Homeowners already facing rising insurance premiums are being warned that soon their policies may not cover the full cost of rebuilding their homes if they are destroyed.
Fixed-cover policies are common overseas, and used to be in this country 20 years ago, before competition between insurers led to their being replaced by full-replacement policies.
The industry says the change will come in over the next 12 to 24 months, with future coverage likely to be based on government valuations.
Insurance Council chief executive Chris Ryan says the change could become commonplace as policies come up for renewal over the next couple of years.
"It is not due to a lack of availability of insurance," he says. "It's more that reinsurers are asking for more specifics about what is being insured and how much it will be worth. I think people should see it as possibly an improvement."
Mr Ryan says some policyholders could pay less in premiums with the change.
Equity risk seen by Consumer NZ
Consumer New Zealand says however that it could put at risk the equity of those unlucky enough to lose their homes, as the cost of rebuilding is invariably higher than a house's valuation.
Insurance specialist George Keys says the only way to get total cover is to get an independent qualified professional to assess how much it will cost to replace the property from the ground up.
He says insuring to meet the value of a mortgage or the government valuation is not good enough.
