Heritage buildings proving uninsurable
Sun, 17 Jun 2012 7:58a.m.
By 3 News online staff
Some of New Zealand's best known buildings are being rendered uninsurable following the massive losses suffered after the Christchurch Earthquakes.
Hardest hit in Auckland will be suburbs like Ponsonby, Mt Eden, Grey Lynn, Remuera, Devonport, Northcote and even the recently revamped Britomart according to a top insurance broker.
James McGhie of Apex General Limited says many of the commercial buildings in these areas date back to 1935 and earlier, and insurers are imposing premium increases from 200 percent to 500 percent.
Mr McGhie says that even if landlords are able to pay the increased premiums, they will have a tough time passing these increases onto their tenants, who may look at alternatives such as moving to more modern premises.
Streets like Ponsonby Road will be heavily impacted as they have lots of old wooden buildings which are considered higher risk, he says.
Also under the spotlight will be reclaimed land in lower Queen Street and Wellington's Lambton Quay.
Mr McGhie says the real change in the insurance criteria will mean it is a lot tougher for property owners. Previously, premiums were negotiated at a regional and city level, now properties will be segmented down to suburb and even street level.
"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,” he says.
Mr McGhie says that one example of this is a 1910 commercial building in Auckland's Fanshawe Street. Two years ago its premium was $7,286 plus GST. The building has now been sold effective end-June, and the premium for its new owners is $45,657 plus GST. The new owner has little choice but to pay this increased premium as other insurers are unwilling to take the risk on.
Buildings constructed 1936-1965 won't escape a hike in premiums either. Commercial buildings in Auckland from that time period will have a likely increase of a minimum of 50 per cent.
Mr McGhie says the new pricing rates will increase the further south property is owned, with Wellington and Christchurch being the most difficult to insure. In these two areas it is almost impossible to change insurers as they are reluctant to take on new risks because of reinsurance capacity issues.
Domestic property owners need to be prepared for the rising premiums which are likely to affect them too.
Mr McGhie says rate increases of 30 percent are common for houses with EQC levies also going up significantly.
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17/06/2012 9:09:54 a.m.
This problem was entirely avoidable. It was not caused by the extent of damage caused by the earthquakes, but by the civil defence policy of demolishing perfectly repairable buildings - up to 80% of the Christchurch CBD, including nearly all historical buildings. Criminal vandalism I call it. And all buildings owners and tenants will now suffer as a consequence.
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