From 1 July 2026, the way New Zealand’s fire service levy is calculated will change significantly impacting property owners and insurers nationwide. This shift stems from the Fire and Emergency New Zealand (Levy) Amendment Act 2023, which aims to provide more consistent and sustainable funding for Fire and Emergency New Zealand (FENZ).

What’s Changing?

Currently, the levy is calculated based on the indemnity value of the insured property—essentially the current market value, minus depreciation. However, starting in mid-2026, it will be calculated based on the sum insured or reinstatement value for most policies.

What Do These Terms Mean?

Sum Insured / Reinstatement Value: The total cost to rebuild or replace a property to the same standard it was before any damage occurred.

Indemnity Value: The depreciated value of the property, factoring in age and condition at the time of loss.

Why Does This Matter?

The new approach means the levy will apply to the full replacement cost (sum insured), not the reduced, depreciated value (indemnity value). For many policyholders, this will result in higher levy payments, particularly for older properties where there’s a significant gap between market and reinstatement values.

This will also add further financial pressure on tenants, especially in commercial leases where insurance costs are passed through. Many tenants are already grappling with substantial insurance premium increases, and this change is likely to push those costs even higher.

How Your Property Managers Will Help:

Your property manager will work alongside you and your insurer to ensure your policies are reviewed, sum insured values are up to date, and any changes in levy costs are clearly communicated. We’ll also help forecast and manage these costs within your annual budgets to minimise disruption.