AA to offer full replacement cover
13 Sep 2016
The insurer announced today it has made the ‘significant move’ to offer
full replacement for damage caused by fire, flood or storm, thereby
holding true to a prediction they made when Tower took the first step in
that direction nearly two years ago.
Tower started the ball rolling in October 2014 by offering full replacement cover for fire, a move which was criticised by AA Insurance at the time for only focusing on one cause of damage.
AA Insurance’s customer relations manager Amelia Macandrew said the
concern was that policyholders could think they had cover for a range of
events such as flooding, storms and earthquakes when it was only for
“This could shift the focus away from the importance of determining an
adequate Sum Insured figure for their home, because they believe they
are covered by full replacement insurance when they are not,” she said
at the time.
Macandrew also said any move by AA Insurance to bring back full
replacement would be unlikely to focus solely on a single event, a
prediction that has now held out to be true.
AA Insurance has now joined its sister Suncorp company Vero into the full replacement arena.
In February 2015, Vero
announced a new policy benefit called SumExtra which would extend
homeowners’ insurance cover by 10% in the event of a natural disaster
and total replacement cover to customers experiencing any other insured
AA Insurance’s head of product, Aaron Dickinson, said: “We’re confident
that our new replacement cover is one of the most comprehensive
offerings in New Zealand.
“This means that in an event other than a natural disaster, AAI
customers will receive full replacement cover, even if it costs more
than their Sum Insured.”
He added: “In the case of damage caused by a natural disaster, a customer’s Sum Insured will be used to settle the claim.”
Dickinson said the move was introduced following feedback from customers
to give them a new settlement option on all new and renewing home and
“We appreciate some customers have had difficulty calculating an
accurate Sum Insured and understand it can be stressful contemplating
whether the amount calculated is enough,” he said.
“So we wanted to make it less stressful and provide them with greater peace of mind with their cover.”
Dickinson said the new cover was particularly timely as recent data had shown there had been a leap in fire claims.
AAI data showed there were more fire claims worth $20,000-plus in May
2016 than in any other month during the previous financial year, with
the majority of fires caused by unattended heaters, appliances and
“While the total loss of a home due to a fire is rare, it can be
devastating for those who lose their property and its contents, such as
one couple who caused $200,000 worth of damage to their home and
belongings after leaving a pot of oil on the stove while cooking
Dickinson stressed that customers still had responsibility to provide an
accurate Sum Insured figure for their home, which was a requirement for
the replacement cover.
“As long as customers take reasonable steps to provide us with an
accurate size of their home and Sum Insured calculation, we will look
after them, should the worst happen,” he said.
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