New Zealand insurer Tower says it will again offer full replacement cover for homes destroyed by fire with immediate effect.

The new policy applies on all new Tower home insurance policies, and will cover existing policyholders. Older homes covered by the Present Day Value policy are excluded under the policy switch.

Tower says the policy change is driven primarily by feedback from customers who are still coming to terms with the concept of sum-insured home coverage.

“The key driver behind Tower doing this has been that our customers have been telling us that they want more certainty of cover with their house insurance,” GM Customer Proposition Mark Savage told insuranceNEWS.com.au.

“We’ve been working for a number of months to help make house insurance simpler for our customers when it comes to fire claims.”

New Zealand’s home insurance policies were mostly based on a total replacement basis until the February 2011 Christchurch earthquake.

Consumer groups have voiced concerns homeowners are struggling to properly value their properties when buying sum-insured policies.

Mr Savage says Tower customers can have peace of mind no matter what their specified sum insured is.

“We expect this new benefit will give customers another prompt to think about their house insurance and provide impetus to considering the right level of cover for their property,” he said. “This is still important.”

Tower’s reinsurers have been “very supportive” of the policy switch, and Mr Savage says Tower is now the only major New Zealand insurer to offer full replacement cover for homes destroyed by fire.