The facts about insurance premiums.

We want to help you understand what makes up the cost of insuring your car, home and contents and why the cost of this cover changes.

The underwriter of Westpac Home, Contents, Vehicle and Boat insurance cover, IAG New Zealand Limited (IAG), uses pricing disciplines to calculate a fair price for insurance cover. Because IAG regularly review pricing, your premium could change every year based on a number of reasons.

What are you paying for exactly?

You might be surprised to learn that only part of the cost of your insurance actually goes to IAG. Your total premium is made up of a number of costs, including the following:

Claims and business costs

Claims and business costs form part of the premium you pay for covering your car, house or contents. This is the money used to pay claims and costs to run the business.


Insurance companies also need insurance, called ‘reinsurance’, which is often provided by specialist insurance companies. Reinsurance helps to cover the cost of all claims if there’s a major disaster such as an earthquake.

Among other things, a portion of your premiums go towards meeting reinsurance costs.

The Fire and Emergency Levy

We all hope we never need Fire and Emergency New Zealand (FENZ), but it’s good to know that it’s there. The levy is applied on insurance premiums which insurers then pay in full to the Government. Find out more about the Fire and Emergency Levy. 

The Earthquake Commission (EQC) Levy

EQC is a Crown entity that provides natural disaster cover for residential homes and land where you hold a current private insurance policy (such as your Westpac home insurance). EQC levies are set by the NZ Government, collected by IAG as part of your home insurance premiums and passed on to the EQC.

Currently, the maximum amount of cover provided by EQC is $300,000 (+GST). For most homes this means that the EQC levy is $480 (+GST).


GST is charged at a set rate (currently 15%) of your base premium plus levies, so any increases to your premium means you’ll also be paying more in GST.

Changes to house insurance premiums.

An increase in building costs

The increase in the cost of materials and labour used to rebuild and repair homes, making it more expensive to pay claims and fix houses. 

Ongoing natural disasters

The increasing number of extreme weather events, like flooding or tornadoes is causing more costly and frequent claims.

Levy changes

If any applicable government levies increase, this will be factored into your total premium. Levies are collected and paid directly to FENZ and EQC by IAG New Zealand Limited (IAG), the underwriter of your Westpac Home Cover policy.

Changes to car insurance premiums.

Repair costs

Parts, paint and labour costs for vehicle repairs continue to increase. Newer vehicles also have more technology, like rain sensors in windscreens and intelligent braking systems, and can cost more to repair than older vehicles.


Wilder weather

With climate change affecting global weather patterns, New Zealand is experiencing extreme weather events more frequently. This impacts the price of your car insurance.

Changes to contents insurance premiums.


We own more of them. TVs, mobile phones, tablets and laptops – there are more opportunities for our things to get lost, broken or stolen.


There’s more technology in the things we own. For example – mobile phones do more than just call or text, they’re mini computers that practically run our lives. Hearing aid technology has also improved. But these advances come at an increased cost when it comes to repairing or replacing these items.

Your pricing.

The information you give us also affects your premium pricing, including:

  • Your own claim history
  • Excesses and discounts
  • Changes to your home or contents sum insured or vehicle value
  • Changes in your circumstances, such as renting out your house, moving to a new address or no longer needing to cover an under 25-year-old driver on your vehicle;
  • Your age and location. For instance, if you live in a region with greater seismic or flood risk, you may pay more for your home insurance than a like-for-like home in a lower risk area
  • Your driving history and type of vehicle (vehicle insurance)
  • The year of construction of your home (home insurance).

Ways to reduce the cost of insurance.

It’s important that you have the right insurance cover in place to suit you. Over time your circumstances can change, so it’s a good idea to review your cover from time to time.

Here are some ways to reduce insurance premiums while staying insured:

Remove optional cover add-ons

Remove any optional add-ons you don’t need. Optional cover can be things like breakdown service or landlord optional benefits.

See if you’re eligible for discounts

If you live in your own home and insure it with Westpac Home Cover, you’ll receive lower premiums on your car and contents insurance.

Increase your excess amount

Your excess is the amount you contribute towards paying for repair or replacement when you claim. You may have the option to increase your excess to help lower your premium.

Remove under 25-year-old drivers on vehicle policies

If they no longer drive your vehicle and need to be on your policy, removing drivers aged under 25 can help reduce the cost of your car insurance.

We’re here to help.

Our team are here to help you with your cover so you can stay insured and protected.

If you're having difficulty making ends meet and you'd like to talk about your cover or support we can offer you, simply give us a call on 0800 809 378 Monday to Friday 7:30am to 6.30pm, Saturday 8.30am to 5pm.

Things you should know.

Westpac Home, Contents, Vehicle and Boat insurance cover is arranged by Westpac New Zealand Limited (“Westpac”) and underwritten by IAG New Zealand Limited (“IAG”). None of Westpac Banking Corporation ABN 33 007 457 141 (incorporated in Australia), Westpac, or any member of the Westpac group of companies guarantee the obligations of, or any products issued by, IAG or any member of the IAG group of companies. Westpac will receive commission payments as a result of the arrangement of IAG policies. For IAG's financial strength rating visit Westpac accepts no responsibility for the availability or content of any third-party websites and makes no representation as to the accuracy or currency of the materials.

Terms, conditions, exclusions and limits apply. More detail can be found in the policy document; visit or call 0800 809 378 for a copy.

Any claim payment is subject to your claim being accepted.

Eligibility criteria apply to discounts. Discounts are applied to the base premium before add-ons, levies, and GST are added. If you get two or more discounts, these will be calculated consecutively. Any discount may apply in part, or not at all, if your premium is below our minimum level. Discounts can be changed or removed at any time.