Making EQC simpler

by Amy Adams

The Earthquake Commission (EQC) has provided huge support for New Zealanders following the Christchurch, Seddon, and Kaikoura earthquakes.

Following lessons learnt from these events, the Government is reforming the EQC scheme to make the process simpler and more effective for future natural disasters.

The reforms will:

• Increase the monetary cap from $100,000 (plus GST) to $150,000 (plus GST) for EQC building cover.

• Clarify how land damage is covered by EQC, and how land and building damage interact. Damage that directly affects the property and/or access to it will be covered by EQC.

• Standardise the claims excess on EQC building cover at $1,000. This means all homeowners will pay the same excess, whereas currently this ranges from $200 to $1,150 depending on the size of the claim.

• EQC will no longer provide any residential household contents insurance. Homeowners will have their contents insurance covered by their private insurer.

• Require claimants to lodge claims with their private insurer in the first instance, and the insurer would then pass the claim on to EQC (if the property is insured).

EQC and private insurers have already been working much more closely together in the aftermath of the Kaikoura earthquake, the February 14, 2016 aftershock and the flooding in Edgecumbe.

The reforms will help EQC and private insurers work together better in future to provide faster and smoother resolution of claims.

Everyone with a private insurance policy that includes fire insurance for their residential building will continue to receive EQC cover and existing EQC claims will not be affected by the reforms.

EQC has a Government guarantee and $4.7 billion in reinsurance cover, so homeowners will be covered if there is another natural disaster.

However we do need to start the process of replenishing the Natural Disaster Fund (NDF) which has been depleted by the Christchurch and Kaikoura earthquakes.

For this reason, EQC levies will increase to 20 cents per $100 from November 1 to help rebuild the NDF and ensure EQC is available to contribute to future natural disasters.