Brought to you by:

EQC building cap raised

The New Zealand Earthquake Commission’s (EQC) cap for residential building cover will increase from $NZ100,000 ($95,000) to $NZ150,000 ($142,500) later this year.

This means the public insurer will take on a greater share of the risk and pass on fewer “over-cap” claims to private insurers.

The change is part of a range of measures included in the EQC Amendment Bill passed by Parliament last week.

The $NZ20,000 ($19,000) of EQC cover for contents has been removed, so private insurers will now pick up all contents claims. The changes will be phased in over 12 months from July.

Other reforms include an immediate extension of the timeframe for lodging claims from three months to two years, and an increase in information-sharing between the commission and private insurers.

The EQC and Insurance Council of New Zealand (ICNZ) have welcomed the changes.

“The review, and the changes that have been announced, have looked at the lessons not only from the [2010/11] Canterbury earthquakes but other events since the law was enacted in 1993,” commission CEO Sid Miller said.

“Along with these policy changes, we have also introduced a range of operational and organisation changes since 2017 to improve our claims management processes and customer experience.”

ICNZ CEO Tim Grafton says insurers are supportive of the “long-expected” changes, including the cap increase.

“Generally, we see this as a good move,” he said. “Over time, the value of a loss will have increased.”

He says greater information-sharing will be “helpful” and insureds should still get their claims in early, despite the timeframe extension.

“The longer you take to put in a claim, the more challenging it can be to demonstrate that damage was caused by a particular quake,” he said.

Mr Grafton pointed to the ongoing EQC public inquiry, led by former governor-general Silvia Cartwright, saying further changes are “inevitable”.

The inquiry is scheduled to provide an interim report before the end of June.