Safeguard your home from fire with the right insurance

Fire and Emergency New Zealand warns that more people need to be aware of the potential dangers posed by lithium-ion batteries.

When treated with respect and care, these batteries are safe. However, if misused (for example, they are overcharged, damaged, or are of poor quality), they can pose serious risks of fire, explosion and toxic smoke inhalation. Lithium-ion battery fires burn intensely, are difficult to extinguish and can spread rapidly.

Preventing lithium-ion battery fires in various devices

Lithium-ion batteries power a wide range of devices, including:

Smartphones and tablets
Laptops and other electronic devices
Power tools
E-bikes and e-scooters
Electric vehicles
Vapes
Toys.

Each of these devices requires specific safety precautions. For example:

Avoid leaving laptops on soft surfaces that may block ventilation and cause overheating
Ensure power tools are not exposed to excessive heat or moisture
For e-bikes, e-scooters, or electric vehicles - always use manufacturerapproved chargers and avoid charging in enclosed spaces.

When it comes to vapes, kids toys and many other devices, their charging ports may match those of your phone or other devices at home. While this is convenient, it can compromise the built-in safety features of charging cables designed for specific devices.

For example, some charging cables for toys include security features that stop charging when the battery reaches 100%. While phones also have this function built in, it’s important not to mix toy chargers with your phone’s cable. Doing so could prevent the toy’s battery from stopping at full charge, potentially leading to overheating, fire, or explosion.

Protecting your rental property

For landlords, managing the risks of lithium-ion battery-powered devices in rental properties can be challenging. You can't control what tenants choose to use and with these devices becoming increasingly common, the risk is growing.

To help mitigate this risk to your investment, it’s highly recommended that you seek an insurance policy offering additional fire coverage.

Your Harcourts property manager is on the lookout for incorrectly charged devices during their regular inspections, we include a clause with new tenancy agreements about the safe charging of lithium batteries and provide education to tenants including articles in our twice-yearly ‘Renting with Harcourts’ newsletters.

Issues with sum insured vs. full replacement

Since 2011, all insurers in New Zealand have transitioned from offering "replacement cover" home policies to "sum insured" policies. This means that, as a homeowner, you're now responsible for estimating the rebuild cost of your property. After a total loss, the insurer is only obligated to pay you the sum you've selected as your insured amount.

However, some insurers may still offer additional coverage or even full replacement cover following a total loss caused by fire or explosion. The difference between these two types of coverage can have a significant impact on your ability to fully rebuild your property in the event of a total loss.

Differences in policy wordings

Here are a few examples to highlight how different insurers may treat the same event. For this example, let’s assume your home is insured for $500,000, but the actual cost to rebuild is closer to $800,000.

(Note: Insurers update their policies regularly, so the following examples are based on real-life insurers, though their names have been omitted as this may not always apply.)

Insurer A: Offers a 20% extension of the sum insured after a fire. For example, if your home is insured for $500,000, they could pay up to $600,000 following a fire.
Insurer B: Offers full replacement for all losses except those caused by natural disasters. However, they require additional conditions to be met in order to qualify for this benefit.
Insurer C: Provides full replacement after a fire or explosion, with no additional terms or conditions.

While Insurer A would only cover up to $600,000 (despite the actual rebuild cost being $800,000), Insurer C would cover the full $800,000 rebuild cost, ensuring you are fully covered. It’s important to note that these differences in coverage often lead to varying premium costs, with Insurer A typically offering a lower premium but less coverage, while Insurer C, with its more comprehensive coverage, may come with a higher premium.

How to ensure you’re properly covered

To ensure you have a cover that suits your requirements, it’s essential to work with a trusted insurance adviser who can help you understand your coverage options and ensure your home and investment property are insured against any potential fires. If you're unsure whether you're adequately covered, reach out to an experienced broker for guidance.

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