Buying a home is one of the biggest financial decisions you'll ever make, so it pays to protect it properly. Property insurance shouldn’t be a box to tick at settlement, nor should it be your last consideration either.

Insurance Council Consumer Affairs manager Sarah-Jane Knox says you should be thinking about insurance even before you buy your home.

“It should be treated as part of your due diligence process. Your bank will also require you to have insurance if you apply for a mortgage so it’s really something that needs to be sorted beforehand anyway.”

That means looking into the history and condition of the property, and whether there’s been any previous incidents that could affect the insurance process.

All policies also aren’t created equal, and the fine print can make a big difference when it comes time to make a claim. That’s why doing your due diligence before you sign on the dotted line is essential.

WHAT SHOULD I LOOK FOR?

Knox says insurers are interested in the home itself, and the natural hazard risks it might be exposed to.

“Is it weather-tight, does it have a good roof and has it been well maintained? If it's an older home, then has it been rewired and replumbed?”

Insurers may ask for a building report which in many cases you’ll have access to during the standard due diligence process anyway.

“Check on whether the house has Dux Quest piping, especially if it’s a home built in the 1970s or 1980s.”

“Insurers may not want to insure for losses caused by that plumbing as it’s notoriously known for failing and causing leaks. They’ll still insure the home, but you’ll need to get the plumbing sorted.”

Knox says another thing to think about is your exposure to natural hazards and understanding the land the house is sitting on.

“Land stability is a big one. Check the slopes on any property you're looking at but also think about whether a landslide on neighbouring land might affect you. Slopes and retaining walls can crack, move or even collapse after heavy rainfall. You’ll want to look for retaining walls on the property, as well as looking at the land around it. Does it look like it's going to be prone to land slides? And is there anything noted in the LIM report?”

That’s because the Natural Hazards Commission (formerly EQC) is unlikely to cover everything that goes wrong. It covers some land damage, but it usually isn’t enough to do repairs after land failure.

Knox says a great tool is the Natural Hazards portal which you can run the property through and it will show you if there were any previous NHC claims, there’s also a great checklist to follow too.

“It's a really good resource, and from that natural hazard portal, you can find your local council and it will take you through to a link to flood mapping and the natural hazard mapping for your area.”

“This will ensure you aren’t buying a home in the flood zone either.”

Another useful resource is a Land Information Memorandum (LIM) report, which is a summary of information your local council holds on a property.

“LIM reports go through lots of things. They talk about flooding, erosion, contamination, subsidence and wind risk.”

Knox says most importantly it gives you a copy of the title of your house which will show you any section notices from the council.

“If a natural hazard section notice is noted on your certificate of title, it means that the NHC may not cover that particular hazard. You'll still get your insurance for everything else, but most likely not for that.”

“That section notice also means your private insurance is unlikely to provide cover for that particular risk either. If you have a section notice listed on your certificate of title, talk to your insurer so you can understand what this means.”

A section notice doesn’t need to be forever though.

“If you mitigate the risk for example by building a retaining wall which addresses whatever the concern is then it can be removed. But it’s only councils that can remove and add a section notice to your title.”

HOW MUCH SHOULD I INSURE MY PROPERTY FOR?

The most common type of insurance is “sum insured”. This means that you decide how much cover you want based on how much it would cost to completely rebuild the property.

It’s important to get this right - if it’s too high, you’ll be paying for insurance you don’t need and if it’s too low, the payout won’t be enough to rebuild your home.

“We did a survey of New Zealanders, and 50% of people didn't know what your sum insured should be. It shouldn’t be what you bought your house for, how much your mortgage is or what it’s valued at.”

“You just need to have enough cover to rebuild.”

Knox says there’s a range of calculators you can use to work out what the right number is, and your insurer will most likely have one.

“It’s always good to double check you’re insured for enough, because adding another $100,000 onto your sum insured might cost very little in premium.”

“Remember your house is your biggest asset, and you don’t want to get caught out with not being covered for enough.”

IS THERE ANYTHING THAT CAN CATCH ME OUT?

Knox says the main thing that’s likely to trip you up would be not reading an insurance policy properly before you buy it.

“Not enough people shop around for their insurance, and they also aren’t clear on what they are and aren't insured for.”

A big area of confusion for many is gradual damage.

“This could include something like a slow leak that rots the floor under your house that you can't see. Insurers will have some very limited cover, for example $3,000-$5,000 and that will not be enough to repair the damage. Generally it’s not covered and people get really caught out.”

Knox says another thing to be aware of is if you’re insuring an apartment or a multi unit dwelling.

“Your risks are higher when you’re sharing walls, roofs and ceilings.”

“A lot of issues can arise when you have multi-unit dwellings and it’s not the same insurer. However, a body corporate will take out insurance for the whole building, that means all the maintenance is all planned out.”

“But the most important thing is all the shared property is covered and everyone is insured under the one policy, which makes claiming a much simpler process.”

More guidance on insuring a multi-unit property here.

WHAT IF I’M IN A FLOOD ZONE?

Knox advises against buying in a flood zone, but says that generally insurance is still available if there’s good flood mitigation in place.

“What we are starting to see now is many insurers moving towards risk based pricing. So what we will see is if a property is in a flood zone there may be some terms applied like increased premiums, or a higher excess.”

“It's in very rare circumstances that insurance isn't available, if you shop around each company has its own risk appetite.”

Moving forward Knox says the Insurance Council is strongly advising councils to not approve developments in flood zones so the availability of at risk housing will decrease.

Ultimately in a property market full of big decisions, taking the time to understand your insurance options is one of the smartest moves a buyer can make. The right approach and the right policy gives you peace of mind that your investment is protected.

So before you pick up the keys, pick up the phone, ask the hard questions, and make sure your coverage is as solid as the foundations of your new home.