Effects of change in cover

Press, 23 June 1984, Page 25

Effects of change in cover

Examples of how pro-perty-holders will be affected by the withdrawal of the Earthquake and War Damage Fund cover from flood and storm cover, was given to the non-life insurance industry’s annual news seminar in Wellington this week. Mr Trevor Roberts, executive director of the Insurance Council, spoke of a case in which a house's contents worth $20,000 were a total loss and insurance cover was S5OOO. The insurance firm would pay* out $5OOO, less the normal excess (the first piece of compensation which the person buying the insurance agrees to waive when buying the policy). The and War Damage Commission would pay a further $5OOO. The houseowner would therefore receive a total of $lO,OOO compensation for the $20,000 loss.

If the Earthquake and War Damage Commission had phased out flood cover before the flood, the owner would have received only $5OOO against the $20,000 loss.

The insurance speakers at the seminar pounded home

the message that householders and businesses now had greater need to check their cover because of the fund’s withdrawal. Mr Eric Sherburd, director of a firm of loss adjusters. who was in Invercargill after the floods, told the seminar that it seemed every third Southland person affected was under-in-sured. In the Waikiwi suburb of Invercargill, the contents loss of householders covered by insurance typically ranged from $15,000 to $25,000. This probably meant an upper level of about $35,000 on replacement value. Mr Sherburd said there were some very sad situations among those who had not reviewed their insurance cover, and were grossly under-insured; these had often been elderly people. Mr Sherburd said modern furniture, made of veneer finish over particle board, had been very vulnerable to water damage. It had seldom been possible to clean and restore carpets, or to repair electrical appliances satisfactorily.