House and contents insurance
Protect your home and belongings with house and contents insurance.
Feeling the pinch from the cost of your house and contents insurance? It’s not surprising. Premiums for cover have increased more than 150 percent over the past decade.
Has the cost of your house and contents insurance jumped lately? If so, you’re not alone. Premiums have risen 5.6 percent in the 12 months to September. That’s on the back of increases of more than 150 percent over the past 10 years. The area with the biggest rise is Wellington, followed closely by Christchurch.
With premium prices more expensive than ever, it’s important to check what you’re paying.
Our survey found a difference of more than $2000 between the cheapest and most expensive policies for our standard-sized house. Quotes for our large dwelling differed by more than $3000 across the five cities we surveyed.
To get a snapshot of the market, we asked eight insurers to give us quotes for cover in five main centres: Auckland, Hamilton, Wellington, Christchurch and Dunedin. We requested quotes for:
We’ve also asked consumers how satisfied they were with their insurance companies in our latest satisfaction survey.
Wellington has again been hardest hit by price hikes. Since last year, median prices increased 16 percent for our standard house and 18 percent for our large dwelling. Christchurch has also seen big increases: median prices increased 8.5 percent for our standard house and 17 percent for our large house.
Since 2017, the median price has jumped more than 50 percent for the Wellington properties in our price comparison. Christchurch has also seen sharp rises: median prices increased 37 percent for our standard house and 44 percent for our large dwelling.
Almost all insurers changed to sum-insured policies after the 2011 Canterbury earthquakes. These policies make the owner responsible for calculating the costs to rebuild their home and insuring it for this amount. This sum insured is the maximum your insurer pays if your home is damaged or destroyed.
Medical Assurance Society (MAS) is the only insurer offering full replacement – which is where you’ll get paid the reasonable cost of rebuilding your home to its pre-damaged standard – in our survey (it calls it “area replacement”). MAS also has a sum-insured option.
MAS quotes for full replacement were pricier, but the higher price reflects that you’re getting more coverage (and peace of mind). It was the most expensive for our standard house in Auckland and Christchurch. For our larger house, it was the most expensive for Auckland, Christchurch and Dunedin.
MAS is a membership-based organisation. In the past, membership was restricted to doctors, dentists and other health-related occupations. However, it’s now open to other professionals.
In our customer satisfaction survey, MAS rates highly. Eighty-eight percent of its house insurance customers were very satisfied with its service.
Limited full replacement is where you get sum-insured cover for natural disasters but full replacement for everything else. So if your house burns down, you get full replacement cover. But if it gets destroyed in an earthquake, your pay-out is capped at the sum-insured amount.
AA Insurance and FMG offer full replacement for events other than natural disasters. However, FMG doesn’t offer policies in Wellington and Christchurch. AAI didn’t provide quotes for Wellington and Christchurch for the first time this year. The company said it would only offer policies in these areas if the properties met additional underwriting risk criteria.
AAI’s premiums were near the median price of the eight companies in our survey and cheaper than FMG’s. In Auckland, AAI’s premium was $611 cheaper than FMG’s for our standard house, and $805 cheaper for our large house.
Both companies delivered above-average satisfaction: 63 percent of AAI’s house insurance customers were very satisfied with its service; FMG rated 74 percent.
Tower and Trade Me no longer offer full replacement cover for fire, whereas both companies offered this policy last year. These companies now offer an extended sum-insured option. This means the insurers will pay the sum-insured amount plus up to 20 percent on top of that amount. For other events such as natural disasters, they offer sum-insured cover.
Tower was the cheapest option for our standard house in Hamilton and Wellington.
However, Tower continues to rate below average for customer satisfaction – just 36 percent of its customers with a house insurance policy thought the insurer was doing a good job.
AMI, Lantern and State only provide sum-insured policies. They’re all brands owned by IAG.
State quoted the most expensive prices for both of our Wellington houses. For our standard house it was $615 higher than the median price, and for our large house it was $672 more expensive than the median price. State’s Wellington prices had increased by more than $1000 since last year – the most dramatic rise across all of the insurers surveyed.
However, it had the cheapest premiums for our Dunedin houses.
Lantern was the most expensive for both our Hamilton houses, and the cheapest for our large houses in Wellington and Christchurch.
State and Lantern also rated below average for customer satisfaction. Just 39 percent of State customers with house insurance in our survey were very satisfied; Lantern scored 33 percent.
AMI rated below average with only 37 percent of its customers happy with its performance.
If you’re renting and only need contents cover, you’ll also see a big difference in annual premiums between insurers. For example, we found a $311 difference between the cheapest (Tower) and most expensive (Lantern) policies in Auckland.
If you live in Wellington, MAS is worth a look. It had the cheapest policy, which was almost $450 cheaper than the most expensive option (offered by State). MAS topped our customer satisfaction table: 86 percent of customers with its contents cover were very satisfied with the service they were getting.
Tower had the cheapest price for Auckland, Hamilton, Christchurch and Dunedin. However, it rated near the bottom of our customer satisfaction table – just 39 percent of customers with its contents cover were very satisfied.
The biggest factor behind premium hikes is the shift by insurers to full risk-based pricing for natural disasters. This means if you live somewhere with a higher chance of earthquakes – such as Wellington or Christchurch – you’ll be charged more for insurance.
Insurers are also now factoring climate risks, such as flooding and coastal erosion, into their calculations for premiums.
The Earthquake Commission (EQC) levy, which you pay with your insurance premium, can also contribute to price increases. The levy covers the EQC’s residential building pay-out, which is what the commission contributes to claims when a natural disaster strikes.
In September, EQC Minister David Clark announced that from October next year the EQC cap on pay-outs will be doubled from $150,000 to $300,000 (plus GST).
This will add an extra $207 a year to homeowners’ premiums. The levy amount paid by each homeowner will depend on their sum insured, but will be a maximum of $552. The current levy amount is $345.
Clark said he expects insurers to lower their premiums as the government is taking on more of the risk. If that doesn’t happen, the government might investigate.
We think a review of the insurance industry to ensure it’s competitive and working for homeowners is well overdue.
We asked insurers to quote annual premiums for comprehensive policies for three profiles:
Renter: our young worker wants contents-only insurance for belongings worth $35,000.
Standard home: our couple wants to insure their home for $450,000 and their contents for $90,000.
Large home: our family of four wants to insure their home for $800,000 and their contents for $140,000.
We’ve made these assumptions:
Most companies offered discounts for taking out combined house-and-contents policies. MAS and FMG offered discounts for being claims-free for a set number of years. Half of the companies surveyed offered a discount if the home had an alarm. We accepted these discounts. Other discounts are noted in our table.
GUIDE TO THE CONTENTS ONLY PREMIUM TABLE OUR DATA were collected in July-August 2021 from insurance companies. COMPANY ᵃTrade Me's premiums include a 15% member discount. ANNUAL PREMIUMS ᵇFMG doesn’t provide cover in Wellington and Christchurch. SATISFACTION results are from our 2021 survey of 6111 Consumer NZ members and supporters. Numbers show the percentage of very satisfied customers. - means insufficient data.
GUIDE TO THE HOUSE AND CONTENTS TABLE OUR DATA were collected in July-August 2021 from insurance companies. COMPANY ᵃTrade Me's premiums include a 15% member discount. ᵇMAS’ premiums include a 10% discount for combined house, contents and car insurance. COVER ᶜfor damage from a covered event, MAS will pay the full cost to repair; for total loss, it pays the cost to rebuild to floor area provided in the policy schedule. MAS also offers a sum-insured option. ANNUAL PREMIUMS ᵉFMG doesn’t provide cover in Wellington and Christchurch. ᶠAAI didn’t provide quotes for this area. Insurance will only be offered if application meets AAI’s underwriting risk criteria. SATISFACTION results are from our 2021 survey of 6111 Consumer NZ members and supporters. Numbers show the percentage of very satisfied customers. - means insufficient data.