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Earthquake Insurance

Earthquake Insurance

Old Sep 5th 2010, 8:04 am
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Default Earthquake Insurance

The terrible events in Christchurch got me thinking about earthquake insurance. How does this work in NZ? In the almost unthinkable event of losing everything in an earthquake, would you be covered by insurance?
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Old Sep 5th 2010, 8:32 am
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Default Re: Earthquake Insurance

providing you have buildings/house insurance you are covered by the EQC-earthquake commission. part of your insurance premium goes to this govt. run scheme.
thats how we understand it-but stand to be corrected, fortunately as of now we dont need this service.
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Old Sep 5th 2010, 8:55 am
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Default Re: Earthquake Insurance

AM I COVERED BY THE EARTHQUAKE COMMISSION?
If you have current home and/or contents insurance, you also have the Earthquake Commission’s cover.

EQC covers damage to residential property* caused by the following perils:
- Earthquake
- Landslip
- Tsunami
- Volcanic eruption
- Hydrothermal activity
- Storm or flood (land only – not the property on it)
- Fire following any of the above.

* Residential property is your home, its contents and the land immediately surrounding the dwelling (within limits).

Extent of Cover

Dwellings are insured up to a maximum of $100,000 plus goods and services tax (GST) and personal effects are insured up to $20,000 + GST. EQC pays the value of damaged land at the time of the earthquake or natural disaster, or the repair cost, whichever is lower.

Dwellings are covered on a replacement value basis. Personal property is insured on the same basis as the household insurance policy covering the same property. Some retaining walls are covered, but on an indemnity basis.

http://www.eqc.govt.nz/home.aspx
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Old Sep 5th 2010, 9:02 am
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Default Re: Earthquake Insurance

Originally Posted by Bo-Jangles View Post
AM I COVERED BY THE EARTHQUAKE COMMISSION?
If you have current home and/or contents insurance, you also have the Earthquake Commission’s cover.

EQC covers damage to residential property* caused by the following perils:
- Earthquake
- Landslip
- Tsunami
- Volcanic eruption
- Hydrothermal activity
- Storm or flood (land only – not the property on it)
- Fire following any of the above.

* Residential property is your home, its contents and the land immediately surrounding the dwelling (within limits).

Extent of Cover

Dwellings are insured up to a maximum of $100,000 plus goods and services tax (GST) and personal effects are insured up to $20,000 + GST. EQC pays the value of damaged land at the time of the earthquake or natural disaster, or the repair cost, whichever is lower.

Dwellings are covered on a replacement value basis. Personal property is insured on the same basis as the household insurance policy covering the same property. Some retaining walls are covered, but on an indemnity basis.

http://www.eqc.govt.nz/home.aspx
Thanks for that, it's some comfort to know that an insurance scheme exists. However, I do find the capped payout a bit worrying. In the event of total loss, there could be a substantial shortfall in the insurance payout. I guess it's more of a "last resort" system to ensure no one is left with absolutely nothing.
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Old Sep 5th 2010, 10:09 am
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Default Re: Earthquake Insurance

Originally Posted by rushmere View Post
Thanks for that, it's some comfort to know that an insurance scheme exists. However, I do find the capped payout a bit worrying. In the event of total loss, there could be a substantial shortfall in the insurance payout. I guess it's more of a "last resort" system to ensure no one is left with absolutely nothing.
It amazes me, they reckon there are about 20% of folk in Chch who will have damage but won't have ins for their property. If you can afford a house you MUST find the monies for the ins. It costs about $100 a month to insure about $750k of contents and building. I would sell my house if I could not afford home ins. There is just too much to lose. I will be annoyed if these people who chose to NOT have ins (it is their choice..no one elses) get any handouts. All the old folk who lost ALL their pension money and more thru most of all the finance companies got **** all from the govt. Why should people who have no ins. get preferential treatment? It remains to be seen if the latter happens.
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Old Sep 5th 2010, 11:16 am
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Default Re: Earthquake Insurance

Originally Posted by rushmere View Post
Thanks for that, it's some comfort to know that an insurance scheme exists. However, I do find the capped payout a bit worrying. In the event of total loss, there could be a substantial shortfall in the insurance payout. I guess it's more of a "last resort" system to ensure no one is left with absolutely nothing.
Home insurance payouts are not capped. Although the Earthquake Commission contribution is capped at the first $100,000, your insurance company pays the rest. Remember, you must have a commercial home insurance policy to benefit from the Earthquake Commission's coverage.

Home insurance is quite affordable here - I pay around $750/year for comprehensive home and contents cover amounting to $600,000 in earthquake-prone Wellington (I have a high voluntary excess to minimise the premium). This includes coverage for total loss (full rebuild) plus 26 weeks' emergency accommodation.

NZ is very wise to have set up the Earthquake Commission. They cover all natural disasters (including floods, tsunamis, volcanoes, landslides), and essentially ensure that homes can be insured at reasonable cost. My brother lives in California which does not have an equivalent, and where earthquake insurance is essentially unaffordable.
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Old Sep 5th 2010, 11:45 am
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Default Re: Earthquake Insurance

If you have insurance up to $100,000 of the claim is paid by the EQC, everything above that your company will pay for. This is because EQC cover is included in the premiums you pay.

If you don't have insurance you're not covered by the EQC, but the chances are you'll get something back from some charitable fund that will be set up.

Claim for everything you can -broken bottles, pictures, windows etc.
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Old Sep 5th 2010, 12:17 pm
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Default Re: Earthquake Insurance

It looks like there will be a fund for the uninsured.
It is what it is
One could feel miffed about that
Or just feel Ok about it really
People experience tragedy everyday for sure but this is an exceptional event that requires an exceptional response
It's chch after all. Who ever would have thought of a big quake there? Welly, yes, you really know what you're up against there, but Chch??????

I get your point Genesis, and I know that it must be particularly personal to you after your experiences that the govt did nowt to assist with.

So $2bn it will cost the EQ comission
and $1.7 for South Canterbury Finance payout
A hell of a week for Canterbury in so many ways
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Old Sep 5th 2010, 12:57 pm
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Default Re: Earthquake Insurance

Originally Posted by drrobert View Post
Home insurance payouts are not capped. Although the Earthquake Commission contribution is capped at the first $100,000, your insurance company pays the rest. Remember, you must have a commercial home insurance policy to benefit from the Earthquake Commission's coverage.

Home insurance is quite affordable here - I pay around $750/year for comprehensive home and contents cover amounting to $600,000 in earthquake-prone Wellington (I have a high voluntary excess to minimise the premium). This includes coverage for total loss (full rebuild) plus 26 weeks' emergency accommodation.

NZ is very wise to have set up the Earthquake Commission. They cover all natural disasters (including floods, tsunamis, volcanoes, landslides), and essentially ensure that homes can be insured at reasonable cost. My brother lives in California which does not have an equivalent, and where earthquake insurance is essentially unaffordable.
Originally Posted by Expat Kiwi View Post
If you have insurance up to $100,000 of the claim is paid by the EQC, everything above that your company will pay for. This is because EQC cover is included in the premiums you pay.

If you don't have insurance you're not covered by the EQC, but the chances are you'll get something back from some charitable fund that will be set up.

Claim for everything you can -broken bottles, pictures, windows etc.
Thanks for the replies. That's very reassuring, and seems like a good system.
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Old Sep 5th 2010, 8:10 pm
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Default Re: Earthquake Insurance

Originally Posted by pricklykina View Post
It looks like there will be a fund for the uninsured.
It is what it is
One could feel miffed about that
Or just feel Ok about it really
People experience tragedy everyday for sure but this is an exceptional event that requires an exceptional response
It's chch after all. Who ever would have thought of a big quake there? Welly, yes, you really know what you're up against there, but Chch??????

I get your point Genesis, and I know that it must be particularly personal to you after your experiences that the govt did nowt to assist with.

So $2bn it will cost the EQ comission
and $1.7 for South Canterbury Finance payout
A hell of a week for Canterbury in so many ways
As John Key said if you paid out all the uninsured willy nilly no one would bother having ins. I know my line sounds hard but having a home uninsured is daft. Its like having a dog without a lead. Having no car insurance is really dumb, having no home ins is even dumber. If my home slips down the gully tomorrow and I either did not bother with ins or could not afford it I would not expect anyone to pay for it. My choice, my stupid fault end of story. Like wise my loss with Hanover, why should anyone else have to pay out for my poor choice of investment? I must bear some blame for my loss. If I had been paid out with tax payers money I would have been laughing all the way to the bank..but it would not make it fair on those who bailed me out. It is life and shit happens.
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Old Sep 6th 2010, 1:52 am
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Default Re: Earthquake Insurance

The government will inevitably come up with some sort of solution for the uninsured. I imagine it will run along the lines of repairing homes in exchange for the rights too a proportion of the house price when the property is sold. That way, the housing stock is repaired, everyone gets somewhere to live, and the govt still gets its money back (eventually, when the property is sold).
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Old Sep 6th 2010, 3:31 am
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Default Re: Earthquake Insurance

Originally Posted by pricklykina View Post
So $2bn it will cost the EQ comission
and $1.7 for South Canterbury Finance payout

...I read today that this was a positive things form the Kiwi ecconomy becuase of the level of investment required to rebuild....but here's the question. Where's the momeny coming from?

It's $1000 for every man woman and child in NZ. The commentators say it's coming out of the 'Emergency' fund the government has...So that was 'spare cash' just sloshing around somewhere?

Whatever the source doesn't this mean we either have to pay more (tax I guess) to fill the hole, or the country / government is 'worth less' (has less assets to cover it's liabilities)

I just don't see where all the money is coming from.

PS Another thought - if GDP is going up by even an Australian 2% pa - this would be only $1000 extra per family per year or about 1/4 of what we have to find for SCF / Cant. Earthquake
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Old Sep 6th 2010, 3:38 am
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Default Re: Earthquake Insurance

The earthquake commision has a ringfenced amount from insurance premiums so it's not a big deal and waon't cost the taxpayer. The pot will be refilled in it's own time.
SCF of course will cost the taxpayer but that is entirely different
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Old Sep 6th 2010, 3:49 am
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Default Re: Earthquake Insurance

Originally Posted by pricklykina View Post
The earthquake commision has a ringfenced amount from insurance premiums so it's not a big deal and waon't cost the taxpayer. The pot will be refilled in it's own time.
Interesting - so I just looked into what they do with the money in the fund...

http://www.eqc.govt.nz/abouteqc/investmennofndf.aspx

About 1/3rd is in overseas equities - so taking less than $700million out of these isn't going to impact anything and certainly not in NZ.

The rest is in fixed term secure deposits like Government Bonds. $1.5B represents about 15% of this years total bond issuance - so again should be material.

All in all pretty well managed (IMHO)

I guess that by 'ring fenced' they mean only for the use of paying insurance claim cover (limited to $125,000 per household). That would leave the infrastructure and uninsured costs for the government to cover.

Last edited by Wooly_Cow; Sep 6th 2010 at 4:10 am.
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