In a significant move to bolster home insurance against natural disasters, New Zealand’s Earthquake Commission (EQC) has successfully implemented a law change doubling EQCover for homes in 2022.
The amendment saw the EQC building cover surge from $150,000 to $300,000 (+ GST), providing homeowners with enhanced protection against damage from named natural hazards.
The adjustment, initiated in October of 2022, aimed to align the building cap with the rising house prices and building costs.
After a year of transition, the change has seamlessly integrated into the insurance landscape, as all insured homeowners have renewed their policies to reflect the upgraded building cap.
Tina Mitchell, Chief Executive of Toka Tū Ake EQC, emphasised the importance of EQCover in providing affordable home insurance to aid communities in the aftermath of natural hazard events.
Mitchell stated, “New Zealand has one of the highest levels of home insurance in the world, with around 90% of homes covered. This is critical for community recovery after large-scale events.”
Under EQCover, homeowners receive insurance for their homes and a portion of their residential land, provided they have an existing private home insurance policy.
The coverage is tailored for damage resulting from volcanic eruptions, earthquakes, tsunamis, landslips, hydrothermal activity, and limited coverage for damage to residential land from storms and floods.
Notably, the unique feature of insurance cover for land damage remains unchanged, with the formula for calculating it remaining the same in 2022.
While claims for land damage have become more frequent over the past 18 months due to extreme weather events across the country, Mitchell highlighted that this coverage is designed as a contribution to actual repair costs.
Mitchell encouraged homeowners to regularly review their policies, emphasising the importance of understanding the coverage and risks associated with their properties.
In a country prone to natural hazards, Mitchell stressed the need for homeowners to be aware of potential risks in their areas and take proactive measures to safeguard their land from damage.
In May, Toka Tū Ake EQC completed a renewal for a record level of reinsurance of just under $8.2 billion for New Zealand homeowners, including reinsurance via catastrophe bonds, which it has secured for the first time.