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The EQC and your house insurance explained

What is the EQC, and how do you make a claim through them? Our guide explains.

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Earthquake damage

In a country where natural disasters and hazards such as earthquakes, landslides, hydrothermal activity and volcanic eruptions can happen at any time, EQC is the entity that ensures homeowners are covered when their homes are affected.

So how does the process work, and what are you really covered for? We find out in this guide.

What is the Earthquake Commission (EQC)?

The Earthquake Commission (EQC) was originally set up in 1945 and was then known as The Earthquake and War Damages Commission.

First designed to cover war damage, earthquake damage was included following the Wairarapa Earthquake in 1942.

This was a time when most homes were uninsured and as homeowners were unable to afford repairs, many homes and buildings were still left unrepaired over a year later.

The EQC that we know today was established in 1993 under the Earthquake Commission Act as a Crown entity, and is responsible for the research and education of natural disasters as well as insurance for homeowners.

What does the EQC do?>

The three high-level objectives of the EQC are:

  • Efficient management and settlement of claims
  • Efficient pricing and financing of risk
  • Improving the current state of knowledge about New Zealand’s natural hazards

The EQC is responsible for administering the Natural Disaster Fund (NDF), which is a fund that specifically takes care of paying out claims to home and contents policyholders when there is a natural disaster.

Since 1945, part of each home and contents insurance policy has included a levy which goes directly to the NDF, and back in 2010, this fund had a balance of more than $6.1 billion.

Following the Christchurch and Kaikoura earthquakes and realising the long-term costs of earthquakes, the EQC levies increased from 15c per $100 of cover to 20c in 2017.

One of the primary uses of the NDF is for settling claims made to the EQC. It is also used for understanding natural disasters and how we can reduce our natural hazard risk.

For additional financial resources when a natural disaster occurs in New Zealand, the EQC has purchased reinsurance since 1988, otherwise known as insurance for insurers.

It also pays $10 million a year to the Crown for Crown Guarantee, so that if the Natural Disaster Fund is fully depleted in the event of a natural disaster, the government will meet claims that are still to be paid.

What is EQCover?

EQCover is the EQC’s disaster insurance. It provides insurance for residential homes and land in the event of:

  • Earthquakes
  • Tsunamis
  • Volcanic eruption
  • Hydrothermal activity
  • Landslips<
  • Storm damage

If you have a private insurance policy for your home, EQCover is automatically included for your home and land if your policy has fire cover. Your provider collects the premium for EQCover as part of your insurance premium.

As long as you have a current insurance policy at the time of a natural disaster, EQCover is available up to the specified cap.

What is EQCover?

EQCover is the EQC’s disaster insurance. It provides insurance for residential homes and land in the event of:

  • Earthquakes
  • Tsunamis
  • Volcanic eruption
  • Hydrothermal activity
  • Landslips
  • Storm damage

If you have a private insurance policy for your home, EQCover is automatically included for your home and land if your policy has fire cover. Your provider collects the premium for EQCover as part of your insurance premium.

As long as you have a current insurance policy at the time of a natural disaster, EQCover is available up to the specified cap.

Building cover

EQCover includes cover for your home as well as separate buildings such as a garage or shed, and any electrical cables and water pipes up to 60 metres away from your home that you own.

Your home or residential building is usually insured for either $100,000+GST or $150,000+GST according to when you first took out your policy or when it was renewed.

The EQCover settlement amount is calculated as being the least of three options:

  • The fire replacement sum your building is insured for
  • Any amount your building is insured for under the EQC and specified in your private insurance policy
  • The total amount calculated by multiplying the number of homes in the residential building by the maximum EQCover

Land cover

In the event of a natural disaster, EQCover includes land within your property boundary including the land under your home, within eight metres of your home, and the land that supports your main accessway up to a maximum of 60 metres from your home.

You are also covered for some retaining walls and bridges if they fall within the parameters, but trees, lawns and driveways are not included.

Are my contents covered?

For policies taken out before 1 July 2019 with a private insurer that include fire insurance, you automatically have EQCover for your contents.

However, EQC no longer covers contents for policy renewals and new policies taken out since 1 July 2019. Policies that are renewed or taken out after 1 July 2019 do not cover contents. Insurance for your contents is covered by your private contents insurance.

What isn’t covered by EQCover?

As with all cover, EQCover has certain exclusions that you will not be able to make a claim for. A full list can be found on the EQC website but to get an idea of what is not covered, we’ve pulled together some things you should be aware of.

  • Lawns, plants and trees
  • Vehicles, boats and trailers
  • Livestock and pets
  • Money and documents
  • Jewellery and precious stones
  • Artwork
  • Paving and artificial surfaces
  • Information stored on your computer
  • Tennis courts
  • Theft or damage following a natural disaster
  • Temporary accommodation following a natural disaster
  • Buildings that aren’t insured against fire
  • Buildings that don’t have a current insurance policy

There are some things, including swimming pools, fences, bridges and retaining walls that may or may not be covered depending on the circumstances.

Your policy with your private insurance provider may include cover for these and items listed above.

If your home is potentially more at risk of natural hazards, this will be specified on your Certificate of Title and will affect both your EQCover and private insurance cover.

How do I make a claim with the EQC?

If you’ve had damage to your home or land, you make a claim with the EQC by phone or by completing an online claim form.

While you have up to two years to make a claim, EQC encourages claims to be lodged within the three months following a natural disaster event so that claims can be properly assessed.

Once your claim is received, EQC will acknowledge your claim with a letter and contact your private insurer to confirm your policy is current.

EQC will then carry out an assessment. Depending on the circumstances this could include a valuation of your damaged land by a registered valuer, an engineer’s report and repair or replacement costings.

Do I need to pay an excess?

If you make a claim with EQC and it is accepted you will be required to pay an excess. The excess amount can vary and is taken off the claim amount.

  • For claims under $20,000, an excess of $200 will be deducted. For claims over $20,000, an excess of 1% will be deducted.
  • For personal property claims on policies taken out before 1 July 2019, an excess of $200 will be deducted.
  • For land claims of $5,000 or less, an excess of $500 will be deducted, and for land claims over $5,000, an excess of 10% will be deducted to a maximum of $5,000.
  • If the amount needed to repair or replace your property is less than the excess, you will be required to cover this cost yourself.

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