Your Insurance Premium

Many factors can impact the amount of premium that we charge, including what you’re insuring, the policy you choose, and how we calculate premiums from time to time. We understand that premiums, and changes to them, can be confusing so we’ve put together some of the factors that can influence the premiums you pay.

What impacts my home &/or contents premium?

When insuring your home and/or contents, we ask several questions to help you determine the cover you need and the associated premium. Some of the key pieces of information that impact your premium are listed below.

Sum insured

The sum insured is the most you can claim for any one event unless otherwise stated in your relevant policy document. Often, the extra bit of cover you could need, may not significantly increase your premium. You should make sure it’s up-to-date and will sufficiently cover the rebuild of your home and/or replacement of your contents.


Some areas of New Zealand are more prone to natural disasters or severe weather events and therefore, location can impact premiums. This means insurers need to be disciplined around pricing the properties and areas they cover sustainably.

Certain areas with higher instances of theft and/or vandalism can also have an impact on premiums.

Building Materials

The materials used to build a home will affect the premium charged, particularly as they’re what protects a home and your contents from the outside elements.

Year of Construction

The year your property was built could influence how much premium you pay. For example, certain types of construction methods and materials have been shown to impact the likelihood of a claim occurring.

What impacts my car premium?

When insuring your car, we ask several questions to help you determine the cover you need and the associated premium. Some of the key pieces of information that impact your premium are listed below.

Agreed value

The amount your vehicle is insured for affects your premium. Your agreed value will usually be adjusted every year at renewal to account for depreciation, in line with the market. For example, luxury vehicles can have higher premiums as they cost more to replace than less expensive vehicles in the event of a total loss.

Type of Vehicle

The type of car you own can have a significant impact on your premium, because the cost and availability of replacement parts can vary based on a vehicle’s make, model and age.


Areas with higher incidences of theft and vandalism could see higher premiums, and more populated areas mean more traffic and an increased likelihood of damage occurring. This is monitored by analysing our claims data.

Age of Driver

A driver’s age and experience can affect their likelihood of having an accident or claim. For example, we generally see more experienced drivers with fewer accidents. This is monitored by analysing our claims data.

What influences premium?

As an insurer we have a responsibility to maintain a level of capital to meet our customers’ needs in the event of losses/claims. Throughout this process, we always aim to ensure premiums are set to fairly reflect the risk and the cover provided for our customers. This means striking a balance between pricing policies for specific risk versus pooling that risk and spreading the cost to make insurance more affordable across the board.

We are continually checking our pricing against factors like the number and types of claims we experience and changes to the cost of running our business. This means that each year your premium can change, even if your personal circumstances haven’t.


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A premium may change depending on the number and severity of claims we receive each year. If we receive more claims than planned for, or these cost more than expected, premiums may rise accordingly to replenish our pool of funds so we can continue to help customers in their time of need. Your own claims history can also affect premiums.

Taxes & Levies

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Any applicable taxes and levies are applied including GST, Earthquake Commission and Fire & Emergency levies, which we collect on behalf of the government.


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Part of the premium we collect from our customers goes towards paying our own insurance premium to reinsurance providers. This is additional cover we purchase to protect us against exposure to large scale events such as storms, floods and earthquakes. This helps us maintain our ability to pay claims. As the cost of our reinsurance changes, so too could your insurance premium.

Expenses & Profit

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Like any business, we have expenses and operating costs that enable us to service our customers. We invest in the technology and products that we believe will enhance our customer experience. We also need to make a profit to ensure we can continue running our business year after year, and this can vary significantly depending on large scale events.

Understanding your notices

What is a base premium

The base premium listed on your notices is the premium we've calculated that fairly reflects the risk and the cover we provide. It excludes any applicable taxes and levies.

What do the different excesses listed on my policy schedule mean?

All policies have a policy excess which is outlined on your most recent policy schedule. Any other additional excesses that could apply to a claim under certain circumstances are also listed for you to be aware of.

For example, if you have listed an under 25-year-old driver on your policy who has caused an accident, there would be an additional excess of $550 plus your policy excess.

Why do you charge levies?

Taxes, fees and levies such as GST, Fire and Emergency (FENZ) Levy and Earthquake Commission (EQC) Levy are collected by all insurance companies on behalf of the government. Insurance companies, like AA Insurance, include them in the premium you pay and ensure they’re passed on to the Government.

What makes up my total premium?

The cost of your insurance is made up of three components:

  • The AA Insurance premium. This considers risk factors of what you are insuring. For example, the size and materials that your home is made of and where it's located in the country or the year, make and model of your car and the drivers using it.

  • The second component is reinsurance costs. This is additional financial cover that enables us to make sure there are enough funds to pay all insurance claims in the case of a large-scale event.

  • The final component is taxes, fees and levies collected by all insurance companies on behalf of the government for example GST, Fire and Emergency (FENZ) Levy and Earthquake Commission (EQC) Levy.

The direct debits shown on my renewal notice in ‘last year’s premium’ are different to what I’m paying, and I didn’t make any changes to my policy?

If you pay by direct debit, ‘last year’s premium’ displayed on your notice may be based on the number of instalment payments for the coming year, so you can compare premiums like-for-like.

For example, if you paid 25 instalments last year, and you have 26 this year, your ‘last year’s premium’ displayed will be based on 26 payments.

This is calculated as: Last year’s premium = Annual premium / number of instalments for upcoming year.

What is a like-for-like premium? Why do you use it?

A like-for-like premium may be used if you made changes to your policy in the last 12 months. This means it may not always be the same as the amount you paid last year. We take any changes you’ve made throughout the last 12 months and calculate what the price would have been last year, so you can make an easy comparison.

For example, if you have changed your vehicle cover from Comprehensive to Third Party cover, we would show what your annual premium would have been last year if you had Third Party cover from the beginning of your last policy term.

What does ‘period of insurance’ mean?

The period of insurance outlines the dates that your policy starts and ends on, unless your policy has ended earlier.

Why is last year’s premium on my renewal notice?

We strive to make things as easy as possible for our customers - that’s why we’ve decided to display your previous year’s premium, alongside your new one, on policy renewal notices.

In addition, you may have noticed we’ve included a helpful percentage so if your premium has changed, you can quickly and easily see how much it has changed by.

Why is last year’s premium on my renewal notice different to what I paid?

We may have used a like-for-like premium to help you compare the cost of your renewing policy, to the price you paid last year. This means it may not be the amount you paid last year. This is used if you’ve made changes to your policy throughout the last 12 months. We’ve found this is more useful than comparing your renewing policy price to your previous policy, especially if there have been significant changes.

If you haven’t made any changes to your policy, there’s nothing to worry about. The amount shown from ‘last year’ should match the premium you paid for the previous policy term.

Concerned about the cost of your insurance?

Here are some ways to save on your premium

Check your contents sum insured – use the online calculator on our website (provided by ‘Sum Insured Pty Ltd’) to check everything is up-to-date and that the cover you have would be enough to replace all your contents if you lost everything. For example, if you have downsized since setting up your policy, you may be paying for more cover than necessary. It’s also important your sum insured is updated when you buy new stuff or upgrade your belongings (especially expensive items like a new TV or sofa) so you’re not caught short in the event you need to claim. Often, the extra bit of cover you could need might not significantly increase your premium.

Review your excess – depending on what you think is manageable for your budget, you may want to review your excess. There are different excess options available, in case you need to make a claim, and generally the larger the excess, the smaller the premium. Remember, you’ll need to pay this amount if you make a claim so it should still be affordable. You should also take into account any additional excesses that may apply.

Check your home sum insured – use our online calculator to check it’s up-to-date and will sufficiently cover the rebuild of your home. For more information, check out our sum insured page.  

Consider how you pay – you can choose to pay your premium annually or spread the cost by fortnightly or monthly direct debit. You’ll pay less if you pay one annual lump sum.

Review your benefits – you’ll find your optional benefits listed on your policy schedule or on the Policy Summary page in your My AA Insurance account. For example;

  • If you could use another vehicle while yours is being repaired and wouldn’t need us to provide a rental car, you may wish to remove the optional rental cover benefit from your Comprehensive Car Insurance Policy. Removing this benefit saves $50 (Inc. GST) per year.

  • You may decide you no longer want or need the optional excess-free glass cover benefit for your Home Insurance Policy. Removing this benefit saves $69 (Inc. GST) per year.