House insurance bills have more than doubled for some home owners under sweeping changes imposed because of the Christchurch earthquakes.
The scale of the changes has come as a shock to many families, who are already stretched by rises in charges for contents and car insurance, electricity, rates and water.
Insurers say it is too early to give national figures, as many owners are still considering what insurance value to place on their properties.
But they warn of some steep increases, saying New Zealand has previously been considered "very cheap" by international standards.
Until now, homes were insured for an unspecified full replacement cost. Premiums were based on what the insurance company said a house was worth, calculated per square metre.
But that caught out many Canterbury insurers after the city's earthquakes, as the cost of rebuilding homes was often more than the value they had recorded.
Now, as annual renewals come up, homeowners are asked to specify how much it would cost to rebuild their property to the same standard. Premiums are calculated accordingly.
If rebuilding costs more than this "sum insured" amount, the owner must pay the extra.
Insurers say the new rules are a response to overseas re-insurers' requests. They provide cover to many New Zealand companies and want to know the maximum costs insurers would have to pay claimants.
Insurers are providing online calculator tools so homeowners can work out their rebuilding cost.
But the head of the Federation of Family Budgeting Services, Raewyn Fox, said the tools were not user-friendly for elderly people, people for whom English was a second language and those with low literacy levels.
They would probably have to get their home professionally valued, which could cost more than $500.
Ms Fox said there was a fine line between setting the value at a level that enabled a home to be adequately replaced and setting it so high that premiums became unaffordable.
She advised her clients to check before their policies came up for renewal how much their premiums were likely to rise.
"Start as soon as possible adjusting your budget to prepare for that. We advise people that if one big lump-sum payment is too much, they should see if there's an option of paying monthly premiums without any extra cost."
The chief executive of the Insurance Brokers Association, Gary Young, said the new system was similar to the way premiums were calculated in Australia, Britain and the United States.
Earthquake-prone areas such as California and Japan had very high premiums and excesses.
"It's driven by the re-insurers saying, 'We need to know what our total exposure is.'
"You need to look at the cost of house insurance in New Zealand and compare it with countries that have similar risks.
"I think New Zealand has always been very cheap. And it's probably now just more that the insurance market is trying to get to a more reasonable level."
He said the old method often did not take into account variables such as whether the house was on a slope, or had garages and swimming pools.
The Insurance Council's insurance manager, John Lucas, said about 100 re-insurers from Europe, Asia and the US acted in New Zealand.
Asked if he had heard of premiums more than doubling, he said some valuations would be "much, much higher" than they were now, and new premiums would reflect that.
But not all premiums would go up and some companies were staying with the square-meterage calculation method.
Under the old system, people often gave incorrect area figures for their homes, so the new process was more accurate, Mr Lucas said.
A spokesman for New Zealand's biggest insurer, IAG, said premiums had also been rising because of increases in the international cost of reinsurance, influenced by the cost of natural disasters around the world.
As well, the Earthquake Commission levy and GST-linked costs had increased.
Bills go through the roof
• Case study A - A North Shore resident received a letter from Tower Insurance this week saying his bill would rise from $1,100 last year to $2,561 - a jump of 132 per cent.
The old figure was calculated on a $560,000 valuation - $2,000 per square metre for his 280sqm villa. But the company's online calculator showed the four-bedroom 1900s weatherboard villa would cost about $1.2 million to re-build based on the cost of building materials
• Case study B - A West Auckland resident says the AMI premiums for her 200sq m house have more than doubled since the Christchurch earthquakes.
She was paying $441 in 2010 and now pays $921.
Her mortgage broker has told her they will double again.
"It's a huge concern," she says, "because it has already gone up so much and if it does double, it will be a huge amount for us to pay.
"Our car and contents insurance is already increasing and our power bills are rising."