ChatGPT · New Zealand
We've found a cheaper house policy, but its flood excess is much higher. How risky would that be for us?
A cheaper house insurance policy with a much higher flood excess can be a sensible saving — but it depends on how exposed your home is to flooding, how much extra you would have to pay after a flood, and how often you could realistically face a claim.
In New Zealand, I'd be particularly careful about this trade-off because flood damage can be expensive, and a flood excess can leave you with a substantial bill even when your insurer covers the rest.
The key question isn't just whether flooding is likely. It's whether the premium savings are worth taking on that extra financial risk.
1. What a higher flood excess could mean for you
Imagine these three scenarios. The figures are illustrative, not estimates of your actual risk.
| Current policy | Cheaper policy | |
|---|---|---|
| Annual premium | $2,400 | $1,900 |
| Flood excess | $1,000 | $5,000 |
| Annual saving | — | $500 |
With the cheaper policy, you'd save $500 a year but pay an extra $4,000 if you had a flood claim.
Your break-even point in this example
$4,000 ÷ $500 = 8 years
If you had one flood claim, it would take eight years of premium savings to recover that additional excess, assuming premiums and excesses stay unchanged.
That doesn't mean a flood is likely every eight years. It means that one claim could wipe out eight years of savings. Multiple claims, or damage below the excess, could make the cheaper policy less attractive still.
2. How risky is flooding for your particular home?
I'd think about it in three broad categories.
Lower concern
Your property is outside mapped flood-hazard areas, hasn't experienced flooding, and has good drainage. A higher flood excess may be a reasonable trade-off if you can comfortably afford it.
Moderate concern
The area has surface-water ponding, nearby streams, drainage problems or a history of localised flooding. I'd want to understand the property's exposure before switching.
Higher concern
The house has flooded before, lies in a mapped floodplain, sits low relative to surrounding land, or has a known history of water entering the building. I'd be reluctant to accept a substantially higher excess without strong financial reserves and a clear understanding of the risk.
These are screening guidelines, not a prediction of your home's flood probability. In New Zealand, you can start by checking your local council's flood-hazard maps and asking your insurer about the property's specific risk.
3. An important New Zealand insurance detail
The Natural Hazards Commission Toka Tū Ake provides limited cover for eligible land damage caused by floods, but flood damage to the house itself is generally covered by your private insurer, subject to your policy terms. Don't assume that the government-backed natural hazards cover will make up for a large private-policy flood excess. About natural hazards cover :: Natural Hazards Commission Toka Tū AkeCover for storm, flood, and landslide damage :: Natural Hazards Commission Toka Tū Ake
Before switching, check:
- Whether the excess applies to every flood event or is calculated differently in certain circumstances.
- Whether flood damage to the building, contents and temporary accommodation are covered, and what excess applies to each.
- Whether the cheaper policy has any flood exclusions, restrictions or special conditions.
4. Let's work out whether the saving is worth it for you
If you share a few details, I can calculate the financial trade-off and help you assess the risk more meaningfully.
You don't need to know everything to start. The premium saving, the two excess amounts and whether flooding has occurred at the property are the most useful first details.
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Captured 11 October 2026