Insurance Requirements for Home Loan Approval in New Zealand
Arrange acceptable house insurance early enough for your lender and solicitor to confirm the property can be insured before settlement.
Once an offer is accepted, the lender may need evidence that suitable house insurance is available for the property. The exact document and wording can depend on the lender, insurer, property and stage of the purchase.
This guide explains the usual process, the documents you may be asked for, what sum insured means, and where property-specific exclusions or conditions may need closer attention.
The Short Answer
When do you need house insurance for a home loan?
In New Zealand, home buyers usually need suitable house insurance to begin from settlement day, and the lender may ask for evidence earlier while finance is being confirmed.
The insurer needs accurate information about the property and how it will be used. The lender then needs to be comfortable that the policy, exclusions and conditions do not create an unacceptable risk over the property being used as security.
If the insurer identifies previous damage, unusual construction, natural-hazard exposure or another property-specific issue, allow extra time. The insurer, lender and solicitor may each need to consider different parts of the information.
The lender decides whether the insurance evidence is acceptable for the home loan. Canterbury Home Loans can help clarify what the lender has requested, but does not provide general insurance advice.
After Your Offer Is Accepted
Insurance checklist before finance and settlement
Work through these steps early. A straightforward property may be quick to insure, while a property with previous damage, unusual features or natural-hazard concerns may take longer.
- 1
Start the insurance application
Contact your preferred insurer once the offer is accepted. Give accurate details about the property, intended use and any known issues.
- 2
Check the proposed cover
Review the policy type, sum insured, excesses, exclusions, conditions and start date. Ask the insurer or an insurance adviser if you need help deciding whether the cover suits you.
- 3
Record the lender
Ask for your bank or lender to be shown as mortgagee or interested party using the name and wording the lender requires.
- 4
Request the right document
The lender may ask for a Letter of Intention, Certificate of Insurance or Certificate of Currency. Confirm which document is required and when it must be supplied.
- 5
Send it to the right people
Provide the document to Canterbury Home Loans and your solicitor if requested. Keep a copy and tell us if the insurer adds any material exclusion or condition.
Evidence Of Cover
Letter of Intention versus Certificate of Insurance
The names and timing can vary between insurers and lenders. Confirm the exact document requested rather than assuming one document will be accepted at every stage.
| Document | What it usually confirms | When it may be requested |
|---|---|---|
| Letter of Intention | An insurer is prepared to offer cover, subject to the details and terms shown. | Potentially earlier in the finance process, including when the lender is checking that the property can be insured. |
| Certificate of Insurance or Currency | The policy details, insured property, cover period and any interested party recorded on the policy. | Often before settlement, when the lender and solicitor need evidence that the required cover is in place. |
| Policy wording or schedule | The detailed terms, limits, exclusions, excesses and conditions applying to the policy. | Where the lender, solicitor or buyer needs to understand a property-specific term or limitation. |
Tower explains that its Certificate of Insurance, sometimes called a Certificate of Currency, can be used as proof of insurance and includes details such as the insured parties, policy period, property and interested parties. Read Tower's certificate information.
Allow More Time Where Needed
Properties that may need additional insurance checks
Insurance is property-specific. A quotation or risk rating is the insurer's assessment for insurance purposes and is not a replacement for your wider due diligence.
Tell the insurer what you know
Disclose known damage, repairs, unusual construction, unconsented work, retaining walls, outbuildings, intended renovations and how the property will be occupied. If you are uncertain about a question, ask the insurer what information it needs.
Where insurance is limited, excluded or subject to special conditions, the lender may need to reconsider whether the property remains acceptable security.
Use the property due diligence guidePrevious earthquake, flood, fire or other damage
Flood, sea-surge, landslide or other natural-hazard exposure
Older, unusual or specialist construction
Retaining walls, outbuildings or other significant features
Unit titles where body corporate insurance also applies
Rental use, major renovations or contract works
Use the LIM, title, building report and specialist advice to investigate the property itself. Tower's natural-hazard risk information is an insurance assessment and should not be treated as a substitute for those checks. Read how Tower describes property risk ratings.
Rebuild Cost
What does sum insured mean?
Sum insured is the maximum amount the insurer will pay to rebuild the house under the policy, subject to the policy terms. It is not the property's market value or the amount you are borrowing.
Sum insured may include
- Rebuilding the house
- Demolition and debris removal
- Professional and council fees
- Property features included in the estimate
It is not the same as
- The purchase price
- The land value
- The property's market value
- The home loan balance
Use a calculator as a starting point
Tower's sum-insured guidance links to the Cordell Sum Sure calculator and explains the property details that can affect estimated rebuild cost. For unusual or high-value homes, professional advice may be appropriate.
Optional Insurance Provider
Start a Tower quote online
Need insurance for your home, rental, contents, car or boat? You can start a Tower quote using my link below.
Canterbury Home Loans does not provide advice or recommendations about Tower products and does not act for or on behalf of Tower. Tower is one option and you are free to use any insurer. Purchases made through this referral link are attributed to Canterbury Home Loans and may result in a referral payment. Please review the policy terms, limits and exclusions before deciding whether the cover is suitable.
Prefer Personal Support?
Ask Tower to contact you
The online quote journey is designed for clients who are comfortable completing their own quote and purchase. Use this form if you would prefer to speak with Tower, need extra support, have more complex insurance needs, or cannot complete the online journey.
Submitting this form asks Tower to contact you. It does not guarantee that cover will be available or that any particular policy, price or term will apply.
Insurance FAQs
Common questions before home loan settlement
These answers are general. The lender, insurer and property details determine what is required in each case.
When should I arrange insurance after an offer is accepted?
Start as soon as practical after the offer is accepted and before the finance condition is due. This allows time to identify exclusions, property issues or further information the insurer or lender may require.
Does cover need to start on settlement day?
It usually needs to be effective from the date you become responsible for the property, which is commonly settlement day. Confirm the date with your solicitor, lender and insurer because the contract or circumstances may require different timing.
Does the lender need to be listed on the policy?
Usually, yes. Ask the insurer to record the lender as mortgagee or interested party using the name and wording requested by the lender.
Can I choose any insurer?
Yes. You may use any insurer, provided the proposed cover and evidence are acceptable to the lender. Tower is an optional referral pathway, not a requirement.
Can an insurance issue affect home loan approval?
Yes. If suitable cover cannot be arranged, or material exclusions or conditions apply, the lender may need to reassess whether the property remains acceptable security.
What if the property is part of a body corporate?
The body corporate may hold insurance over the building or shared property, but the lender and solicitor may still require documents and confirmation about the cover. You may also need separate contents or other insurance. Ask your solicitor and insurer what applies to the unit.
Is a Cordell estimate the same as an insurance valuation?
No. A calculator provides an estimate based on the information entered and available property data. An unusual, high-value or complex property may justify a professional rebuild-cost assessment.
Who can help me decide which policy is suitable?
Contact the insurer or a general insurance adviser for help with policy suitability, cover, exclusions and excesses. Canterbury Home Loans can explain what the home-loan lender has requested but does not provide general insurance advice.
For independent property-buyer guidance, see Settled.govt.nz's insurance information for property buyers.
Related Home-Buying Guides
Keep the purchase process moving
Insurance is one part of the wider purchase and settlement process. These guides cover the next checks, documents and finance steps.
Home Loan Process
From approval through to settlement
Understand the main finance steps and what usually needs to happen before the lender releases funds.
Follow The Home Loan Process
Documents
Mortgage application documents checklist
Check the common information lenders request and prepare complete, readable documents for your application.
Prepare Your Documents
Making An Offer
Protect your position before you commit
Understand finance, due-diligence and settlement conditions before signing an agreement.
Understand The Offer Process
Priority Check
Complete your property due diligence
Insurance does not replace the LIM, title, building report, valuation or specialist advice. Use the full due-diligence guide to coordinate the wider checks before going unconditional.
Use The Due Diligence Guide