Sum insured evening...
.....You might be in danger,
You might be in danger,
Of being under-insured
And somehow you know,
You know even then,
You never can win when you deal with insurance men (or women).
Well as usual the insurance companies, or protection rackets as I like to call them, have found another way to milk the average Kiwi using fear tactics and a massive cartel.
As home owners we have already had to absorb large increases in our premiums because these crooks took a hit in the Christchurch earthquake. Why somebody who has built their house on solid ground as opposed to mush should have to subsidise those who are living in danger central beats the hell out of me. Mind you, insurance companies have been doing this for years. The good drivers keep experiencing hikes in their car policies because of the clowns who couldn’t drive a nail and the careful people also see their personal effects policies hiked up because of the dimwits who leave their doors unlocked.
So I guess we should not be surprised the insurance companies are now requiring us to try and work out how much it would cost to totally replace our houses should they be destroyed.
The difficulty is that few of us would have a clue about how much this might cost and furthermore what it might cost today is hardly likely to bear much resemblance to what it will cost in 5, 10 or 20 years time. So guess who is likely to be the loser?
The way I see it we will be buggered whatever we do. Since so few of us would have the knowledge or skills to accurately assess the cost of replacing our house we will be forced to either use one of those on-line calculators or spend $1000 or more on an expert to asses it for us. But even if we can afford to do that, the bottom line is that we will be stuck with that valuation.
If that valuation turns out to be less than the cost of replacement many people will find themselves unable to replace their homes. The only way I can see that would enable people to avoid this sort of situation would be to over-insure them. The obvious down side of doing that would be a little matter of one’s signature at the bottom of the policy attesting to the truth of its contents. The worst-case scenario arising from that might be insurance companies later relying upon that to decline claims based upon an over valuation. Even the best case scenario would not be good, because they would simply adjust the payout to match the actual cost leaving the insured in the position of having overpaid premiums based upon a higher level of protection but not actually getting that level of protection.
This is another example of how the powerful agencies manage to dominate the average bloke. They can trade on our fears to make us part with often more money than we can reasonably afford to protect ourselves against something that might never happen. While most of us will never have to claim on our policies, few of us can afford to be in a position where we need to but have no cover. The parallels with organised crime are difficult to miss.
The smart thing to do would be to build up a stash of money for yourself to cover such an event, but who has the dough to do that? In any case that wouldn’t be an option because the banks are in on this as well. As most people own their home with a mortgage over it and the lenders always insist upon the property being insured we are forced to go along with this new system.
While I am fully aware that this ‘sum insured’ system has been in place in other countries for donkeys’ years I still don’t accept that the change was necessary in New Zealand. After all these insurance companies have been making money hand over fist forever. None of them operate out of a caravan or a portacabin. None of their CEOs or board chairmen are on the minimum wage. All of them loan out the money we entrust to them almost before they get it and are able to access all the most lucrative investments that can turn a dollar into five almost literally (I’m being careful with my use of that word here, Derek) overnight.
It leaves the humble home owner with no other option but to go along with the latest outrageous imposition by the insurance companies. It’s not as if you can simply shop around until you find one who will give you a better deal over this; they are all in cahoots, or as we doctors call it - a cartel.
I know this much. When I win Powerball I will immediately cancel all of my insurances.