New Zealand should regulate to ensure sum-insured home policies provide suitable cover based on accurate valuations, according to Consumer NZ.

The consumer group says it has found home valuations by specialist companies produce sharply different results, report content and descriptions vary widely and sums differ from default figures provided by insurers.

“We believe the Government needs to step in and investigate problems in the sector,” the group says in a report. “Regulation around who can provide rebuild estimates and monitoring of these providers is essential.”

Consumer NZ has also called on insurance companies to “step up” and help customers determine realistic sum-insured figures.

The group obtained five valuations for both a 1911 villa in Auckland, and a 1950s family home in Wellington.

Sum-insured valuations for the Auckland house range from $NZ576,170 to $NZ985,000 ($525,166 to $897,805), compared with an insurer default sum valuation of about $NZ460,460 ($419,699).

The Wellington valuations range from $NZ718,079 to $NZ1.2 million ($654,513 to $1.09 million), compared with a default sum of $NZ465,000 ($423,837).

Insurance renewal policies include default sums, but homeowners are advised to make their own assessments using online calculators on insurer websites and via valuation companies.

Insurance Council of New Zealand spokesman Samson Samasoni says the default sum is based on square footage and is only a starting point to determine an accurate value.

“Two-thirds of New Zealand homeowners are telling us they are confident about the sum they’ve nominated and three-quarters had no problems deciding the insured value,” he told insuranceNEWS.com.au.

“If insurers were to set up a system for valuing house rebuilds, the costs would have to be passed on.”

New Zealand switched from total replacement cover to a sum-insured system after the Canterbury earthquakes.

Land Information New Zealand is currently reviewing the occupational regulation of valuers. The review began last year and submissions are due by August 26.