An embargo by most insurers on new insurance policies for property such as commercial buildings, houses and motor vehicles – which extends from lower North Island to just north of Christchurch – is not expected to be lifted anytime soon.
However, General Insurance Specialist, Jane Seed, said that existing domestic insurance policies are transferable.
“Sellers who have existing insurance on a property or motor vehicle can offer that policy to the new owners. However, without an existing policy, buyers of new properties will struggle to get insurance.”
“One of the problems this creates is that buyers can’t draw-down funds if they don’t have insurance. Another issue is that if a buyer believes that the seller’s sum insured falls short of the replacement value of the property, they may decline the property deal,” she said.
Jane said she did not expect the embargo to be lifted while the aftershocks continue, especially amidst warning that the area is at risk from another earthquake.
“I don’t expect too much of an impact in the property market. Buying and selling may slow down a bit, but so long as people can transfer insurance policies, they should be alright.”
“When the embargo is lifted, insurance may become more expensive, and I think insurers will take a closer look – particularly in a commercial context – at the age and construction of buildings before deciding whether to insure.”
If you would like to talk to a commercial or personal general insurance expert, whether you are in the affected quake zone or not, call 0800 438 238 or click here to email.
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