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Understanding your general insurance premiums.
There are a number of factors that make up the cost of your general insurance and influence why your premiums may change from time to time.
What are you paying for exactly?
Your premium is made up of several factors that can change from year to year. Some costs are general, while others are unique to your property. This is why no two premiums are the same. These factors include:
Base premium
(also referred to as the Tower premium in your policy documents).
This portion of your premium goes to Tower as the underwriter, to cover general claims and operational costs, including their own insurance (known as reinsurance). This helps protect them and our customers during significant events and catastrophes.
Risk Based premium
Using risk-based pricing, this part of your premium is based on your property's risk of being damaged by specific natural hazards.*
When Tower assesses the possibility of specific natural hazards happening at your place, they look at your property individually, not anyone else's. Tower call this natural hazard risk-based pricing, which is a fairer way to price insurance.
Risks can change over time, so we may update premiums as new data comes in.
For your vehicle insurance cover, Tower looks at the type of vehicle you drive, the value of your vehicle, your location and the average cost of claims to help determine your premium.
For your contents insurance cover, Tower uses insights from claims data alongside other available risk data to analyse the insurance risks at different addresses across New Zealand. Your specific cover is also considered, such as your sum insured and if you have any specified items that might need extra cover.
The Natural Hazards Insurance (NHI) Levy
This is a mandatory government levy collected by insurers and passed on to the Natural Hazards Commission Toka Tū Ake (NHC) to help rebuild or repair your home if it's damaged by specific natural hazards. Learn about the NHI levy.
Currently, the maximum amount of cover provided by NHCover is $300,000 plus GST. For most homes, this means that the NHI Levy is $480 plus GST.
The Fire and Emergency (FENZ) Levy
This is another mandatory government levy. Our insurance partner Tower collects it and passes it on to FENZ to help them operate fire and emergency services across New Zealand. Learn more about the FENZ levy.
Tax
Your total premium currently includes a 15% Goods and Services Tax (GST).
Why house insurance premiums change.
It's important to understand what influences your home insurance premium so you can make informed decisions.
- Increasingly frequent bad weather events mean more claims for insurers to cover, which can lead to higher premiums.
- Inflation and rising building costs also play a role, impacting the cost to repair or rebuild.
- Reinsurance, which helps insurers recover from large-scale disasters, can change over time due to global trends, and those costs are shared across premiums.
- Government levies (mentioned above) can go up.
Why vehicle insurance premiums change.
Type of vehicle
The frequency and cost of claims for the same or similar vehicles will influence the price of insurance for a particular make and model of vehicle. In addition, makes and models that require specialist or imported parts generally have higher repair costs which also affect your insurance premium.
The risk of claim for certain types of vehicles, including older models, can increase as they become more attractive to thieves.
Value of vehicle
The value of your vehicle can play a role in the price of your insurance, however, you’re much more likely to have an accident needing a repair rather than a total write-off. The premium charged needs to reflect the cost of repairs, including parts and labour. The repair costs and accident data for similar vehicles can also affect the cost of your insurance. Remember, the total value of your vehicle depreciates over time.
Your location
The growth in population and car ownership creates more opportunities for car accidents. Our data shows that areas of higher population density have an increased risk of car crashes and this will be reflected in the price of vehicle insurance for your location.
Average cost of vehicle claims
The number of vehicles with in-vehicle technology like reversing cameras, windscreen rain sensors and intelligent braking systems included as standard is rising. This can make repairs more complex and costly. Plus, labour costs are affected by the complexity of repairs because these take longer to complete and may require more specialised skills.
Why contents insurance premiums change.
We’re always reviewing our pricing, and your premium might change at renewal. It’s based on a few things specific to you, like your claim’s history, where you live and the type of assets you own.
Inflation also plays a part, as supplies, parts or replacement items become more expensive, so your premium may be adjusted accordingly. It's important to make sure you have enough insurance to cover everything in your home. If you’re not sure how much that is, you can use Tower’s Contents Calculator to do the maths and give you an indication.
Your pricing.
The information you give us also affects your premium pricing, including:
- Your claims 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 or change of use of the asset
- Your location. For example, if you live in a region with greater seismic, landslide, sea surge 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 (house 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 for you to consider if you want 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 a RoadWise benefit for breakdown services or a rental car benefit.
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. If choosing to increase your excess, consider whether you'd be able to cover the cost of that upfront if you need to make a claim.
Remove under 25-year-old drivers on vehicle policies
If they no longer drive your vehicle, removing drivers aged under 25 can help reduce the cost of your car insurance.
Our team is here to help you with your cover so you can stay insured and covered. If you're under financial pressure and would like to talk about your cover or the support available, please contact us.
Things you should know.
Please read the policy wording to understand the terms, conditions, excesses, limits, sub-limits and exclusions that may apply. Cover is subject to the current underwriting criteria. Claims payments are subject to cover and approval.
Westpac general insurance products are arranged by Westpac New Zealand Limited (Westpac) and underwritten by Tower Limited (Tower). 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, Tower or any member of the Tower group of companies. Westpac will receive commission payments as a result of the arrangement of Tower policies.