Understanding your car insurance premium

Your insurance premium should be easy to understand but we know this isn’t always the case. To make things a little clearer, we take a look at some of the factors that affect how much you pay for car insurance and explain why the cost of cover is going up.

What factors impact your car insurance premium?

  • The type of car you drive

    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 cars, including older models, can increase as they become more attractive to thieves.

  • The average cost of claims is increasing

    The number of cars with in-vehicle technology (like reversing cameras, windscreen rain sensors and intelligent braking systems) included as standard is rising. These make repairs more complex and costly compared to previous years.

    Plus, labour costs are increasing as greater complexity of repairs means these take longer to complete and require more specialised skills.

  • The value of your car

    The replacement value of a car can play a role in the price of your insurance, however, you’re much more likely to have an accident requiring a repair rather than a total write-off. 

    The premium we collect needs to reflect the cost of repairs, including parts and labour. The impact of rising repair costs and accident data for similar vehicles can mean the cost of insurance can go up even as your vehicle ages and the total replacement value starts to depreciate.

  • Your location

    The growth in population and car ownership create 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 car insurance for your location.

  • Changes to government levies

    Although an EQC Levy is not collected for car insurance, a Fire Service Levy is collected to help pay for the services Fire and Emergency New Zealand (FENZ) provide at the scene of an accident. We collect this levy on behalf of the government and pay it directly to FENZ. The Fire Service Levy increased on 1 July 2017. 

    Read more about the Fire and Emergency levy