Ways to avoid excess insurance expenses
House and contents insurance is one of those grudge purchases. Most of us have it, whether we like it or not.
But if you’re sticking with the same insurer year after year, it could be costing you hundreds more than you need to pay.
Our latest survey of insurance premiums found a difference of more than $500 between the cheapest and most expensive policy providing $400,000 home and $90,000 contents insurance cover.
Renters could also be saving. In Auckland, those on the most expensive contents policy, providing $35,000 cover, are paying $440 more a year than those on the cheapest.
Shopping for insurance is more daunting than it should be. Insurers don’t make it easy to compare policies to see what you get for your money – and poring over the legalese in policy documents probably isn’t your idea of fun.
All contents policies provide basic cover. The main difference between them is in the detail. For example, if your camera is stolen will you get the cash value, a replacement of the latest model, or something from a budget brand?
House cover has become more complicated since the industry’s move to sum insured insurance after the Christchurch quakes. It means homeowners are responsible for estimating the cost of rebuilding their homes, including the cost of demolition and rubble removal. If you get it wrong, you’ll have to pick up the shortfall or accept the rebuild will be a lesser version of your home.
Some insurers are moving back to full replacement cover for events other than natural disasters. Full replacement means just that: the insurer will pay the full cost of repairing your home. It’s an important difference to be aware of when comparing options.
When you’re doing so, you should also keep in mind our tips for getting a better deal:
Get at least two or three quotes: Taking the time to shop around can pay off. In Auckland, we found a difference of $1200 between the cheapest and most expensive policy for $800,000 home and $140,000 contents cover.
Try negotiating a better deal :If you’ve found a cheaper policy somewhere else, give your current insurer the chance to come up with a better deal before walking away.
Ask for a multiple policy discount: If you have your house and contents insurance with the same insurer, ask for a discount.
Consider a higher excess: The excess is the amount of each claim you must pay yourself. As a guide, it’s usually $250 to $500, depending on the company. Taking a higher excess will lower your premiums. We’ve found taking a $1000 excess could cut your premium in half with some insurers.
Ask about age discounts: Some insurers offer discounts from ages 50 or 60.
Check out consumer.org.nz: Want to see what you’ll get if your precious jewellery is stolen or your book collection is wrecked in a freak flood? Our website provides information on the core cover provided by 16 policies. We’ve also looked at the premiums you can expect to pay in the five main centres. Renters can also compare contents insurance premiums.
Sue Chetwin is the chief executive of Consumer NZ. For thousands of independent test results and research on a range of products and services, go to consumer.org.nz.
Give your current insurer the chance to come up with a better deal.