Some specific increases we’ve seen on the farm include a 100 per cent rise in insurance costs for quad bikes, a 110 per cent increase for the main dwelling, and a 99 per cent increase for the farm implement shed. There are no hard and fast rules regarding insurance costs and what should be insured; these decisions depend on individual circumstances and needs.
The main reason for the increases in premiums is the rise in the number of claims resulting from weather events and natural disasters in New Zealand. Plus, the escalating costs of labour, materials, and equipment needed for rebuilding or replacement have contributed to the higher premiums.
Part of your premium consists of government levies, which have also been increasing. These include the Fire and Emergency Levy, Earthquake Commission (EQC) Levy. As these levies increase, the GST applied to the premiums also increases.
How can you reduce premiums?
Get different quotes:
It is advisable to periodically obtain quotes from different insurers to compare costs. If you find a cheaper quote, make sure that the terms and conditions are equivalent. Maintaining multiple policies with a single provider can often qualify you for a multi-policy discount.
Claim only when necessary:
Your claim history significantly impacts your premium. Insurers consider your history of claims, so it’s wise to avoid filing claims for minor issues like broken windows or cellphones.
Build a relationship:
A long-term relationship with a broker can also help. They are more likely to go in to bat for you and provide support during complex claims.
Review regularly:
Regularly review what you are insuring and the value at which it is insured. For example, farm vehicles depreciate quickly, so ensure that the insured sum reflects the current market value of the vehicles.
Choose appropriate excess:
All insurance companies will offer you a choice in the excess amount, which in turn affects your premium. Generally, a higher excess results in a lower premium, as you take on more risk. For instance, if you consider yourself a good driver and believe you are unlikely to cause an accident, you might opt for a higher excess on your motor vehicle policy.
You can ask your insurance company to provide different scenarios with varying excess levels to aid in your decision-making. It’s crucial to ensure you can afford the higher excess if you need to make a major claim.
For many, reviewing insurance coverage is a low priority, often resulting in simply accepting the renewal terms sent by the insurance company. However, given the significant increases in some coverage costs, it’s worthwhile to invest more time in this process. Personally, I have started to request quotes from other insurers to ensure I am getting the best value.
We all have choices when it comes to insurance. You can decide to insure or not insure certain items, particularly those with lower risk. However, it’s important to carefully consider the potential consequences of such decisions.
To review your insurance policies or to talk to an insurance broker, contact our experienced team at Findex.co.nz
