Personal finance editor Amanda Morrall talks to Suzanne Wolton with AA Insurance about rate increases, bargaining hunting and the security of your insurer.

Personal finance editor Amanda Morrall talks to Suzanne Wolton with AA Insurance about rate increases, bargaining hunting and the security of your insurer.

Personal finance editor Amanda Morrall talks to Suzanne Wolton with AA Insurance about rate increases, bargaining hunting and the security of your insurer.

By Amanda Morrall

With EQC levies tripling at the start on this month in addition to home insurance premiums increasing by as much as 50%, householders can prepare themselves for a seismic case of bill shock if they haven't already.

It's not only cash-strapped Cantabrians who can expect to be hit with higher insurance costs. Nation-wide insurance companies impacted by the Christchurch earthquakes have raised their rates (and many) readjusted their policies in some cases after reinsurance hikes at their end.

The Earthquake Commission, hit with approximately NZ$10.8 billion in claims (so far NZ$2.8 billion of that has been paid), is also looking to rebuild its reserve. Earthquake levies have now shifted from a maximum of NZ$50 to NZ$150.

AA Insurance head of corporate affairs Suzanne Wolton said the average customer used to pay approximately NZ$200 to cover reinsurance, GST, fire service and earthquake levies. From Feb.1, that jumped to NZ$600.

"It's a significant increase,'' concedes Wolton.

"When people open their bill this year, no doubt they aren't going to be particularly happy.''

Consumers may be defenceless against reinsurance risks being priced into their policies however those who shop around could mitigate some of the financial pressure.

A common mistake many people make is thinking that by using the same insurer for all their rquirements (car, contents and home cover) that they'll get a better deal.

Wolton said while that might have been the case at one time, it was no longer true.

"We need to dispel this notion that you need to have all your insurance with one provider.''

Wolton offered the following tips for customers.

1)  Separate the costs for each type of cover and find out if and by how much it is increasing. While some insurers have raised insurance on home cover by 50%, others have increased insurance premiums across the board but by a smaller amount.

2) Shop around for each insurance requirement to find the best price.

3) Take into account the insurer's financial stability as part of your decision making. New Zealand insurers require a credit rating from AM Best or Standard and Poor's.

According to the RBNZ, a credit rating is an independent opinion of the capability and willingness of a financial institution or company to repay its debts – in other words, its financial strength or creditworthiness. (See interest.co.nz's credit rating explained section here).

4) Get quotes from a number of different insurers but make sure you're comparing like with like in terms of what protection you're buying.

5) Ask specific questions of the potential insurers and give them scenarios that explain your circumstances or concerns.

6) Don't put the brochures in your bottom drawer, read them thoroughly.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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best way to minimise insurance costs.
NEVER CLAIM
As soon as you claim goodbye cheap insurance.

Shop around is good advice, however in this case no matter where you go it seems all premiums have gone up.
For an Auckland home full replacement you are looking at new rates of:
AMI $700, Tower $800, AA and PSIS $900+    Old rates were in the order of $500. It would be too risky to go without, so you just have to absorb the increase- maybe cut off contents insurance to compensate.  The comments given suggest that the premium is related to the company draw down from other events, even though your individual risk for your home has not changed.
So from my limited sample AMI looks to be the best  in terms of premium- anyone have other suggestions?
 
 
 
 
 
 

Other ways of reducing insurance premiums: 
1. Slightly reduce the sum insured e.g. reduce $12000 car to $9000  or Contents from 90000 to 65000  - chances are that's closer to market price anyway.
2. Slightly increase the Excess amount on House, Contnetns & Cars e.g. from 300 to 500 on each.   This disciplines you to only claim on larger events as well as reduce premiums. 
3. Reduce the amount insured on both partners Life insurance by the balance in your respective Kiwisaver account/s - Your partners Kiwisaver account is effectively a small life insurance account.   In addition - reduce slightly the sum insured on major medical/disability.
 
 
 

No Contents could be a problem with: major earthquake, fire or major theft  - could you afford to replace most items inside your home?  Probably not.
What about listing & selling everything inside your house on TradeMe?  Sleep on an airbed - keep some clothes. You might flush out $30,000.    Then start all over again  -  many people do this when moving country anyway - must be doable!    The ultimate declutter experience.

It pays to shop around for the best insurance that meets your needs. Your insurance provider might not have the solution to all your needs, and it is foolish to stick with one provider who charges you more.