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.
Consumer NZ’s insurance satisfaction survey shows that nearly half of respondents are concerned about rising house insurance costs.
Among those who don’t have contents insurance, 17% say they have not renewed their policy in the past 12 months due to cost. Of those who don’t have house insurance, 7% have cancelled (or not renewed) their policy in the past 12 months due to cost.
Our insurance premium price survey found Hamilton has been hardest hit with premium price increases for a standard house – up 17% from this time last year. This was followed by Auckland on 15% and Dunedin a close third, on 14%.
We also found a difference of $1249 between the cheapest and most expensive premiums for our large-sized house, and a $1095 price difference for our standard-sized house.
To get a snapshot of the market, we asked seven insurers to give us quotes for cover in five main centres: Auckland, Hamilton, Wellington, Christchurch and Dunedin. We requested quotes for:
a couple with a standard-sized house insured for $450,000 and contents for $90,000; and
a family with a large house insured for $800,000, and contents for $140,000.
We also asked consumers how satisfied they were with their insurance companies, in our latest satisfaction survey.
Hamilton has been the hardest hit by insurance price hikes. Since last year, median prices increased 17% for our standard house, followed closely by Auckland, up 15%.
Dunedin also saw a big increase: median prices increased 14% for our standard house.
The median price for a large house has jumped 11% in Christchurch, followed closely by Hamilton – up 10% on last year.
Wellington is still the most expensive region to insure our standard and large home. Yet this year, price hikes for Wellington properties were modest compared with the other regions: up 5% for the standard house and 9% for the large house
In our survey, Medical Assurance Society (MAS) is the only insurer offering full replacement. This means you are paid the reasonable cost of rebuilding your home to its pre-damaged standard; MAS it calls it “area replacement”. MAS also has a sum-insured option.
The MAS quotes for full replacement were pricier than other insurers we surveyed except for our standard house in Wellington, where it was the cheapest. Yet the higher price reflects that you’re getting more coverage – and peace of mind.
MAS also came tops in overall satisfaction for house and contents insurance in our insurance satisfaction survey (see “House and contents overall satisfaction”).
The cheapest insurer we surveyed was State Insurance (for its sum insured policy), except for our standard and large house in Wellington. While State was cheaper, it scored below average for overall satisfaction.
In our premium price survey, insurers offered discounts for taking out combined house-and-contents policies, being claims-free for a set number of years, or having an alarm. We accepted these discounts. Other discounts are noted in our table.
The Earthquake Commission (EQC) levy, which you pay with your insurance premium, contributes to price rises.
The levy covers the EQC residential building payout, which is what the commission contributes to claims when a natural disaster strikes.
From 1 October 2022, the EQCover levy rose from $345 (including GST) to a maximum of $552 (including GST).
The increased levy pays for a higher building cap – up from $150,000 to $300,000. This means EQC will cover the first $300,000 worth of damage caused by earthquakes, tsunamis, volcanic eruptions, hydrothermal activity and natural landslips.
However, it could take up to 12 months as individual policies come up for renewal. The revised cap applies to all new policies issued from 1 October 2022.
Yet our insurance satisfaction survey found 67% of respondents with house insurance were unaware of the changes to the cap, while 78% were unaware there is a levy change.
After we told them about the levy changes, nearly three-quarters of respondents expected premiums to increase. Just over a quarter expected significant increases.
Increasing the building cap was a way of reducing premiums for those in high-risk seismic areas, as well as making sure house insurance is still affordable across the country.
While the increased levy will mean an increase in insurance premiums for some, those living in high-risk areas should see a decrease because the Government is taking on more risk than private insurers.
This could account for the bigger price rises we saw in Hamilton, Auckland and Dunedin, rather than in the higher-risk areas of Wellington and Christchurch.
Treasury advice to the Government, based on premium modelling used by insurance broker Aon, suggested that Wellingtonians could see a $207 decrease in premiums, while Aucklanders would pay $103 more.
But our premium survey didn’t show any savings. Instead, median costs increased for our standard and large house across the main centres.
We asked the insurers we surveyed whether customers living in high-risk areas should see a premium discount because of the increased EQC levy.
AA Insurance said increases in reinsurance costs, high inflation and more frequent weather events, as well as the rising cost of claims, wasn’t accounted for in the Treasury analysis – meaning any potential savings has been absorbed by other costs.
FMG, Tower and Trade Me said while the earthquake proportion of premiums would decrease, other risk factors could mean the total premium could go up or down.
Yet the EQC Minister, Dr David Clark, said last year he expects insurers to lower their premiums.
The Minister warned that if reductions aren’t passed onto consumers, the Government could investigate.
Treasury officials are monitoring insurance premiums closely, and any future Government action will be informed by this analysis, Dr Clark said.
We think a review of the insurance industry to ensure it’s competitive and working for homeowners is well overdue.
The cost of house and contents insurance has increased 150% over the past 10 years, according to Consumers Price Index (CPI) data.
One way to get a better deal is to shop around. Our insurance satisfaction survey showed that over three-quarters of respondents stick with the same insurer for more than five years.
One barrier to finding a new insurer is the difficulty of comparing insurance products. To compare insurance products, check out our survey.
The Insurance Council of New Zealand (ICNZ) also recommends installing an alarm at your property. Most insurers offer a discount for alarmed properties.
Also check whether there’s a discount for paying your premiums annually (rather than monthly, for example). However, given the rising costs, this is unlikely to be a viable option for many consumers.
Opting for a larger excess can also make your premium cheaper. So, instead of paying the first $500 on a claim, you could increase it to between $750 and $2500.
While house and contents insurance premiums continue to rise, there’s also a chance your home is under-insured because of rising building costs. Increasing your sum insured is likely to put even more pressure on household budgets.
However, ICNZ said it’s important to note that if you increase the sum insured for your home from $400,000 to $600,000, it won’t result in a 50% increase in your premium.
It’s best to go online and get quotes from different providers to see how much your premium will go up if you increase the sum insured.
You can get an indication of what your sum insured should be by using the Cordell Calculator – an independent online tool to calculate the cost of rebuilding. A builder or quantity surveyor can also assess the value.