If your house insurance premiums have been rising, you’re not alone. Many Kiwi homeowners are seeing steeper costs, with premiums climbing by 17.3% over the past year. What’s causing these increases, and is there anything you can do to manage them? Let’s break it down and explore practical ways to lower your costs.
How much does house insurance cost in New Zealand?
Before we get into the “why,” let’s touch on the “how much.” House insurance costs in New Zealand can vary widely depending on factors like location and property specifics.
For example, Wellington homeowners face average premiums of $4,467 annually, largely due to earthquake risks, while Aucklanders typically pay closer to $2,104.
These costs highlight how location and risk levels directly influence what you pay. But rising premiums aren’t just about where you live—they’re also driven by broader factors like natural disasters, construction costs, and climate change.
Let’s unpack these drivers and explore how they affect your insurance bill.
Natural disasters and extreme weather events
New Zealand frequently experiences natural disasters like earthquakes, floods, and storms. These worsening events are driving up insurance costs as insurers adjust their prices to manage higher risks.
In 2022, severe weather events resulted in $351 million in insurance claims. This surge in claims has increased costs for insurers, which are then passed on to homeowners. Regions like Wellington and Christchurch are particularly affected due to their higher natural disaster risks.
Living in areas prone to earthquakes or other natural disasters significantly impacts insurance costs. Insurance companies charge higher premiums in these locations to account for the greater likelihood of large claims. Even if you never make a claim, residing in these high-risk areas can still result in higher premiums for your house insurance coverage.
Natural disasters don’t just lead to more claims—they also increase the costs of rebuilding. Rising prices for building materials and labour are adding even more pressure to premiums.
Rising costs of construction and repairs
The impact of natural disasters extends beyond claims—rising construction and labour costs are making repairs and rebuilding even more expensive.
Another factor driving premiums up is the increasing cost of building materials and labour. If home renovations or repairs feel pricier than ever, you’re not alone. Rising construction and labour costs mean it’s more expensive for insurers to cover repairs or rebuilding, which directly impacts your premium.
Why this matters: Insurers calculate your premium based on the “sum insured,” which is the estimated cost to rebuild your home. As rebuild costs go up, so does your premium.
Quick tip: Using tools like the Cordell Sum Sure Calculator can help you keep your sum insured accurate.
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Reinsurance costs
With rebuilding becoming more expensive, insurers also face increasing risks. Reinsurance, which helps insurers manage these risks, plays a critical role in shaping premiums.
Reinsurance may sound complex, but it’s essentially insurance for insurance companies. It protects insurers from major events, like earthquakes, that impact many homes. As natural disasters become more frequent globally, reinsurance costs have risen, and consumers are feeling the effects.
If you live in a high-risk area, part of your premium likely reflects these rising reinsurance costs. As a result, homeowners in New Zealand are seeing changes in their insurance rates to cover these added expenses.
The shift to risk-based pricing
Reinsurance spreads the financial burden of large-scale disasters, but risk-based pricing focuses on tailoring premiums to individual properties.
You might wonder, “What is risk-based pricing?” It’s a method insurance companies use to set prices based on the specific risks of each property.
Instead of applying the same rate to every house in the same area, insurers adjust prices according to the risks of each home. This means your insurance premium could differ significantly from your neighbour’s—even if you live on the same street.
If you own an older home with outdated wiring or live in an area with higher crime rates, your insurance costs might be higher. Even within the same neighbourhood, premiums can vary—newer homes are often cheaper to insure than older ones.
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The impact of climate change
Risk-based pricing is particularly important as climate change continues to amplify risks. Insurers are rethinking their models to deal with the growing number of extreme weather events.
Climate change is a key reason house insurance prices are on the rise. Floods, strong storms, and other extreme weather events are happening more often—and with more intensity—making it riskier to insure homes in certain areas.
For example, if your property is near a river or along the coast, you might notice higher premiums to cover increased flood risks. This is just one way insurers are responding to the challenges climate change is throwing their way.
What can you do to manage rising costs?
While these factors are driving up premiums, there are steps you can take to lower your costs and ensure you’re protected. Let’s explore how to manage your house insurance effectively.
Review your coverage regularly: Make sure it reflects accurate rebuilding costs to avoid over- or under-insuring your home.
Consider increasing your excess: A higher excess can help lower your premium, but be sure it’s an amount you can comfortably afford if you need to make a claim.
Shop around and compare policies: Take the time to compare different providers to find the best deal for your needs.
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Review your cover regularly
Make sure your sum insured matches the current cost to rebuild your home. Overestimating your coverage can result in higher premiums, while underestimating it may leave you underinsured—putting your finances at risk if disaster strikes. Tools like the Cordell Sum Sure Calculator make this process simple and stress-free.
Here’s an example to show why regular reviews matter:
A house with a sum insured of $1,000,000, but a more realistic valuation of $750,000, highlights the importance of reviewing your cover regularly.
Sum insured ($) | Average yearly house insurance costs ($) | Savings ($) |
$1,000,000 (overvalued) | $2,665 | |
$750,000 (actual value) | $2,039 | $626 |
Source: Quashed
In this case, adjusting your sum insured to reflect the actual rebuilding cost could save you $626 every year. By regularly reviewing and updating your cover, you can ensure you have the right protection without overpaying for unnecessary premiums.
Want to learn more about house insurance and how to get the best coverage? Check out our comprehensive guide: House Insurance: A Homeowner’s Guide. It’s packed with tips on choosing the right policy, budgeting smartly, and protecting your home with confidence.
Consider increasing your excess
Increasing your insurance excess means paying more out-of-pocket when you claim, but it can significantly lower your annual premium. In some cases, a higher excess can reduce your costs by up to 20%, making it a great option for those comfortable paying more upfront to save money over time.
Example: Adjusting your excess
Consider the same home in Auckland with a sum insured of $750,000. Here's how different excess amounts can affect your annual premium:
Excess ($) | Average yearly house insurance costs ($) | Savings compared to $500 Excess |
$500 | $2,039 | - |
$1,000 | $1,877 | $162 |
$2,000 | $1,725 | $314 |
Source: Quashed
By increasing your excess from $500 to $1,000, you could save $162 each year. If you raise it to $2,000, your savings grow to $314 annually. Before adjusting your excess, think about your ability to pay the higher amount if you need to make a claim. It’s important to find a balance between the savings you’ll enjoy now and the potential out-of-pocket costs you may face later.
Shop around and compare policies
Comparing different policies is one of the easiest ways to find great coverage while saving money. Quashed makes this process hassle-free, letting you view multiple insurers side by side in real-time. This helps you quickly spot the best deal tailored to your needs.
Each insurance company offers unique benefits and pricing, so it’s important to compare your options. With Quashed, you can access an easy summary of policy terms from multiple providers, along with full details outlined in the policy wording documents.
Here’s why comparing matters: Some policies may have lower premiums but come with conditions—like higher excesses or limited coverage for certain items. Others might offer more features, such as high liability cover, inflation protection, or optional extras. That’s why it’s essential to carefully review the fine print to ensure you’re getting the right mix of affordability and protection.
Ready to find the right policy? With Quashed, comparing policies is simple, fast, and stress-free. Start comparing today to secure the best coverage for your needs.
Protect your home and your wallet
Don’t let rising premiums catch you off guard—compare and save on house insurance today. With Quashed, you can find the right policy in just minutes. It’s simple, free, and tailored to your needs.
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FAQs
What factors determine the cost of house insurance?
House insurance premiums in New Zealand vary based on a few key factors:
Location: Homes in high-risk areas, like earthquake-prone Wellington or flood zones, often have higher premiums.
Property age and condition: Older homes may cost more to insure due to upkeep needs, while newer homes can be cheaper to cover.
Coverage and excess: The level of coverage and your chosen excess amount affect your premium. A higher excess can lower your monthly cost but increases out-of-pocket expenses if you claim. Understanding these factors helps you manage and potentially reduce your insurance costs.
How does house insurance work in New Zealand?
House insurance, or home insurance, is your safety net for when things go wrong. It covers you not only for accidental damage to your home but also protects you from potential legal issues, including legal liability, that might come up. Here’s how it works: you and your insurance provider agree on a “sum insured”—the maximum amount they’ll pay if your home is seriously damaged or destroyed. If disaster strikes, the insurance company will cover the costs to repair or rebuild your home up to that agreed amount, including any extra costs that come with the damage.
How much will my house insurance cost?
In 2024, the cost of insuring your home is influenced by factors like inflation, real estate trends, and new regulations. On average, house insurance costs around $2,702 per year (or about $225 per month) as of Q3 2024.
Rising costs are a growing concern. Extreme weather events and other factors are driving up premiums—so much so that 8% of homeowners are considering dropping their policies due to expense, according to Consumer NZ.
Still unsure about house insurance? Our blog, Top House Insurance Questions Answered, has all the details, from coverage limits to exclusions, to clear things up.
