Earthquake Fact Sheet | INSURANCE
Following the November 14 earthquake homeowners have until midnight on 14 February 2017 to make a claim with EQC. If you have home or contents insurance, you will have EQC cover. However, this is limited to certain amounts and does not cover all types of loss so you may have to claim under your private insurance as well. In this case, the extent of your cover will depend on the terms of your particular policy. Don’t be afraid to discuss any concerns with your insurer. Insurance companies may well take a generous view given the extraordinary circumstances and any hardship to you.
If you don’t currently have any insurance, now may be a good time to consider getting some, even if it is minimal coverage. Contact your bank or insurance companies and discuss what coverage you can get at a reasonable price. Things to consider at this time are your clothes, your food, your children’s clothes and toys. The cost of insurance may be worth it for any future loss if you ever have to replace all of these items at one time, or have to move out of your home at short notice.
1. What does the Earthquake Commission cover?
To qualify for Earthquake Commission (EQC) cover, you must have private insurance. You must lodge a claim with EQC and your private insurance company. The deadline may be different for your private insurer than the 3 month deadline for EQC, check your policy to ensure your claim is in to your private insurer in time.
EQC will cover your house up to $100,000+GST and up to $20,000+GST for contents. Damage to vehicles (including cars, boats, trailers, and motorbikes) is not covered by the EQC; you will need to make a claim with your own insurance company for damage to vehicles. There is also a list of assets the EQC will not cover, for example: swimming pools, fences, jewellery, money, works of art, securities, and documents.
Some damage to land is also covered by the EQC. For example, damage to accessways up to 60 metres (but not the artificial surfaces on them) and damage around the house up to 8 metres away from the house. If your land is unusable for rebuilding, you will be paid out for your land. This payout is based on a series of calculations set out in the Earthquake Commission Act.
2. I have checked my insurance policy and I have "indemnity" insurance.
What is the difference between indemnity insurance and "full replacement" or "total replacement insurance"?
An indemnity insurance policy pays up to a fixed amount (generally the current sale value of the property) when you make a claim. The amount insured will probably be less than the full replacement cost. A full replacement, or total replacement, policy will replace the insured item on a “like for like” (size and quality) basis. Your home will be replaced with a new home, up to the same area as your old home, or to an agreed value.
What you are covered for will depend on what type of insurance policy you have. You should also check if you are covered for cleaning up your property, for the demolition of your damaged home, and if you are covered for moving to another home and the accommodation costs while your home is rebuilt.
3. What is the Earthquake Commission excess?
As at 7 December excess for land is as follows: if the claim is for $5,000 or less, EQC will deduct an excess of $500 and pay the rest. If the claim is for more than $5,000, EQC will pay 90% of it, deducting an excess of 10%. However, the maximum excess EQC can deduct is $5,000.
For a dwelling, or a dwelling and personal property: If the claim is for $20,000 or less, EQC will deduct an excess of $200 and pay the rest. If the claim is for more than $20,000, EQC will pay 99% of it, deducting an excess of 1%.
For personal property only: Whatever the amount of the claim, EQC will deduct an excess of $200 and pay the rest.
4. I have broken china on the floor, and the food in my fridge was spoiled because the power was off.
Can I throw these away?
5. My house is not weathertight and my front door does not close properly.
Can I get these repaired now or do I have to wait for EQC or my insurance assessor to come?
6. Can I claim the excess on my Earthquake Commission payout from my private insurance?
As a general rule, no. You will need to check with your insurance company, or check your policy on this.
7. If I have more personal damage than EQC will cover, do I have to pay another excess on my private insurance claim?
As a general rule, yes. Check with your insurance company or check your policy as some companies offer no excess on claims that also have an EQC component. Your policy will have details as to what your excess is.
8. What happens to my contents insurance if I have to move house?
If you have contents insurance, you will need to notify your insurance company if you move house. Insurers may require you to satisfy them as to the condition of the property you are moving into.
9. I was the purchaser of a property that has been affected by the earthquake. Where do I stand?
10. My new house will need building consents to be built the same way as my old home.
Who will pay for these consents to be obtained?
Your insurance company may be responsible for obtaining building consents for your house to be rebuilt, particularly if you have a full replacement policy. Check your insurance policy or with your insurance provider before starting any rebuilding work to ensure there are no nasty shocks.
11. I had emergency work done on my property to ensure weather-tightness, now the tradesman is pursuing me for payment.
I thought EQC would pay for this from my claim?
EQC will pay up to $2,000 for repairs or will pay for repairs for weather-tightness or to repair water pipes. When you receive an invoice from the tradesperson you need to forward this to EQC as soon as possible for them to arrange payment. It is advisable to contact EQC before sending in your invoice to check what supporting documents they require. EQC are endeavouring to pay tradespeople within two weeks of receiving the invoice, and at the latest one month. It is important to include all the information they require for them to process the payment as quickly as possible. You are responsible for that person being paid, regardless of who is actually making that payment, so if there is a delay with EQC ensure you keep in contact with the tradesperson so the situation does not escalate.
12. I am considering purchasing a property.
How may the earthquake affect me?
It is common for people buying properties to add conditions (such as finance, or solicitor’s approval) to the sale and purchase agreement. It is a good idea to add an additional condition of obtaining suitable insurance, as this may be more difficult post-earthquake.
If the seller currently has insurance, it may be easier for you to continue to insure with the same company. Some insurance companies are expressing reluctance to insure properties that are not currently on their books. Check with your preferred insurance company if they will insure your new property, and whether they will require any professional reports.
13. I am not happy with the assessment made / the payout made.
Do I have a right to challenge any decision made by EQC or my insurance company?
Both EQC and your insurance company must provide a process for handling complaints from customers. Your first step is to contact the organisation you have a complaint against. Do not sign any insurance release forms until you are happy with your assessment and payout. This is best done in writing detailing what your complaint is. Once you have followed through with their complaints procedure, and if you are still not happy, you can contact the government Ombudsmen’s office for EQC complaints or the Banking and Insurance Ombudsman in relation to your private insurance company.
Need more help?
Community Law Marlborough provides free legal help over the phone or in person about various legal issues.
Phone our office on (03) 577 9919 or 0800 266 529 to talk to or make an appointment with a Case worker.
This factsheet was written by Community Law Canterbury and adapted by Community Law Marlborough.
It contains general insurance information relating to earthquakes, and you may need to seek more specific information or advice about your situation.
This version: 8 December 2016