was the same insurer that had declined to insure me. So I went back to the insurer regarding a transfer of the vendor's policy to me and I was again declined - though this time the insurer gave the following reasons:

• Previous water related damage (two burst copper pipes in the concrete floor [repaired] and two small/intermittent rain/ground water leaks into a basement with concrete floor, block walls and pre-cast concrete floor above).
• Two lengths of Dux Qest pipe in the solar hot water system (easy to replace)
• Asbestos cement board soffits, and textured ceiling coating in some rooms that might contain asbestos.

I understand that these sorts of defects are not exactly uncommon in houses in New Zealand. Does anyone else have trouble taking out a new policy on an old house?

Cheers

Did the insurer ask for a building inspection report - or did you just voluntarily provide such?

Haven't ever been asked for one when insuring and have owned lots of older homes, including those built in the 70s. Never even had an insurer ask us about such matters.

I would get the existing homeowner to get the ceiling coating tested before going unconditional (hopefully you've got a clause in there regarding the building report being to your satisfaction).

The insurance company did not ask for a copy of the building inspection reports. Whilst I am not a lawyer, I understand that I (and everyone else!) is obligated to declare all material facts that may affect the risk of a contract of insurance: en.wikipedia.org/wiki/Uberrima_fides

I understand that if you withhold material facts from your insurer, when you later try to make a claim, your claim may be refused if your insurer finds out that you did not tell them about said material facts.

In any case, it's better to have insurance refused when trying to take out a new policy rather than having a claim refused at some time in the future because you failed to tell your insurance company something that you should have...

You are right about disclosure - sometimes what you don't know is a good thing - and these building inspection reports do make things rather official in terms of every little issue. As you say, the cracked pipe was repaired and other matters (aside from the basement issue if still on-going) don't make the building a higher risk in terms property insurance, I wouldn't have thought. The asbestos issue is more a health one, although I suppose that if those materials suffer damage, there is a higher cost to repair.

Insurance is getting quite burdensome. Hope you find an alternate provider!

I think you need to inform your lawyer who is handling your sale and purchase agreement esp. if the same insurer is already in place.

Yes I have heard about pre 1970's housing being knocked back by a rural insurer for the neighbours in the front house, but when they were able to prove legit upgrades had been undertaken by the selling owner, the mortgage and insurance went through without a hitch.

all it took (from my understanding) was a letter from the selling owners of what work they had undertaken, mainly electrical upgrades was the insuring company's concern.

I have to say, it would not have occurred to me to send the building reports to the insurer.

We are unconditional but not yet settled on a 60s house and the house itself was insured no problems (though there were insurance "issues", resolved after a few days of back-and-forth with the bank, pertaining to nearby oil drilling) with Tower. They did not inspect the house or property in person, and didn't with our current property either. Is that a rural insurance thing?

So no, we did not have any problems getting insurance on our 'new' 60s house (or current 100 year old villa).

Ironic that they advised you to ask the vendor's insurance company to transfer the current policy to you but declined to do so themselves!

Our solicitor was helpful in advising us on the best course of action to take to get our insurance hold-ups resolved - if you haven't already spoken to yours it would be a good idea to do so.

Have you asked the insurance company what repair/replacements in the problem areas they would require in order to insure the house?

When we had to renew our insurance last year in July (we were one of the first) I got told by one of the assessors at our insurer (AMI - and I have no issues about naming and shaming!) that once a house gets over 40yrs old they don't really want to know - ours is 1910s (we think, it could be 1920s, or 30s or even late 1800s for all we know) with a large 1978/1979 extension. He was actually quite an informative chap, and made it quite plain that with an old house they would be looking for any reason not to pay. Lack of maintenance (ie rusty screws not replaced) is one excuse for not paying as its preexisting damage. In other words gut the house, replace everything with new, bring the entire structure up to code and we'll happily insure you. Don't gut the house and you take your chances that we will pay out, and if we do pay out then we depreciate based on age (up to a maximum of 60% of the $ value the house is insured for is not paid due to its age - that includes minor damage caused by a fire in the kitchen for instance: up to 60% lost due to it being original, not modern).

The hoops that I had to jump through were amazing, at one point as I'm sitting in their offices going over it all, and the woman is saying what they won't pay out on as its an old house with no major redecoration of kitchen and bathroom, I asked why was I bothering with insurance if they were basically going to take the premiums and not pay out. Her answer was classic "you have a mortgage you have to have insurance, that we won't pay out is your and your banks problem". [:0][:0] So, we're expected to rip out a solid rimu kitchen and install a modern mdf piece of shit if we want any kitchen damage covered, we have to gut the bathroom and install tiles if we want that covered. Oh, and we didn't have any thanks for paying out and replacing the last of the old rubber wires and making the two sub-boards RCD types either. (As our electrician said, we've replaced perfectly good rubber covered wiring that rats/mice don't chew as it clogs their teeth, for modern white wiring that they love to chew...hence we replaced our fuse boards with RCD types at the same time).

And as for their media statements that nothing would change premium wise - ours went up by just under $100 a month. Its my New Years resolution to find a new insurer this year - I just wonder what hoops I'll have to jump through for that.[}][}]

Kilmoon;482044 wrote: When we had to renew our insurance last year in July (we were one of the first) I got told by one of the assessors at our insurer (AMI - and I have no issues about naming and shaming!) that once a house gets over 40yrs old they don't really want to know -

I went into AMI last year to insure a 1950's house just before full replacement was stopped last year, and they didn't ask us any of these questions. They were more than happy to insure. The gist I got (through their terrible communication skills filtered through a general lawyer-like layer of non-committal abstract speak) was that as long as it was maintained and problems weren't caused by lack of maintenance, things would be covered.

They were however expensive, and I eventually went with AA who were considerably cheaper. The impression I get in general from talking to people, is that AMI has gone downhill.

Name123 - oh yeah, they have gone downhill big time now they are really AIG clones. We never had problems with them or the age of the house before the changes to sum-insured last year. In fact they were never really interested in knowing anything before that...but once the changes came in it was completely different.

I have heard (from a friend who renewed in December) that they have got their shit together now they are fully versed in the rules of the new sum-insured policies. But that doesn't excuse the crap I had to go through to renew our policies back in July. This other customer who had heard our horror story and was fully prepared for their own level of shit, was pleasantly surprised, and after explaining why they were surprised passed on to me what AMI said. The gist of it was that they had no real idea what they were doing back in July, and that they learnt on the first customers rolling over, and that I should come back in and be reassessed because it sounded like we'd been dealt with a tad too harshly. Well, blow me down with a feather - that gives me great confidence in their systems...NOT![}][}]

We bought a 1940s stucco house on 2.5 acres 10 years ago. As part of the sale agreement we got a building inspection done. There were a lot of small issues including prior water damage which was then dry and repairs had been made. Mostly it was a lack of maintenance as the owners were getting older. But the so called double garage and workshop failed inspection and we were advised the whole building needed to be demolished and was un safe. The building does lean a bit and had rotten cladding on one wall and some broken windows. We repaired the cladding, fixed windows and made it water tight.

We advised FMG of this and they refused to cover the building itself. The contents are covered for fire or theft but we cant park the car inside as it wont be insured if the building falls. Interestingly this building, 10 years on has survived severe storms, a huge tree toppled and landed on it, several earthquakes, including the ones in July and August last year in Seddon which caused damage to our house piles and on property power pole. It still leans a bit but doesn't look any worse than it did. A neighbour who has lived here all his life says the building will outlast us.

Interestingly with regard to the house, an FMG agent came in and measured the place and was happy to sort out insurance without seeing the written property inspection - the only question asked was when was the house built as if it was prior to 1940 we would need an electrical inspection to check the wiring. In hindsight this is funny as we just had the part of the house that hadn't been re wired done and the electrician was heard to say its a wonder the house was still standing given the state of the old wires, the coating was just crumbling off them.........

And FMG are as far as I know the only company still offering full replacement insurance as well as fixed sum. you can select which you prefer

The age of the house is immaterial in many areas with regard to the electrical wiring. The real question to ask is when did electricity become available. Some places around here didn't get the power on until the 50's and 60's.

It could be worth using an insurance broker. They know the ins and outs and what information to provide, and usually get a good deal as well. They also assist with claims.

Have you tried Farmer Mutual Insurance! It was some years ago & I know much has changed in the insurance market since Chch quakes but back then, I found them excellent for land & buildings cover.
Actually, I now think insurance is a bit of a have" I know Banks require it but for me, once the property is freehold, Im exiting the insurance covers. I have friends whose family (mum & dad and 3 kids) all put in the equivalent sums old premiums into a kitty. It has been going on for 30 odd years is now a massive amount in savings.
After 45 years of paying premiums for all sorts of cover, I now personally believe its just the "fear factor" that the companies are thriving so handsomely on.
Also, after doing a lot of research on Banking and Insurance, Banks, & the insurance companies all go back to the City of London. Guess who owns the dirt the City of London sits on (& I dont mean London City) . If I offer the answer, you wont go digging to find out your selves what the truth is.
Hint,.... its the same family that gave the land for the United Nations to sit on.

Hi,

In the end I tried four different insurers.
Two (including the vendor's insurance) said no.
Two said yes, but with unsatisfactory special exclusions...

Feels like being 18 years old and trying to insure a sports car!

So, the contract will not be going unconditional.

Cheers