The Natural Hazards Commission (NHC) is calling on homeowners – and the brokers who advise them – to understand the limits of New Zealand’s natural hazard land cover before disaster strikes.
A recent NHC survey found 56% of insured homeowners mistakenly believe they would receive full compensation for natural hazard-related land damage. In reality, the Crown-owned scheme, formerly known as EQC, provides up to $300,000 for house damage and only partial land cover, which cannot be topped up with private insurance.
“Land cover is specifically designed as a contribution payment, not full cover,” NHC chief executive Tina Mitchell said. “The limits of cover available ensure every homeowner across the country gets access to some protection, and helps keep the scheme affordable as it is funded by homeowners.”
Mitchell said the recent landslides in Wellington underscored the risk of misunderstanding policy scope. Two hillside properties in Wadestown were left teetering above a busy commuter rail line after slips triggered by a burst water pipe. Urgent works were required to stabilise the sites, but questions remain over who will bear the remaining costs.
According to RNZ, NHC chief strategy officer Michala Beacham said land cover applies only to damage within eight metres of the home or within 60 metres of land needed to access it. Settlements are based on the lesser of repair costs or the land’s value, often resulting in a shortfall.
“It is a horribly stressful time dealing with a natural hazard event,” Beacham told Morning Report. “Then having an unexpected cost on top of that is really not a good time for anyone. That’s why we are just trying to help people understand beforehand.”
The NHC recommends that property owners:
• Learn about the risks to their property and how hazards may affect it.
• Check the specific limits for both house and land cover.
• Reduce risk by seeking expert advice, such as strengthening retaining walls or improving drainage.
• Plan financially for potential recovery costs beyond the scheme’s contribution.
For brokers, the message is clear: client education is essential. With New Zealand experiencing more than 150 severe weather events and natural disasters since 1968 – including record payouts after Cyclone Gabrielle and the Auckland Anniversary floods in 2023 – understanding cover limits could prevent financial shocks in future claims.
“The scheme is a good contribution, but it is not designed to cover all costs,” Mitchell said.
Article courtesy of insurancebusinessmag.com
