Low-income New Zealanders are penalised with higher premiums because of where they live and their tendency to pay for insurance on a monthly basis, consumer advocates say.

Monthly premiums can amount to 20% more than if a policy is paid for upfront, according to consumer website MoneyHub.

And insurers calculate contents and motor premiums based on crime risk, which usually affects areas with large proportions of low-income households.

“We are realistic that insurance is a business, but as the situation is today, those with the lowest incomes will often pay the most for their insurance needs one way or another,” Senior Researcher Christopher Walsh said.

“Contents insurance is often more expensive if paid monthly rather than annually, and households in lower-income areas can pay more for policies based on the risk of burglary.”