Compare house insurance

What is house insurance, and do you need it?

House insurance gives you financial protection against damage to your home. If your house is damaged in a fire, flooding, or in some other way, insurance will compensate you to repair or rebuild it.

House insurance specifically covers the property — the walls, floors, roof, and so on. This is why it’s also known as building insurance. It’s different to contents insurance, which protects the items you own, but it’s common to buy them as a package from the same insurer.

It’s not mandatory, but house insurance is highly recommended. A house is the most valuable asset many people will ever buy and the cost to replace it can be financially devastating.

The 5 best tips to get cheaper house insurance

1. Don’t automatically renew your policy — shop around or haggle

If you let your insurance roll over when it comes to renewal time, you could be missing out on a saving.

Insurers regularly update their pricing models which means that the cheapest insurer for your property can differ from year to year. Find out what price other insurers quote you to make sure you’re still getting the best deal.

If you have had your policy with the same insurer for a while, it’s highly likely you can haggle with them for a discount. Check out our section on haggling below.

2. Compare quotes to find the cheapest deal

You will nearly always benefit from taking the time to get quotes from a number of different insurers. All insurers price differently and take different factors regarding you and your property into account.

However, you will only know which insurer will give you the best price for your house by shopping around and getting quotes.

3. Combine with your car and/or contents policies for a discount

Most people who take out both house and contents insurance policies do so with the same company. Not only does it make managing and paying for your insurance simpler, but you will also benefit from a discount.

If you also have car insurance with another provider, you could consider moving that over too for an even bigger discount.

Multi-policy discounts are a common way for general insurers to attract and maintain business. Most insurers don’t state exactly how big their multi-policy discount is (often because they can’t guarantee each customer with multiple policies will get the same discount), but they can be as high as 20%.

4. Pay annually and save

House insurance can be expensive so it’s common for many of us to pay our premiums in instalments – usually monthly. But if you are in a position you pay for your house cover in one go, you can save up to around 10% off the total cost of the policy.

Make sure you can do so comfortably and don’t risk failing to meet other financial obligations you might have. But if you can pay annually, it’s an easy way to make another saving.

5. Choose a higher excess and pay less on your premiums

An excess is an amount you will have to pay if you need to make a claim before the insurer covers the rest. Many insurers will let you choose what that excess is from a range. Choosing a high excess will result in you paying lower premiums.

Many homeowners choose a higher excess because they get house insurance for incidents that can cause catastrophic damage. If a fire destroys their home, paying a $1,500 excess rather than a $400 excess as a one-off to rebuild seems acceptable.

Choosing the highest possible excess might not be for you if you want to be able to claim for smaller things like a broken window or a damaged carpet.

What to watch out for

Choose the right sum insured value and update it regularly

Most house insurance policies are ‘sum insured’ policies. This means that if your home is damaged, you will be covered up to the sum insured amount that you have chosen.

Your sum insured value is the amount it would take to rebuild your house, including materials, labour, council fees, and so on. It’s important to note that your sum insured value is not:

• the market value of your home (which could be much higher)
• how much you paid for your home
• the value of your land.

While you could choose a lower sum insured to save money on your premiums, it’s a terrible idea. The comparatively small amount you would save would likely pale in comparison to the shortfall in the amount needed to rebuild your home.

It’s also important to review and update your sum insured on a regular basis. Due to inflation and other factors, the cost to entirely rebuild your home will go up each year. It will also go up if you make any improvements to your home, such as extensions and renovations.

There are a number of ways to calculate your home’s sum insured. Using Cordell’s Sum Sure calculator is not the most accurate way, but it will give you a great idea.

How to haggle and save on your house insurance

While New Zealanders are often not used to haggling, it can save you a lot of money if you know how and when to do it. This is true when you’re haggling with an existing insurer, when and approaching a new insurer with your potential business.

How much power you have to haggle with an insurer will depend on three main factors:

1. How long you have been a customer: Insurers will give you a discount for loyalty, but you will have to ask for it. Customers who have been with an insurer for a number of years are usually very valuable to them and they don’t want to see a customer who could be with them for many more years walk out the door.
2. How many policies you have: Having only a house policy is good for haggling, but having house, contents and car insurance policies with the same insurer is great. The more business you have the insurer, the harder they will fight to keep you (or get you onboard).
3. Your claims history: If you have made a number of claims in the past, an insurer will assume that pattern will continue in the future and may let you leave without a fight.

In summary, if you’re a proven loyal customer with multiple policies and a good claims history, you’re in an excellent position to negotiate. But even if you just have one policy and have been with your insurer for a while, you still have a strong chance of getting a discount.

Tips for haggling as an existing customer

Firstly, prepare. Before you call up your insurer to discuss your policy, get quotes from other insurers to find out how your current premium price stacks up. We recommend doing this each time your policy comes up for renewal.

If you find a cheaper price for similar cover, you will have more power with which to negotiate. Even if your current cover is the cheapest, you still have a good chance of negotiating money off — your insurer will often beat your renewal price.

Also, make a note of any problems you may have had with your insurer in the past. If they have something to make up for, they are more likely to bend on their price.

• Call at renewal time: You have a better chance of negotiating a discount when your current policy is about to expire. You can try before this, but the threat of you leaving won’t be as immediate.
• Make it clear that you intend to leave: The customer operator will put you through to their retention team, which is the starting point for your negotiations.
• Reject the first offer: The retention team will usually have some discretion to offer you a discount, but it likely won’t be much. Keep pressing and you will be escalated to a team with the authority to grant a more significant discount, based on your circumstances.
• Don’t be afraid to abort: If you have rejected the insurer’s latest offer and they won’t go any further, you can always say you will think about it and call them back. Make a record of their best offer (they will do the same) and decide if it’s good enough for you.
• Be polite: Be clear in what you want, but don’t be rude. Being aggressive won’t help you get a discount and the person you’re talking to is ultimately there to help you.

Tips for haggling as a new customer

You won’t have the leverage of being a loyal customer, but you can still haggle for a better price than what you’re first quoted with a new insurer

First, get quotes from a number of insurers. Some insurers will match or beat a quote from another company, so if you have an insurer you prefer but that doesn’t offer the cheapest quote, call them and see what they can do. The insurer will want to see proof of the quoted price and that the level of cover is similar.

Remember that the insurer will be more likely to give you a discount if you are bringing over multiple policies. This may be an opportunity to save on more than just your house insurance.