The insurance industry is expecting earthquake cover in New Zealand to be more restricted and cost more after the second Christchurch earthquake.

Insurers imposed a moratorium on writing new cover in the city following both quakes, and this currently includes not just the city but also the province of Canterbury and, in some cases, other areas of the South Island.

The area is still receiving aftershocks, which will complicate a return to normal business.

Insurance Brokers Association of New Zealand CEO Gary Young says homebuyers cannot close contracts because banks won’t lend without insurance in place.

“Some insurers won’t even cover a car 200 miles away in another town,” he told insuranceNEWS.com.au.

Mr Young says one couple who contacted him had just finished building a house and found the builder’s risk policy had ended. But they could not insure from that point.

“We are getting many calls from the public asking what they can do.”

He notes many Christchurch brokers are trying to help clients but cannot get back into their CBD offices.

Brokers are also reporting insurers are telling them they will increase rates and the way deductibles are being structured once they start writing new cover again.

But Mr Young says insurers are starting to reduce the geographic boundaries they have set around Christchurch.

Vero is taking on some new risks in Christchurch, such as for motor vehicles and boats, but CEO Roger Bell says the property issue still has to be resolved.

Insurers are still covering existing buildings and people who are buying homes can get cover if they stay with the current insurer.

IAG New Zealand, which owns State Insurance and NZI, has a halt on new cover in the city and some other regions of the South Island until March 31, but CEO Jacki Johnson says requests for insurance will be considered on a case-by-case basis.

“Customers are being advised it is important they continue paying their insurance premiums to remain covered for further damage to their home, as well as other structures on the property,” she said.

IAG is reducing premiums on homes confirmed as a total loss. If a home is uninhabitable, the owners will pay only 50% of their premium from the date of renewal, and if it can still be lived in they will pay 75%, excluding the NZ fire service levy and Earthquake Commission premium.

Mr Young says insurers are looking more closely at terrain and asking for geotechnical reports so they can understand the ground beneath the property.

“It can cost between $NZ500 and $NZ5000 ($360-$3600) depending on the level of report you want,” he told insuranceNEWS.com.au.

He says many geotechnical engineers have been tied up with work for the Earthquake Commission and owners have found it difficult to engage someone.

He says insurers will be looking more closely at particular suburbs or regions around Christchurch, and it remains to be seen if some places cannot get earthquake cover.

He can also see this becoming an issue in other parts of NZ with geology similar to Christchurch as insurers look at areas where liquefaction could be a significant problem.