Adapted from an article by Law News. If you own a home or are thinking about buying one, there’s something you need to know — insurance is no longer the simple tick-box it used to be. Across New Zealand, flood, erosion, and landslip risks are rising sharply. In response, insurers and banks are changing how they assess risk, and it’s already reshaping the housing market. Some homeowners are now facing huge premium increases, while others are being refused cover altogether — leaving them in a difficult financial position. Why this matters If your property becomes uninsurable, it’s not just a problem with your insurer — it can also affect your mortgage. Most banks require homeowners to keep their property insured at all times. If you can’t, you could technically be in breach of your loan agreement, even if you’ve never missed a payment. For some homeowners, the first sign of trouble has been a letter in the mail. Instead of a renewal notice, they receive a message from their insurer saying their cover will not be renewed or that their premium will double or even triple to reflect new flood or erosion modelling. And if you’re buying a house, not checking whether you can get insurance could be an expensive mistake. Some buyers only discover the issue when applying for finance — finding out the home they’ve gone unconditional on is on an insurer’s “red list.” Without insurance, the bank won’t lend, but the buyer still has to settle. What’s changed Insurers like Tower have led the shift to risk-based pricing. They’re using sophisticated data and climate models to calculate the likelihood of flooding, erosion, or landslides — not by suburb, but by individual property. This means two homes on the same street could now have vastly different premiums depending on their exact location and risk profile. Tower says around 90% of its customers are paying less under the new system, but for those whose properties fall into higher-risk zones, the increase can be steep. And in some cases, insurers are simply declining to offer cover at all. If that happens, homeowners can struggle to refinance, and sellers may find their property’s value drops sharply because it’s now considered “uninsurable.” The bigger picture The scale of the issue is sobering. A recent NIWA report found that more than 700,000 New Zealanders and over 400,000 buildings worth $135 billion are exposed to river flooding during extreme weather events. Another 72,000 people and 50,000 buildings face risk from coastal flooding. With risks like these becoming more frequent and more costly, insurers are adjusting fast. But that also means homeowners and buyers need to be just as proactive. What you should do before you buy Insurance should now sit alongside your building report and LIM as one of your top checks before buying a property. Make sure you: Check hazard maps and the LIM for flood, erosion or landslip risk. Ask about insurance early — before you go unconditional — and get written confirmation that cover is available. Include an insurance condition in your sale and purchase agreement. Use a broker or your lawyer to help identify any red flags. Even real estate agents are being reminded to tread carefully. While they don’t have a legal duty to check insurability, they must disclose any material facts they know that could affect a buyer’s decision — including natural hazard risks. What if you already own a home? If you receive notice that your premium is increasing or your policy won’t be renewed, don’t ignore it. Talk to your insurer, a broker, or your lawyer. You may have other options, but the earlier you act, the better. Keep an eye on your property’s LIM, too. Councils are required to record known natural hazards, and updates to these can affect your insurance status, sometimes without you being told directly. In Hastings, for example, more than 1,000 properties recently had landslide risks added to their LIMs, and many owners only found out after ordering a copy themselves. The takeaway Climate change isn’t just affecting our weather; it’s changing what it means to own a home. Insurance is becoming one of the biggest financial factors in buying, keeping, and selling property. Before you sign a contract, settle a mortgage, or renew your policy, take a moment to check whether your home is truly protected. The cost of finding out too late could be far greater than any insurance premium. Need advice about property or insurance issues? Our team at Pier Law can guide you through the fine print — from insurance conditions in your agreement to protecting your mortgage obligations. Get in touch with our friendly team today!
