Understanding your house and landlord premiums
Everyone’s insurance premium may change year by year. So we want to be really clear on what makes up your insurance premiums, and why they may change.
What makes up your house and landlord insurance premium?
To get an idea of where your money goes, here’s an overview of costs for an average suburban house in Hamilton.
Base premium
The money we use to pay your claims and other costs, like paying the people who work for us. We also need to pay our insurance; this is called reinsurance.
Earthquake Commission (EQC) levy
A government fee for everyone with house or landlord insurance. Tower, like all insurers, passes this on to the Earthquake Commission – Toka Tū Ake (or EQC), so they’re ready to help if something big happens. Learn more about the EQC levy
Fire and Emergency levy
Your contribution to Fire and Emergency New Zealand. It helps to support the fire and emergency services. Learn more about the Fire and Emergency levy
Specific risks
Flooding and earthquakes are the most destructive natural disasters in New Zealand. So, we use RMS® Risk Models to help us fairly price our premiums.
Tax (GST)
Your premium also includes 15% GST of the total cost.
We use 'risk-based pricing' for house and landlord insurance
The chances of your home being damaged by various risks, like earthquake, flood or storms, are different depending on where you live. What your house is made of, if you have any special features and other characteristics of your house are taken into account when we calculate your house insurance premium. We call this risk-based pricing.
If your property is more likely to be affected by natural perils, your insurance premium will likely be higher. On the flip side, if you’re less likely to be affected, you’ll not pay as much. For example, a house in Wellington, might be considered higher risk as it’s more likely to be affected by an earthquake, compared to a house in an area like Whangarei.
These risks change over time, so we keep an eye on the big picture and your premiums could go up or down based on new data that becomes available.
How we apply risk-based pricing
We use data to analyse the risk at different addresses across New Zealand. We even look at things like soil type, proximity to bodies of water, the elevation of the land, how close your house is to an earthquake faultline, as a few examples. Then we combine this with how old the building is, how many storeys it is, what it’s made of, it’s sum insured and other factors.
We also work closely with Risk Management Solutions (RMS®) – one of the world’s leading catastrophe modelling companies.
Reviewing everything at such a detailed-level means flood and earthquake damage risk can vary from one address to another – even for properties on the same street. This is reflected in our premiums.
Know your numbers
Tips and tricks to help you understand your insurance premiums