18-06-2012
Heritage properties face 500% increase in insurance bills
Landlords.co.nz
Owners of heritage buildings are being warned they may find it hard to get insurance - and if they do, it will come with a high pricetag.
By Susan Edmunds
Most affected will be Auckland suburbs such as Ponsonby, Mt Eden, Grey Lynn and Remuera, says James McGhie, of insurance brokers Apex General.
He said many of the commercial buildings in those suburbs were built before 1935 and would be hit by insurance premium increases of up to 500 per cent.
But McGhie warned that even if landlords themselves could pay the premiums, they might find it hard to pass them on to tenants.
He said Ponsonby Road would be heavily affected as there were lots of old, wooden buildings. Also under the spotlight would be reclaimed land in lower Queen Street and Wellington's Lambton Quay.
A change in insurance criteria means premiums will now be negotiated on a more case-by-case basis. "What this means is that those people who are applying for insurance will be required to provide much more information than they've had to previously. Basically you're starting to see insurers begin to select properties suburb by suburb depending on levels of risk."
McGhie cited an example of a 1910 commercial building in Auckland's Fanshawe Street. Two years ago its premium was $7286 plus GST. The building has now sold, and the premium for its new owners is $45,657 plus GST.
Buildings constructed between 1936 and 1965 are likely to have premium increases of more than 50 per cent.
McGhie said the new pricing rates would increase the further south the property was. Wellington and Christchurch would be the most difficult to insure. In these two areas it was almost impossible to change insurers as they were reluctant to take on new risks because of reinsurance capacity issues, he said.
Residential property owners could expect premium increases of 30 per cent.
Landlords wanting insurance would need very detailed information including Geotech reports, earthquake strengthening reports, and property construction surveys, along with current valuations.
Source: Landlords.co.nz