Who AA Insurance is, and who carries the risk
AA Insurance sells house, contents, car and small business cover in New Zealand under the AA name. It is a separate company from the New Zealand Automobile Association roadside service, even though the two share a brand and many of the same members.
This matters for one practical reason. When you buy from a brand, the company that takes your money is not always the company that pays your claim. Some New Zealand house policies are sold by a bank or a website and underwritten by someone else, which means a different insurer carries the risk and writes the wording. AA Insurance writes and issues its own house policy, so the name on the document is the name that settles the claim.
Everything below comes from that document. Where a figure appears, it is the figure printed in the wording we read on the date at the top of this page. Wordings change, and the one issued with your policy is the one that counts.
What the policy treats as your home
House insurance covers the building, not the things inside it. Sofas, clothes and televisions are contents insurance, which is a separate policy. What counts as the building is wider than most people expect, and the AA wording sets it out in four groups.
The first is buildings and structures, which is the house and other permanent structures on the property. The second is fixtures and appliances, meaning the things attached to the house that would stay if you sold it. The third is outdoor areas. The fourth covers fences, driveways and the rest of the hard surfaces around the section.
That last group is worth reading closely on any policy, because it is where the money hides. Fences, driveways, paths and retaining walls are expensive to replace and easy to forget when you work out what your house would cost to rebuild. On a sloping section they can be a large share of the total.
The policy also asks how you use the house. Your policy schedule, which is the page listing your address, your cover and your excess, will show whether the house is owner occupied, a holiday home or something else. That label changes what the policy responds to, so it needs to be right.
The three ways AA can settle a claim
This is the part of the AA policy that repays the most attention, and it is not the part most people read.
The policy contains three ways of settling a house claim. Replacement cover puts the damaged part of the house back to the condition set out in the wording. Sum insured cover does the same work but caps the payment at the sum insured, which is the number on your policy schedule, or the rebuild cost, whichever is lower. Indemnity cover pays what the damaged part was actually worth at the time, with an allowance for its age and wear.
AA chooses which one applies. The wording says so plainly. Replacement cover is the one it will choose when the damage comes from anything other than a natural hazard, which means the widest settlement basis in the policy does not apply to earthquake, flood or landslip claims.
There is a second trigger, and it is the one to notice. Replacement cover comes with a condition attached to what you did before the loss. You have to have taken the steps a reasonable person would take to give AA an accurate sum insured and an accurate size for your house. If you did not, the wording says the claim will be settled under sum insured cover instead.
Read that in order. The narrower basis is not a penalty applied at claim time for something you did wrong at claim time. It is applied for how carefully you answered two questions when you bought the policy, possibly years earlier.
Indemnity cover is the narrowest of the three. It applies when you are not going to rebuild, or when you and AA have not agreed on the rebuild cost within twelve months of the loss. A house that is not rebuilt is paid out at what it was worth, not what it would cost to build again.
Why your sum insured does more work here than you think
Almost every New Zealand house policy has been sold on a sum insured basis since the Canterbury earthquakes. You give the insurer a number, and that number is the most the building side of the policy can pay.
The AA wording adds a second job for that number. As the settlement section above explains, an accurate sum insured and an accurate house size are conditions of getting the widest settlement basis. So the figure is not only a cap. It is also a gate.
This site does not publish rebuild costs and does not estimate one, because getting that number wrong is exactly how people end up underinsured and there is no safe way to guess it from a web page. What we can say is where a real figure comes from. Every large New Zealand insurer runs a free online calculator that asks about your house and produces a rebuild figure. A registered valuer will do the same job in person, and will cost money.
Whichever route you take, the figure ages. Building costs move, and so does your house every time you add a deck or a room. A sum insured set five years ago and never looked at again is one of the most common reasons a claim falls short.
What is included as standard
The table below lists the standard benefits in the AA Home policy, what each one actually does, and the limit that applies. A benefit is an extra cover that sits inside the policy alongside the main cover on the building.
Two things are worth saying about reading a table like this. A larger limit is not the same as better cover, because the clause behind the limit decides what the money can be spent on. And a benefit with no dollar figure next to it is not unlimited. It is usually capped by the words instead, such as reasonable cost, which is a limit you cannot see until someone assesses it.
| Benefit | What it covers | Limit |
|---|---|---|
| Natural hazard cover | Earthquake, flood, landslip and the other natural hazards, handled alongside the Natural Hazards Commission. | Included as standardAA also covers hazard damage to parts of the property the Commission treats as exempt. An extra excess applies to those claims. |
| Temporary accommodation | Somewhere else to live while the house cannot be lived in after a loss the policy covers. | $40,000 per eventIt also pays when a council or the government stops you getting to your house, even if the house itself is undamaged. |
| Legal liability | What you owe someone else if you damage their property, and it happened because you own this house. | $2 millionProperty damage. Injury to people is handled by ACC in New Zealand, so it is not in this figure. |
| Retaining walls | Walls that hold back earth on the property, covered separately from the house itself. | $50,000Includes your share of a wall you own jointly with a neighbour. After a natural hazard this sits on top of anything the Commission pays. |
| Hidden water damage | Rot, mould, mildew or decay you could not see, caused by a slow leak or overflow from pipes, tanks or appliances. | $5,000The wording calls this a contribution, not full cover. The pipe or tank that leaked is not covered. |
| New building work | Alterations under way at the house, plus building materials you have bought and are storing there. | $75,000Only small jobs. See the section on renovating below, because the list of work this will not cover is long. |
| Keys and locks | Replacing keys or locks, or changing key codes, after a burglary, a theft, a loss, or keys being copied without permission. | No separate dollar limit statedThe trigger is that the security of the house is at risk, not simply that a key went missing. |
| Electronic equipment | Restoring, resetting or reprogramming electronics built into the house after a covered loss. | Reasonable costThe data stored on that equipment is not covered. |
| Demolition and debris | Knocking down what is left and taking the mess away before anything can be rebuilt. | Paid as part of settling the claimOn the sum insured basis this comes out of the sum insured rather than sitting on top of it. |
| Compliance costs | The cost of meeting current building rules when the house is rebuilt, where the old house did not have to meet them. | Paid as part of settling the claim |
| GST | Goods and Services Tax on the cost of putting the house right. | Paid on top of the settlement |
| Excess-free glass | No excess on a claim for broken glass in windows, doors, screens, panels, fixed mirrors and splashbacks. | Optional, costs extraNot standard. It only applies if your policy schedule shows you bought it. |
| Most AA will pay for one event | The cap on a single event, added up across the whole policy. | Rebuild or sum insured, plus $2 million liability, plus the accommodation limitYour excess comes off that total, along with anything another insurer pays. |
Natural hazards, the Commission, and retaining walls
Natural hazard damage in New Zealand works in two layers. The first layer is the Natural Hazards Commission, previously known as EQC. Every household policy that covers fire pays a levy to it, and it covers a set amount of natural hazard damage to your house. Your private insurer covers the rest.
You do not deal with the Commission yourself. You claim with AA, and AA handles the Commission side. The AA wording goes slightly further than that split. It also covers natural hazard damage to parts of your property that the Commission treats as exempt, which means damage the first layer will not look at. An extra excess applies to those claims, and it is shown on your policy schedule.
Retaining walls are the clearest example of why this matters. A retaining wall holds back earth, and on a sloping New Zealand section it can be doing structural work for the whole property. The AA policy covers retaining walls up to fifty thousand dollars, and includes your share of a wall you own jointly with a neighbour. Where the damage came from a natural hazard, that limit sits on top of anything the Commission pays rather than being swallowed by it.
What the policy will not do is cover a retaining wall that was never finished, and it will not pay for damage the Commission has already decided is imminent rather than actual.
Slow leaks and the five thousand dollar contribution
House insurance covers sudden accidental damage. It does not cover things that go wrong slowly, and a slow leak behind a wall is the most common way a New Zealand house is damaged without anyone knowing.
Most insurers write a narrow exception for this, and AA calls its version a contribution. The policy will contribute up to five thousand dollars towards rot, mould, mildew or deterioration you could not see, where the cause is a hidden ongoing leak or overflow from pipes, tanks, or appliances that leak internally.
The word contribution is doing real work in that sentence. It is not a promise to fix the damage. It is a capped payment towards it, and five thousand dollars does not go far into a wall that has been wet for two years.
The other limit is that the thing that leaked is not covered. The policy will contribute towards the damage the water did, and not towards repairing the pipe, the water tank or the waste disposal that let the water out. Damage you could already see is also out, because at that point it is maintenance rather than a sudden loss.
Renovating while the policy is running
The AA policy includes up to seventy five thousand dollars of cover for new building work, which covers alterations under way at the house and the building materials you have bought and stored there.
The figure is generous next to the list of things it does not apply to, and that list is where the attention belongs. The benefit does not cover a job where the finished value or a professional quote, including GST, would be more than seventy five thousand dollars. It does not cover a new separate structure. It does not cover work that involves digging deeper than one metre, work on load-bearing walls, work on piles or foundations, or work where the roof or the outside cladding comes off. It does not cover an extension, and it does not cover any work that needed a building consent which has not been granted.
Strip those out and what is left is small interior work. Anything that would make most people say they are renovating is outside it.
If you are planning a real job, the answer is not to hope this benefit stretches. It is to tell AA before the work starts and find out what cover the house needs while the work is under way. Builders carry their own insurance, and it covers their work rather than your house.
When the house is empty
An empty house is a different risk. Nobody notices a leak, a break-in or a small fire, so almost every New Zealand policy limits cover once a house has been empty for a set number of days.
AA treats a house as unoccupied when neither you nor anyone you have authorised is living in it. The period is sixty consecutive days. Where the schedule shows the house is owner occupied, an additional unoccupied excess applies to any loss from day sixty one onwards. That excess amount is shown on your policy schedule.
Where the schedule shows the house is a holiday home, the wording says cover continues while it is left empty. That is the practical difference between the two labels, and it is the reason a bach insured as an owner occupied house is not insured the way its owner probably assumes.
Sixty days passes quickly. A long trip, a stay in hospital, a renovation you moved out for, or a house sitting between tenants can all reach it without anyone thinking of the insurance.
What the policy does not cover
The exclusions section is long, and most of it is standard across New Zealand house policies. A few items are worth pulling out because people are surprised by them.
Wear and tear and gradual damage are excluded, apart from the hidden water contribution described above. So is existing damage, and damage that was expected. Faulty workmanship is excluded, which means a botched repair is a matter for the tradesperson rather than the insurer. Pests and pets are out. So is mechanical or electrical breakdown, which is a warranty question rather than an insurance one.
Structural alterations are excluded except through the new building work benefit. Undamaged property is excluded, which is the clause behind the common disappointment where half a wall is damaged and the insurer does not pay to replace the whole wall so that it matches.
There is also an exclusion for a house that is non-compliant, and one for removing or weakening support to land. Both are the sort of clause that only becomes visible after a claim, and both are good reasons to be accurate about the house when you buy.
Also excluded, in common with most policies of this kind:
- Pollution or contamination, and confiscation of the house by an authority
- Electronic data, cyber acts and cyber incidents
- Communicable disease, however it contributed to the loss
- Terrorism, war, and nuclear incidents
- Anything ACC covers, and anything another insurer covers
What costs extra
AA sells excess-free glass as an optional benefit rather than including it as standard. If you have it, your policy schedule will say so, and a claim for broken glass in windows, doors, screens, panels, fixed mirrors, splashbacks or built-in furniture carries no excess.
The exclusions on it are narrow but specific. It does not pay to fix wear or damage to the house that has to be put right before the new glass can go in, it does not pay for the framing around the glass, and it does not pay to replace undamaged glass elsewhere so that everything matches.
Whether that is worth the extra premium depends on how much glass your house has and what your ordinary excess is, which is a calculation only you can do with your own numbers in front of you.
What to check before you buy
None of the questions below have a right answer that applies to every house. They are the points where the AA wording gives a different result depending on something only you know.
Worth having ready before you talk to anyone:
- Where your sum insured came from, and when it was last worked out. The AA policy uses it twice, once as a cap and once as a condition of the widest settlement basis.
- Whether the size of your house on the policy matches the house as it now stands, including anything added since you bought it.
- What your policy schedule says the house is used for, and whether that is still true.
- What retaining walls, fences, driveways and paths are on the property, and whether your rebuild figure included them.
- Whether the unoccupied excess would apply to any trip or gap you can already see coming in the next year.
- Whether you have excess-free glass, and whether you want it.
Common questions
- Does AA Insurance underwrite its own house policy?
- Yes. AA Insurance issues and underwrites the Home policy described here, so the company named on the document is the one that settles the claim. That is not true of every brand selling house cover in New Zealand, and it is worth checking on any policy you are comparing.
- What is the difference between replacement, sum insured and indemnity cover?
- Replacement cover puts the damaged part of the house back to the condition set out in the wording. Sum insured cover does the same but caps the payment at your sum insured or the rebuild cost, whichever is lower. Indemnity cover pays what the damaged part was worth at the time, allowing for age and wear. AA chooses which one applies, and replacement cover does not apply to natural hazard claims.
- How much temporary accommodation does AA pay?
- Up to forty thousand dollars for any one event, paid until the house is habitable again, until you move into another home you own, or until the claim is settled. It also pays where a council or the government stops you getting to the house, even where the house itself is fine.
- How long can an AA-insured house be empty?
- Sixty consecutive days. From day sixty one an additional unoccupied excess applies to any loss where the schedule shows the house is owner occupied. Where the schedule shows it is a holiday home, the wording says cover continues while it is empty.
- Is AA Insurance cheaper than other New Zealand insurers?
- That cannot be answered generally, and this site publishes no premiums. Price depends on the property, the sum insured, the excess and the insurerβs own view of the risk at that address. Two houses on one street can be quoted very differently by the same insurer.