Your Insurance Premium
What is an annualised premium?
If you have made changes to your policy in the last 12 months, when we refer to an amount from ‘last year’ on your renewal notice, it may not be the amount you paid. To provide a more useful comparison, we are showing you an amount for your cover as of your most recent change. For example, if you have changed your vehicle cover from Comprehensive to Third Party cover, we’re showing what your annual premium would have been last year if you had Third Party cover from the beginning of your last policy term.
If you haven’t made any changes to your cover, when we refer to the amount from ‘last year’, this should match the premium paid for the previous policy term.
If you pay by direct debit, your ‘last year’s premium’ displayed on your notice will 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 influences premium?
As well as ensuring we’re collecting enough in premiums to remain a sustainable business, we also aim to set prices as fairly as possible 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 of claims we experience, improved data and changes to the cost of running our business. So each year your premium is likely to change even if your personal circumstances haven’t.
The following general information is relevant to AA Insurance home, contents & landlord insurance, and car (including motorcycle & caravan/trailer) insurance, unless otherwise stated. Please refer to relevant policy documents for more detail.
What impacts my home and/or contents premium?
Sum insured is the most you can claim for any one incident unless otherwise stated in your relevant policy document. Repairs on high value homes tend to cost more, resulting in higher premiums.
Some areas of New Zealand are more prone to natural disasters or severe weather events and therefore, location can impact premium. Certain areas with higher instances of theft and/or vandalism can also have an impact.
Following the Canterbury earthquakes, reinsurers significantly increased the risk associated with New Zealand as a whole. This has led to ongoing pressure on reinsurance costs and means insurers need to be more disciplined around pricing the properties they cover sustainably.
The materials used to build a home will affect the premium charged. The roof and exterior wall materials are particularly relevant as they’re what protects a home from outside elements.
Following the Canterbury earthquakes, more detail is captured surrounding building materials so we can establish an accurate Replacement Value for your home.
The year your property was built could influence how much premium you pay. For example, certain types of plumbing used widely in the 1980’s has been shown to cause more water damage and claims. We also know that older buildings tend to have a higher earthquake rating due to building practices improving and becoming more robust over time.
What impacts my car premium?
The amount your vehicle is insured for affects your premium. 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. Your Agreed Value will usually be adjusted every year at renewal to account for depreciation, in line with the market.
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. Demand for repairers can also play a role, particularly in specialist categories.
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 constantly tracked through analysing our claims data.
A driver’s age and experience can affect their likelihood of having an accident or claim. Generally, more experienced drivers have less accidents, but our claims data is constantly evolving.