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Most material damage insurance policies will include a condition limiting the coverage to replacement using modern materials and construction processes, which could become a significant factor in particular building restoration projects. The owner must discuss any restoration preferences with the broker at the start of the process so that the broker can investigate options and develop a valuation approach. If modern materials are to be used in the reconstruction, the heritage value of the replacement must be determined. 

Specific issues

Partial damage claims to buildings are more prevalent, and they provide some difficult considerations for heritage building owners, such as the level of public interest and interaction with the property, as well as the ramifications of any legislation.

Functional Replacement is an important consideration. This is the estimated cost required to reinstate all assets to perform similar tasks but under optimum current design and layout conditions.

Time is also a consideration for such rehabilitation initiatives, as local government consents and Heritage New Zealand input may be required before work can commence. If years pass between an occurrence and the start of restoration work, the value of the insurance policy may no longer accurately reflect real-world costs when building eventually begins, necessitating the inclusion of post-loss inflation charges in the total insurance sum insured.

Insuring heritage buildings in New Zealand has a number of issues, and owners must be extremely specific about the coverage they seek. Unfortunately, there is no miracle cure, but any heritage property owner should seek a brokerage that can demonstrate expert knowledge, clarity and excellent outcomes for customers in the heritage field.