Why has my car insurance premium changed?
Insurance premiums can be a complex subject, influenced by a variety of factors. Whether it’s your personal driving record or larger market trends, it’s essential to understand how these elements may affect your cost of insurance, especially in New Zealand’s dynamic environment.
Weather events
New Zealand’s weather is becoming more erratic, with significant impacts on vehicles. For instance, North Island floods in 2023 led to a high number of vehicles being written off due to water damage.
Advances in technology & materials
Newer cars come with advanced technology like backup cameras and sensors. The materials used, such as aluminium, although beneficial for fuel efficiency and safety, are harder and more costly to repair.
Inflation & economic factors
With New Zealand’s inflation at a 32-year high and increasing labour costs, the overall cost of vehicle repairs is rising.
Claims cost inflation
Driven by the increasing frequency and costs of claims, the average cost for vehicle parts has surged by 8-10% over the past year. Labour costs have also seen an increase, now ranging between $115-$160 per hour.
Insurer’s data
Between September 2022 and February 2023, our underwriter, IAG NZ, recorded a rise in claims, especially due to weather events like North Island floods and Cyclone Gabrielle. The Insurance Council New Zealand reported that Cyclone Gabrielle had already resulted in costs of around $1.5 billion*
Location & past claims
Where you live, your past vehicle claims, the sum insured, and the type of car you drive all contribute to your premium rate.
Changes to cover
If you alter the agreed value, excess, main driver, or permit drivers under 25 years to use the vehicle, this will affect the cost.
Driver grades
If the main driver incurs an ‘at-fault’ claim, this changes the driver grade, affecting the premium. Learn more about driver grades here.
Government levies
A segment of your car insurance goes towards the Fire & Emergency NZ (FENZ) levy. This rate will increase to $10.96 (incl GST) per vehicle on 1 July 2024.
The cost you pay for insurance needs to mirror what it costs your insurance provider to offer the cover. With the various contributing factors outlined above, it’s understandable that premiums may undergo adjustments. Rates usually change annually, aligned with your policy’s anniversary.
Understanding these factors will better prepare you for any changes to your insurance premiums and equip you with the knowledge to make informed choices.
*Insurance Council New Zealand, September 2023
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