Insurance is not optional when you have a mortgage. Your lender will require it, and they will want to see the policy before they release funds.
When cover has to start
Your policy must be in force from the settlement date at the latest — earlier if your agreement says risk passes to you sooner, which some do. Arrange it as soon as you go unconditional, not the day before settlement.
Your solicitor and lender will both ask for a certificate of currency showing the lender's interest noted on the policy.
Natural Hazards Cover (formerly EQC)
If you have private house insurance that includes fire cover, you automatically get Natural Hazards Cover, funded by a levy collected with your premium. It covers your home for damage from earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami, and storm or flood damage to residential land.
It is capped — currently $300,000 plus GST per dwelling for the building — and it covers land only in limited circumstances. Your private insurer covers above the cap and everything Natural Hazards Cover does not.
- Contents are not covered by Natural Hazards Cover; insure them privately.
- Storm and flood damage to the house itself is a private insurance matter, not NHC.
- You claim through your private insurer, who manages it from there.
Sum insured — the number you must get right
New Zealand house policies are 'sum insured': you nominate the rebuild cost and that is the maximum you get. Use a rebuild calculator or a quantity surveyor rather than guessing from the purchase price — land value is not part of a rebuild, but demolition, consents and professional fees are.
Check availability before you commit
In flood-prone or high-seismic areas, insurers can decline or heavily excess a property. Get a written quote during your conditional period — no insurance means no mortgage.
The other policies to think about
- Contents insurance — separate from house cover.
- Mortgage repayment or income protection cover.
- Life cover, particularly with a co-borrower.
- For unit titles, check what the body corporate policy covers, so you do not double up.
The short version
- Cover must be in force from settlement, with the lender's interest noted.
- Natural Hazards Cover is capped and does not include contents.
- Set the sum insured from a rebuild estimate, not the purchase price.
- Confirm insurability during the conditional period in hazard-prone areas.
General information for New Zealand first home buyers, not financial or legal advice. Rules and lender criteria change — check anything important with your solicitor, your lender or a mortgage adviser. Sources: Toka Tū Ake / Natural Hazards Commission — Natural Hazards Cover; Insurance Council of New Zealand — sum insured guidance.