Owning a Home Is Becoming Riskier: What Buyers and Homeowners Need to Know
New Zealand’s housing landscape is shifting, and for many people owning a home now carries more risk than it once did. With new national hazard mapping, greater awareness of climate-related events and growing caution from insurers, many of the traditional assumptions about the safety and security of property ownership are being challenged.
Hazard information is now far more accessible, allowing buyers to see with much greater accuracy whether a property is exposed to flooding, coastal erosion, or other environmental risks. While this level of insight benefits home buyers, it also means certain homes may lose value as purchasers become more wary and insurers reassess their appetite for risk.
In practical terms, some properties may become harder to insure, more expensive to maintain, or less appealing to lenders, all of which will influence their long-term financial viability, and the decisions buyers and homeowners must now make.
It can no longer be assumed that securing insurance for a home will be simple or guaranteed. As insurers reassess risk across the country, the question of whether a property is insurable has become a central part of any purchase decision. As a result, buyers need to give insurance availability much closer attention during due diligence and confirm early that cover can be obtained on reasonable terms.
It is now even more important to ensure that any agreement for sale and purchase includes a clause making the purchase conditional on the buyer being able to obtain satisfactory insurance.
A clause making the purchase “subject to insurance” protects the buyer by ensuring they are not contractually locked into completing a sale if insurers decline cover or offer it only at an unsustainable cost. Without such a clause, a purchaser who goes unconditional and later discovers that the property is uninsurable, or only insurable at a prohibitively high premium, may lose bank funding and still be legally required to settle the transaction, leaving them with a property they cannot responsibly or affordably own.
Furthermore, if an insurer reassesses a property and concludes it carries a higher level of risk, it may increase premiums, impose new conditions, or decline to renew the policy. Because insurance is renewed annually and insurers are not required to continue providing cover, homeowners (particularly those in higher-risk areas) are heavily reliant on the insurer’s willingness to maintain a policy.
For prospective buyers, verifying that a property is insurable before signing an agreement is no longer optional; it is a critical step in preventing long-term financial exposure. A failure to do so could leave a homeowner trapped with a property that cannot be insured, effectively undermining the value of the home and exposing them to significant personal risk.
As climate patterns continue to shift and hazard data becomes more central to regulatory and market decisions, the legal issues surrounding property purchases are likewise evolving. Buyers must undertake more rigorous due diligence, and homeowners must stay alert to how their property’s risk profile may change over time.
If you are considering buying a home, reviewing your insurance options, or concerned about how risk assessments may affect your property, early legal advice can make the difference between a secure investment and a costly surprise!
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