"As the majority of contamination claims to date involve rental properties, and claim numbers and overall claims costs involving methamphetamine contamination have increased in recent years, premiums across landlord policies will see some increases directly related to the cost of these claims and the changes to levels of cover."
The insurer has also said it will not accept claims for contents contamination.
"Claims will not be accepted for contamination to contents in homes, as it is too difficult to determine the timing and nature of any event causing contamination."
IAG said across its brands it had received an average of 60 meth-related claims per month for the last year.
Claims had cost the company $14 million in the last year.
IAG said in future claim acceptance would be based on the presence of contamination, not reliant on the cause and claims would be capped at $30,000, up from $25,000.
It said the average home decontamination costs somewhere between $20,000 and $25,000 although it can be as high as $50,000.
IAG is not the only insurer to have made meth-related changes.
Vero said it began to introduce a cap of $30,000 for claims to its policies from August last year.
Prior to that there was no limit other than the sum insured amount.
Vero executive general manager Adam Heath said the cap was introduced in order to keep premiums affordable after the industry as a whole had seen a rapid increase in the number of claims related to meth damage.
Vero's claims had more than doubled in the last two years.
"In order to keep our premiums affordable for our customers, we've introduced steps to limit our cover to a maximum of $30,000 for residential landlords, and excluded cover from our Flexi cover option."
The spokesman said it had no plans to increase the excess specifically for meth claims.
It would only consider paying out a meth-related claim for an owner-occupier if an unknown person broke into the house and used or manufactured meth, he said.
While increases had been made to Vero premiums, these were - on average - under $100, he said.
Simon Hobbs, head of claims at AA Insurance, said landlords could opt to tack on extra cover to their insurance policies that would include the risk of illegal drug use.
That had a claim cap of $30,000 which was introduced in September 2015. Prior to that it wasn't covered.
Hobbs said it had not seen any significant increase in claim numbers but was seeing between two and six meth-rated claims per month with an average claim amount of $15k to $16k.
A spokesman for Tower Insurance said: "Over the past 18 months we have been progressively updating our policies to bring them in line with industry standards. Customers who insure their rental properties with us can be covered for up to $30,000 for the cost of repairing or rebuilding physical damage as a result of contamination by illegal substances".
Tim Grafton, chief executive of Insurance Council of New Zealand, said it didn't collect data on how much insurance claims had increased across the industry but annecdotal evidence pointed to a "very significant rise."
Grafton said when the industry faced increasing risks from a particular situation insurers had to make changes and typically that was through premium or excess increases.
New Zealand Property Investors Federation chief executive Andrew King said the insurance cost increase would "undoubtedly" be passed on renters.
