These are the places where it's most difficult to insure a house

Tuesday, 3 October 2023

It’s getting more expensive to insure a house and, in some parts of the country, it’s also getting more difficult.

Events like the Canterbury earthquakes and Cyclone Gabrielle have pushed premiums up and forced insurers to rethink how freely they dole out cover.

Christopher Walsh of consumer finance website MoneyHub said insurers used to price house insurance equally based on property size and regardless of its location.

But a jump in the Earthquake Commission (EQC) levy, higher building costs and greater risk of natural disasters have forced a rethink.

“Now, insurers are facing higher costs to insure and are moving to price insurance specific to a property's location and history. These costs are being passed on to homeowners,” Walsh said.

MoneyHub compared the cost of insuring a single-storey, brick and tile property with a sum insured value of $700,000 and found premiums varied significantly around the country, even when sticking with the same insurer.

Here’s where it’s most difficult – and costly – to get your house insured:

Wellington city

Anyone with a basic geographical knowledge of Aotearoa knows our nation’s capital straddles a major fault line.

Because of that, the city faces significant earthquake risks. Should “the big one” strike (experts put the risk of a rupture on the Wellington Fault in the next 100 years at about 10%), Wellington’s notoriously hilly terrain and coastal exposure also ramp up the risk of landslides and tsunamis.

None of that sits well with insurers, and it can cost significantly more to insure a home in Wellington than it would in Auckland.

Insuring MoneyHub’s model home in the Auckland suburb of Mt Wellington would cost $1825 a year with Tower Insurance. Cover for the same home, from the same company, in actual Wellington would cost $3240.

Marlborough Sounds

With intricate waterways, peninsulas, and islands, there’s no denying the Marlborough Sounds are a beautiful part of the country.

But while limited accessibility can be a good thing if you’re looking to get away from it all for a bit, the topography and isolation that make the area so appealing can also make accessibility a challenge in an emergency and ramp up rebuilding costs.

Add in increased flood and landslide risks, and this little piece of paradise becomes pretty problematic to insure.

Whangarei

Cyclones and severe weather in recent years have taken some of the shine off the “winterless north” and insurers are increasingly wary of the risks in the region.

While rising sea levels and storm surges pose a threat to Whangarei and other low-lying areas of Northland, the biggest risk concern for insurers is “slope severity hazards”, like landsides and instability, during heavy rain.

Wider Wellington region

Given its proximity to Wellington city, it’s no real surprise to find Porirua is also built, quite literally, on a fault line. The Ohariu Fault runs right through its centre, while the Moonshine Fault lies to the north-east of the city.

Porirua’s coastal areas are also prone to sea-level rise and storm surges which, coupled with the elevated earthquake risk, make insurers jumpy.

The Hutt Valley is another area at risk of significant seismic and flood activity.

The Wellington Fault runs all the way up the valley to the Tararua Ranges, while the Hutt River follows the fault line south into Wellington Harbour, adding the risk of flooding to the mix.

That’s a recipe for steep premiums and MoneyHub found the annual cost to insure a home in Upper Hutt ranged from $2357 with AMP to $4214 with Initio.

Westport

Built on a floodplain, sandwiched between two rivers and the sea, Westport has taken a hammering from Mother Nature over the last few years.

In July 2021, heavy rain caused significant flooding and forced the evacuation of more than 2000 people from 826 properties in and around the town. Last year, Westport recorded its wettest February in almost 80 years.

The Government has pledged $22.9 million to improve the town’s defences, but until flood protection is significantly improved, insurers won’t be rushing to provide cover.

Hawke’s Bay

Parts of Hawke’s Bay including Eskdale, Wairoa and Fernhill suffered major flood damage during Cyclone Gabrielle.

Many areas have been reclassified by the council and houses across the region have come under increased scrutiny by insurers.

The area also has a history of earthquakes – including the deadly magnitude 7.8 quake in 1931 – which is also a major factor in insurers’ risk assessments.