From 1 July 2026, the way the FENZ levy is calculated changes for every commercial property and vehicle insurance policy in New Zealand. The rate isn’t going up much. But the method is changing, and for commercial property owners and anyone with a vehicle fleet, the dollar impact can be significant.
Here’s what it is, what’s changing, and what to do before your next renewal.
What is the FENZ levy?
Every commercial property and vehicle insurance policy in New Zealand includes a levy that goes directly to Fire and Emergency New Zealand, the organisation that runs our fire and rescue services. It’s not set by your insurer, it doesn’t go into their pocket, and it’s not optional. Think of it like GST, a government charge collected through your premium and passed straight on.
If your business insurance bill goes up at your next renewal, the FENZ levy change may be part of the reason, even if your insurer hasn’t changed their rates at all.
What’s changing on 1 July 2026?
The rate itself isn’t the issue. What’s changing is how the levy is calculated. Previously, insurers used different methods, which led to inconsistencies across the market. From 1 July, everyone moves to the same approach: the levy is calculated on your sum insured, meaning the full cost to replace what you’re insuring, not what it’s worth today.
For commercial property, there is also no cap on the levy. It scales directly with your sum insured, no matter how large.
At a glance: what changes by policy type
| Cover type | Current | From 1 July 2026 | Impact |
|---|---|---|---|
| Commercial property | 0.1195% · often indemnity basis | 0.0776% · no cap · sum insured basis | Potentially significant |
| Motor vehicles | ~$9.53 per vehicle | Flat $25 per vehicle | More than doubles |
| Mixed-use buildings | Grey area | Defined rules based on 50%+ split | Worth reviewing |
| Contract works | Usually property rates | 0.0388%–0.0776% depending on structure | Varies |
| Aircraft | Mostly exempt | 0.0776% · capped at $77.60 | Now applies |
| Livestock and forests | Exempt | 0.0194% | Now applies |
Why does my renewal look more expensive if the rate went down?
This is the part that trips people up. For commercial property, the rate actually drops from 0.1195% to 0.0776%. But two things work against that.
The calculation base changes. Previously some insurers used the indemnity value, what the asset is worth today accounting for depreciation. Now it must be the sum insured, the full replacement cost. For a commercial building, replacement cost is almost always significantly higher than indemnity value. So even at a lower rate, the levy in dollars tends to be larger.
There’s also no cap. Commercial property has no ceiling. The levy keeps rising with the sum insured, which is very different from how it works for residential cover.
What it means for vehicles
If you insure two cars and a van for your business, your total FENZ motor levy jumps from roughly $28.59 to $75 per year. That’s an increase of over $46 from the levy alone, before your insurer has touched anything. For businesses with larger fleets, this adds up quickly.
One upside: less paperwork
Many policies currently require an annual FENZ declaration form to help calculate the levy. Because the new rules tie the levy directly to your sum insured, most clients will no longer need to complete this. One less form is never a bad thing.
What to do before your next renewal
Make sure your sum insured is accurate. Because the levy is now calculated on this figure, being underinsured means you’re not properly covered and you may still end up paying more than you expect.
If you have a commercial property, mixed-use building, or a fleet of vehicles, get in touch before your renewal. These are the cover types most affected and worth a proper review.
If your renewal arrives and the total looks higher than last year, don’t assume it’s your insurer raising prices. Ask us to break it down. We can show you exactly how much of any increase is FENZ levy versus underwriting.
And if you’re planning any mid-term changes, like adding a vehicle or adjusting a sum insured, let us know sooner rather than later. Insurers are handling mid-term endorsements differently in the first year of the new rules.
The bottom line
The FENZ levy change is a government decision about how fire service funding is collected through insurance. For commercial property holders and vehicle fleets, it’s worth understanding before your renewal lands.
Frequently asked questions
What is the FENZ levy on business insurance?
The FENZ levy is a government charge collected through every commercial property and vehicle insurance policy in New Zealand. It funds Fire and Emergency New Zealand and is set by the government, not your insurer.
Why has my business insurance gone up from 1 July 2026?
From 1 July 2026 the FENZ levy is calculated on your sum insured rather than your indemnity value. For commercial property, replacement cost is almost always higher than indemnity value, so the levy in dollars tends to be larger even though the rate itself dropped.
Does the FENZ levy apply to all business insurance policies?
It applies to commercial property and vehicle insurance policies. Some policy types such as aircraft now have the levy applied for the first time from 1 July 2026. Liability and professional indemnity policies are not subject to the FENZ levy.
Is the FENZ levy the same for all commercial properties?
No. For commercial property there is no cap, so the levy scales directly with your sum insured. The higher your sum insured, the higher the levy in dollar terms.
What can I do to reduce the impact of the FENZ levy change?
Make sure your sum insured is accurate, being overinsured means you pay more levy than necessary. Review your cover with a broker before your next renewal to ensure your sum insured reflects the actual replacement cost of your property.
At Sentinel Insurance, our job is to make sure nothing in your policy catches you off guard. Get in touch if you have questions about how these changes affect your specific cover.
This article is general information only and does not constitute personalised financial or insurance advice. Sentinel Insurance is a licensed financial advice provider. For advice tailored to your specific situation, please contact us. FENZ levy rates are set by the New Zealand government and are subject to change.
