The Insurance Council of New Zealand (ICNZ) and the Earthquake Commission (EQC) will seek guidance from the High Court to determine how to apportion damage from the Christchurch earthquakes.

The number of quakes and aftershocks – including yesterday’s 5.7 quake that preceded a 6.3 quake by 80 minutes, which together damaged another 50 buildings – has posed questions over how to attribute damage to each event.

The EQC and ICNZ are seeking a ruling on where the EQC’s coverage stops and private insurers step in.

The Earthquake Commission Act provides cover for damage to residential properties and contents from earthquakes up to a maximum of $NZ100,000 ($76,900) plus GST for properties and $20,000 ($15,397) plus GST for contents, along with defined coverage for damage to residential land. Private insurers cover amounts above the EQC’s limits. 

The EQC and insurers are asking the High Court to clarify the circumstances in which the EQC insurance will be reinstated back to its full limits after natural disaster damage has occurred. In most cases it is clear that full cover has been reinstated, but in a small number it is unclear whether EQC insurance will provide a further $NZ100,000 of cover for the second event. 

EQC CEO Ian Simpson says the court’s ruling will ensure smooth running of the claims settlement process. 

“The important point that we all agree on is that it shouldn’t affect payments to people who have suffered losses,” he said. “It’s really about how much cover EQC is allowed to provide in these unusual circumstances.”

ICNZ CEO Chris Ryan says the joint approach to the court should ensure an early decision on “who pays what”.

“It’s important to have certainty about how EQC insurance applies in these circumstances,” Mr Simpson said. “This certainty will help the EQC and the insurers continue to process insurance claims as quickly as they can.”